First, the reach of government has been growing in virtually every developed nation in the world, including in America, and it hardly seems that a far-reaching free market conspiracy controls much of anything in the wealthy nationsRobin Hanson at Overcoming Bias talked of a Regulation Ratchet--the idea that when bad things happen, government steps in with regulation, but there's no equivalent process for deregulating.
And today, Alex Tabarrok at Marginal Revolution notes the short time between the physics discovery recognized by the Nobel and its usage in Ipods, etc.
Why do I put these three together? Because I think the mental model latent in the first two cases is contradicted by the third. I think Cowen would agree with the "regulation ratchet", the idea that government always expands and never contracts. And I think both Hanson and Cowen are unconsciously seeing society as fixed. ("Society" being the environmental niche in which the "reach of government" is growing.) But, as Tabarrok implicitly recognizes, change happens, innovations occur, things advance, and society changes and evolves with it. The Ipod rests on a technological advance, but the Itunes storefront depends on a network of governmental regulations which may, or may not, need to be changed to deal with digital rights management (DRM) of songs. If the FCC or Congress or the courts, or all three, change the rules for DRM, is that really an extension of the reach of government. How about the government's rules for Western Union, the old telegraph monopoly--have they not vanished into the past?
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