I guess this is what I mean about not living in the real world. In the real world people with power tend to screw over people who don't have it. In the real world wealth is not distributed to people entirely on their merits. In the real world inequality means a great deal, especially if you happen to be born, live, and die on the less equal side of the railway tracks.
We libertarians are very familiar with regulatory capture as it is our bread and butter. It is not a surprise that when we analyze democracies that we find perverse incentives.
What people usually done is to forsake their long term interest in favor of assured short term survival. That is how free markets die. It also can happen to anybody, rich or poor.
You could be a lowly prison guard part of an industry whom interests are aligned with keeping people in jail. That benefit the whole hierarchy of prison complex, not just the rich CEO on the top. However, everybody suffers in the long run, even the lowly prison guard, because prison breed criminality.
I guess when all you have is laissez-faire capitialism everything starts to look like a market nail. It's this simple and elegant theory that you can apply to all sorts of incredibly complex problems and magically the invisible hand of the market will descend down from supply & demand heaven (likely on wires like some kind of hideous broadway show deus ex machina) and fix everything.
This argument is not much of merit. Please discuss example.
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