In various discussions of free market capitalism and the perceived "need" for government intrusion on the economic self determination of consumers, there are two "problems" in particular that seem to engender the most skepticism:  price gouging, and outsourcing of American jobs overseas.  But neither is necessarily a problem, and both are made more likely through government interference rather than less.

In an open, competitive market, "price gouging" is a difficult proposition to undertake successfully because of the competition that exists for the consumer's dollar.  When "you can get it cheaper at Walmart", it makes it hard for the corner store to raise the price too much.  Of course, the convenience store charges a little more than the full service grocery store, but if they try to charge too high a premium, too many shoppers will decide that it's worth a little more of a drive — the benefit of convenience simply isn't worth the cost.

Obviously, during a time of shortage (or an anticipated shortage), price gouging can actually serve a beneficial function.  A hotel dramatically raising the price of hotel rooms encourages frugality, meaning more people per room; this means more rooms for more families.  If the hotelier were unable to raise prices (by the presence, for example, of "anti-price gouging laws"), then families might decide to have fewer people per room, leaving more families with no room at the inn.  Increasing the price of gasoline makes it less economical to top off the tank, leaving more gasoline for those who truly need it.

The easiest way to achieve price gouging is not through a free, open market but rather with the assistance of government.  The government has great ability to restrict the marketplace, removing competition and clearing the way for price gouging by favored special interests.  There are many ways for government to accomplish this. 

The most direct way is for the government to set a minimum price for a good or service — a price "floor" below which no seller is allowed to go, regardless of the market for a product at the price; an example of this form of legalized price gouging is the dairy market, through the Dairy Price Support Program administered by the Department of Agriculture.  The winners are the milk producers who get to charge higher prices and reap bigger profits; the obvious losers are, of course, families paying more for milk than they would under a free market.  There are other losers too, however.  Consider a producer who discovers an innovation that greatly lowers his cost of producing or delivering dairy products; he is now banned from increasing his market share by lowering prices.

Another such way is either to bar the importation of foreign made goods outright, or to raise the prices of those goods through the imposition of tariffs.  Domestic sugar and ethanol markets utilize this system, as the government taxes importation of both; thus, we pay more for sugar and fuel than we otherwise would under a free market.  The winners and losers are the same as in the previous example, plus another potential downside:  the health of the environment.  One reason that domestic sugar needs assistance from the government to compete with imported product is that the growing conditions — weather, soil, etc. — are more conducive to sugar production in some countries than in the US.  To grow and refine sugar in the US thus requires more fertilizers and pesticides, which can have negative impacts on environmental quality.  The taxpayer then foots the bill for the cleanup, of course.

Another method for enacting government-assisted price gouging is to impose steep licensing or permitting requirements on providers of goods and services.  An example of this is taxi services:  often cities charge exorbitant fees for taxi licenses, thus restricting the smaller businesses from having the ability to enter the market.  The governments often also restrict the number of licenses or permits that are available for purchase, meaning fewer taxis on the street than a free market would support.  Fewer providers means less competition, and high licensing costs means more expensive overhead; once again, the consumer — the person actually looking to purchase a taxi ride — is the loser.  There could perhaps be a further loser, as the artificially high price of taxiing could provide enough incentive for an impaired driver to get out on the road with tragic results.  The barrier to entry by competitors also can stifle innovation; perhaps a company decides to implement a "green" fleet of electric cabs, as is the case in Houston.  The entrenched system of licensing and permitting makes it hard for the innovative entrepreneurs to get their chance to compete for our dollars.

Contrast these examples with some from sectors with less government interference in the free market.  Consider cell phones and computers:  over the past 20 years, prices have come down on both, while product quality, availability, and features have increased exponentially.  Government didn't decree that cell phones needed to have cameras or internet access or walkie-talkies or flexible minutes; rather, companies innovated and people rushed to get these products voluntarily, rewarding companies who provided them and punishing the companies that didn't.

In each case, it is government interference that makes the price gouging possible, not the free market.  In the marketplace, the business must provide goods and services that people are willing to voluntarily exchange their money for; in the political realm, the businesses provide campaign contributions and other benefits to politicians, who then force consumers to pay higher prices, in some cases for products they find less attractive or desirable.  The free market innovation provides more, better options; government interference promotes inefficiency and stagnation.

Ultimately, I trust the person who wants me as his customer more than the person who wants to control my choices.  I'll take my chances with the free market.