We see this all the time. People don't act like economic automatons; people do plenty of things for other people without any economic benefit to themselves.
I don't know why so many people hold this poisonous viewpoint.
The problem that people consistently seem to ignore is that 100% free-markets don't incorporate the costs of negative externalities. So frequently what arises out of the free-market is a situation of misallocated resources.
In this case, the cost to society of people not being able to live close to where they work, or having to pay more to live notably outweights the benefit of people getting to pay a bit less for a vacation. However, because that cost is paid by others and not the people putting the home up or staying there this misallocation still occurs.
I don't think the standard economics characterization of "externalities" includes the opportunity costs of people not being able to use a resource. Even then, I don't see how your argument that vacationers are creating an externality for long term renters is more convincing than the opposite (ie. long term renters are creating an externality for vactioners). Instead, what you seem to be doing is ignoring price signals (ie. the fact that vacationers are willing to pay more for the same unit than "actual" renters), substituting in your own value judgement, and then concluding that there's an externality because the market behavior isn't aligned with your value judgement.
Healthcare used to affordable for most. Now it’s insanely expensive per month for a family, and still costs a huge amount to actually use. That’s not free market, that’s government trying to help out.
Free market has raised hundreds of millions out of poverty. It’s far from perfect, but it’s better then everything else.
Markets free of regulation are not a silver bullet.
I figure you’re making reference to the US healthcare system, which is an anomaly in a world of public health systems that function cost effectively
True, but you can't build a functioning economy out of that. Many have tried - it just doesn't work.
Because it lets their own selfish behavior get a pass which they feel guilty for. I most commonly see this view point in bosses, go figure.
Do you buy things? Pay for services?
Maybe small nominal things, but I don't know many that spend considerable amount of money on anything other than themselves.