I'm surprised that so many people believe in the free market ideology (e.g. market regulation is always wrong). The error in this type of reasoning is very simple. They first assume an idealized market model and then derive conclusions from it – but the idealized market is just too different from real-world markets. It's really that simple but many really smart people fall for it.
Arnold Kling endorses free markets not because they are foolproof or flawless. They aren’t. Arnold supports them because the alternative is generally much worse: an especially flawed institution that fosters unusual amounts of foolishness.
http://www.fee.org/the_freeman/detail/klinging-to-reality#ax...