The military dictatorship everyone loves
This is why the Federation, by the time of Picard, has devolved into a totalitarian military dictatorship. The only apparent choices, when confronted with the discovery of technology as dangerous as matter transportation and mass-energy conversion, it seemed the only logical choice. Replicators, warp drives, and transporters could easily give every single person a comfortable lifestyle, but were so incredibly dangerous that they could never be allowed to fall into untrusted hands. So, Starfleet (and later, the Federation) established itself as the only entity allowed to possess such dangerous technology, strictly and ruthlessly enforced, but in return, provided every person on the planet with all their material needs.
This, of course, resulted in the elimination of free markets, because the only thing that could not be easily replicated was land. For a brief time, it was worried that, having nothing of value with which to negotiate the buying and selling of land, violence would break out between those that owned land and those which did not, and now could not because even human labor was now of minimal value. As a solution, Starfleet confiscated all privately owned land. Thereafter, land was apportioned to individuals on the basis of their contributions to Starfleet. This is one reason why, despite being a very hazardous occupation, it was so hard to get into the academy - becoming a member of starfleet was one of the only ways to gain significant amounts of landed property, though of course scientists and other professionals who rendered their services to Starfleet as civilians, while they could not be paid with any material goods (material goods having lost all value), were paid with land as well.
The major exception was for human colonists. In order to promote human expansion, increase the amount of available Earth land available for Starfleet apportionment, and to encourage the dislocation of dissidents, colonists were granted the right to appropriate land on other planets according to whatever method of apportionment the colonists wished to choose - subject, of course, to the needs of the Federation.
The net result of this policy was that most people remaining on earth were Starfleet supporters, and dissidents were strongly encouraged to leave Earth and colonize other parts of the quadrant. While a few colonists, desperate to escape the clutches of Starfleet, left federation space altogether, most could not afford to do so, having been stripped of the right to own weapons by the Federation and thus being almost totally defenseless and needing the protection of Starfleet. But Starfleet protection was not by any means inexpensive. In return for protection, Starfleet demanded complete obedience. Colonists were forbidden from owning energy weapons, warp vessels, or unauthorized replicators. Starfleet was even skeptical about allowing fusion reactors, but ultimately realized the necessity of it. As a result, however, Federation observation posts and starbases were never far away.
Eventually, some few came to understand all that had been lost in the great and glorious transition to an interstellar race, but they did not openly discuss it.