A subsidy-fueled boom helped build China into an electric-car giant but left weed-infested lots across the nation brimming with unwanted battery-powered vehicles.
Subsidies skew the market toward specific sectors, technologies, or actors. A company that do not benefit from subsidies is at a competitive disadvantage vs a company that do get subsidies.
A totally free market wouldn’t have any subsidies. But markets aren’t totally free in practice.
Subsidies are typically a good thing when it benefits cleaner tech or improving energy efficiency. It’s the fossil fuel subsidies that do the most harm.
That’s part of it, even if that’s not the only part.
Central characteristics of capitalism include capital accumulation, competitive markets, price systems, private property, property rights recognition, voluntary exchange, and wage labor.
I would argue that being horriblely disadvantaged by not getting free money is not in fact a restriction on the market.
That’s technically correct. It’s not a restriction. But it’s not a neutral for the market either.