Economics is traditionally defined as "The allocation of scarce resources". The trouble with
free market thinkers is their assumption of
government as a perfect
regulator. They thus ignore the fact that government contains both institutional and polical elements, and that those political elements are usually dedicated to using the institutional elements to skew the distribution of resources.
It is a curious incidence of circular logic that free market thinkers assume that those with money deserve to have that money BECAUSE they have the money.
Free market thinkers also ignore the natural human tendency for nepotism, graft and corruption. Mr. Hazlitt should also take a hard look at developing nations and the effects of the World Banks free market schemes on their economies.
Mr. Hazlitt is also outdated, and needs to get a clue about globalization. Government interference is typically used to attract or anchor liquid value to a particular geographic location. While this may be detrimental to effective functioning of markets, it is essential to the welfare of every nation state. However, the competition between nation states creates a sort of paradox similar to the "prisoners dilemma". Each state can offer incentives, to the disadvantage of the other. However, if both states choose to offer incentives, it is to the disadvantage of both, for it costs each state the value of the incentive, without gaining any competitive advantage.