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Unjust laws are not followed. Impractical government requirements processed through slow websites are flouted. And above all, people aren't just voting. They're voting with their feet. Don't like your local tax regime? Move out of state. Move out of country.
Markets are not efficient, but they are sort of are if you look on average and in the long-term. Regulation and governments that do not serve their citizens, in particular those who pay tax, will (on average and in the long run) go bankrupt like any other company.
So, yes, Regulation <-> Free Markets, is still a sensible thing to consider when optimizing governance, but just remember that regulation, the prima facie antithesis to free markets, can't escape its opposite. Markets govern all things, including government itself.
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