Why is it, again, that we're supposed to believe that competition ensures that people will make optimal decisions?
What a stupid thing to say! We are not supposed to believe that because it's not true! Clearly this guy has a strawman kit, because he's built a whopper.
The answer is that competition does not ensure that people will make optimal decisions. It just ensures that people will make better decisions than anybody else in their situation. That's the same reason why it's doubtful that a J. Random will make better decisions than a CEO of a firm. Competition doesn't ensure perfection. It doesn't even ensure wisdom. It just ensures that the most foolish decision-makers will have their resources taken away from them.