Just as there are timeless truths, there are also timeless falsehoods.
Here are a few of the latter that I’ve recently encountered, but there are, of course, plenty more. Some libertarians may not agree with me (at least at first) on all of them.
1) The free market creates scarcity and higher prices. In any economic system—socialist, interventionist, or free market—the quantity of a good will typically not be enough to satisfy demand when the price is zero. In a free market, in which people trade their legitimate claims to those resources, prices will tend to rise or fall to the level where the quantity supplied equals the quantity demanded, and in that way prices help us to cope with scarcity. Not only that, the free market, via a system of profit and loss, gives entrepreneurs an incentive both to supply more of scarce resources and to discover alternatives to them. (But not all “trade” is conducted this way. See No. 4 below.)
2) The free market means the government gives businesses special privileges. This is a very common belief based on the idea that pro-market means pro-business. But the free market is free precisely because it denies special legal privileges to any person or group. People sometimes define “privilege” as any advantage a person or group may have over others. Certainly such advantages exist today and would exist in a free market—you may be born into a wealthy family or have superior drive and resourcefulness—but these advantages are consistent with the absence of privilege in the libertarian sense, as long as you acquired such advantages without fraud or the initiation of physical violence against the person or property of others.
3) The pre-Obamacare healthcare industry was a free market. Actually, it was a highly interventionist market, as John C. Goodman explains. Similarly, the failures of the housing and financial markets were hardly the result of “free-market policies,” and the same could be said for practically every other sector of the American economy. The free market is free of legal privileges and discrimination; it is whatever happens in the absence of aggression and within certain “rules of the game”—for example, private property, freedom of association, and the rule of law. Again, it’s not pro-business, pro-consumer, or pro-anything if that means using political power to intentionally help some and hurt others.