Let me start with # 4 – It demonstrates both a Myth and -Straw-man at the same time.
The Cato Institute says the following sentence is a Myth.
“Markets Depend on Perfect Information, Requiring Government Regulation to Make Information Available.”
I agree that is a myth. Great we can start off agreeing.
Now, let’s look at his next sentence.
“For markets to be efficient, all market participants have to be fully informed of the costs of their actions. If some have more information than others, such asymmetries will lead to inefficient and unjust outcomes.”
I also agree with this sentence. Do agree with this sentence also?
Is Cato saying that sentence #2 is a Myth?
What I learned from reading the second sentence is that – Markets determine value based on information. The more the buyer and seller have “symmetrical” information (as opposed to “asymmetrical” information) the more optimum the market works. If a goat seller knows the goat is sick but does not tell the buyer then the seller is a ‘bad actor.” (obviously if the seller dosen’t know the goat is sick, that is different. A economic bad actor is when the seller intentially hides the fact the goat is sick. And the how far the seller goes to hide it determines how much of a bad actor the seller is.)
Let’s take two examples, con men selling Seniors stuff they don’t need and Internet Spam.
The first example is that the con man is a bad actor. In the second example those that abuse email are bad actors. In both cases they do not help commerce. In fact, in both cases they impede optimum commerce.
The point is that in a free market: individual actors may sometimes be bad actors. How we stop bad actors from skewing the market depends on the context. But, we first have to acknowledge that bad actors exist.