More on free market theory...

I have been seeing videos and reading articles of Milton Friedman. His theory/approach about free market sounds very convincing. People should be free to make decisions. No force (govt) should be applied on them. If selfish people serve their interests then the market will reach the equilibrium state.

I agree in principle. Freedom to choose/live/eat/sleep/consume/invest should be there. But there is something that I don't agree with- Extreme freedom. Some regulation has to be there.
Friedman's theory works under the assumption that every individual is well informed and quite able to make the right (right for him/her) decisions. Is that really true? I don't think so.
There are mainly three problems:
1. Not all people are educated. How many people today understand the tax structure or incentives such as lower interest rate? Unfortunately, not all (Not in India). 70% of the population stays in rural areas.
2. Not all people are fully informed. Do you know exactly how is the govt taxation structure going to affect you next year?
Unfortunately, mostly people are misinformed and need to be guided. If they are given extreme freedom, then their inability to take right decisions for themselves can severely hamper their quality of life.
3. All people are selfish but some are also immoral. Some people don't care about others at all. They just want to pursue their personal goals...not matter what the cost to the society.
For example- Friedman has often criticized democracy. He says that in a democracy people vote for those who want power. Hence, democracy only brings powerful (and selfish) people in the government. That doesn't sound good.
Ok. Back to the example- Today terrorism is a reality. There are a bunch of people who misguide others in the name of religion. Illiterate and poor people are chosen (or recruited) as terrorists. What would Mr Friedman say to that? People are free to choose what they want to do? But Mr Friedman...their choice is wrong...they are killing those who didn't choose death for themselves

Free market theory is a principle. It (in theory) should be applied to every aspect of life. Although, I do believe that people should be free to make a choice, but govts role in the whole system cannot be undermined. Govt is life a referee in a game. Whenever there is a foul, all players should look upto it for guidance and justice.