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There will always be interesting examples of exceptions to "rational" economic behavior, i.e. the manager who opts for the larger office with more prestige instead of taking the less esteemed job for higher pay. However, I don't think economics is about predicting how every individual will behave in every possible situation.

Rather, economics attempts to predict behavior in general, with all other factors held equal. Yes, some managers may choose to forego income in exchange for more social prestige. But do all managers, as a general rule, make the same choice? If there are only a few exceptions to a general trend, does it make sense to call for large-scale government intervention to adjust for the effects of a few exceptions?

The kind of critique outlined in the article makes another, more substantial error. While recognizing that certain aspects of the market may not always function with perfect efficiency or consistency, they seem to assume that the government does not suffer the same flaws as the market. Those calling for regulation assume that the government is capable of making perfect, instantaneous, highly detailed decisions to address the shifting and complicated imperfections in a market economy. Anyone whose ever had a run in with any kind of government committee or a few bureaucrats should know better than to make that assumption.

Any market economy in the real world will never perfect, as even Friedman would admit. That doesn't automatically mean government is the best or first solution to turn to. Using the government to correct minor market imperfections is like using a rusty machete to fix the stray whisker you missed during your morning shave.

Economics can actually be simplified, but the explanation is far from satisfactory.

1) The purpose of the study of economics is to profit from an economic model. Everyone in an economy seeks to profit in that economy.

2) The majority follow the economic model, which eventually diminishes the profitability of whatever they do to "too little" return, if not zero profit. However, inertia allows much of the old way to survive for quite a while.

3) By acting in a way different from the model, someone may profit far more than the majority. They become the leader in changing the economic model, and the majority seek to adapt to the new direction.

The trouble is that you cannot predict the new direction of innovation, which means that your economic models will always be flawed. This is very frustrating to economists.