The problem with this reasoning is that it depends on mis-modeling the government. Doing so is intrinsic - the argument is that market effects caused by government action is different than that caused by other market actors. The usual reason given is that government action is not "voluntary", for definitions of voluntary that don't model reality very well.[1]
The reality is that various market participants have powers the others don't. One can argue that the law treats me and Goldman Sachs the same. (I'd also argue that's false, but at least there is a kernel of a case there.) But nobody can argue with a straight face that I have the capabilities to make the same bets. Repeat in thousands of different ways for different actors.
Similarly, the government has special powers that others don't. Indeed, if you treat "government" as a monolithic entity, it is certainly the most powerful actor. But it it just another actor. (Or rather a number of different actors in different contexts, sometimes fighting with each other.)
When your simplifying assumptions don't work, you have two choices. Change your model or complain about reality. The Austrian school has made a philosophy out of the second.
[1] The idea that choosing to feed your kids is a voluntary act but choosing to pay your taxes is not runs contrary to most peoples' moral intuition.
My suspicion is that any asymmetry in the markets which makes it even slightly easier for one participant to make a profit over another is going to have a huge impact on determining which participants survive and which do not. I think this is why there are so many large monopolies today; they've been getting a little extra help; their profit margins have been a little bit bigger and they received a little bit more government contracts (or bailouts) during the economic downturns than their competitors.
You just eviscerating an instance of a problem I see damn near every time I follow a link to mises.org, and the pattern of argument that got me to give up on ever getting value out of Ayn Rand's essays the time I gave that a shot, and you did it better than I likely could have. Thanks you, because those bug the hell out of me.
Smug-ass more-logical-than-you tone (which is itself part of the con, so you feel good when you identify with them and start to repeat their arguments, and can more easily dismiss other ideas as "emotion-driven" or whatever, so you don't slip away from the pack) while apparently hoping I won't notice the parlor tricks they pulled near the beginning where they were relying on folksy, naïve definitions of key terms, and trying to sneak poorly-justified premises past me. And it seems to work on lots of people, is the worst part. Damned charlatans.
The reality is that various market participants have powers the others don't. One can argue that the law treats me and Goldman Sachs the same. (I'd also argue that's false, but at least there is a kernel of a case there.) But nobody can argue with a straight face that I have the capabilities to make the same bets. Repeat in thousands of different ways for different actors.
Similarly, the government has special powers that others don't. Indeed, if you treat "government" as a monolithic entity, it is certainly the most powerful actor. But it it just another actor. (Or rather a number of different actors in different contexts, sometimes fighting with each other.)
When your simplifying assumptions don't work, you have two choices. Change your model or complain about reality. The Austrian school has made a philosophy out of the second.
[1] The idea that choosing to feed your kids is a voluntary act but choosing to pay your taxes is not runs contrary to most peoples' moral intuition.