Opinion

We need a free market solution

“Let them fail; let everybody fail!” The great entrepreneur Henry Ford spoke these words in 1934 in the midst of the Great Depression, but we would be wise to heed them today. Ford, a man who has done much more good for mankind than any politician ever has, understood that the market must be allowed to function freely, especially in bad times. Failed businesses propped up by the state make everyone worse off as scarce capital and resources are diverted away from productive firms.

Politicians need to immediately stop trying to plan, save and stimulate the economy with their brilliant idea of spending more money. An economy is something that cannot be planned or managed; it is far too complex for any team of self-labeled economic geniuses.

The market is around us all the time but not very noticeable, much like the air we breathe. Just a look outside will amaze you: thousands of cars and trucks speeding down US-1 going to and from market transactions, people streaming in and out of stores with seemingly limitless quantities of everything, and motorists filling up at countless gas stations with fuel that was pumped out of a desert halfway around the world just weeks before.

Too many of us unfortunately take the market’s many wonders for granted, leading to incessant calls for more regulations, taxes and subsidies. We are lucky that the market still overwhelmingly directs the economy and we owe our great wealth and prosperity to markets. The poor in America live better than the kings of just centuries ago. Why would anyone interfere with this fantastic engine of growth and advancement?

The government should actually obey the Constitution and be relegated to protecting freedom and property rights – the things most necessary to free markets. Business shouldn’t be helped or hampered by the toxic hands of the state, it should be left alone.

To say that this laissez-faire system I advocate is somehow responsible for our current crisis is untrue partly because we have no such system. Under laissez-faire, only the departments of Justice, Defense, State and the Treasury would exist. Ten departments that explicitly interfere with the market, such as the departments of Commerce, Energy, Transportation and Agriculture, would be abolished. There are additionally over 100 federal agencies and commissions that would all be axed. The Federal Register contained 73,000 pages of regulations as of the end of 2007. I haven’t even mentioned state and local regulations.

This recession was caused by extensive government involvement in the housing market. Government guarantees of mortgage loans through Fannie and Freddie, 2 trillion dollars in illusory capital created by the Federal Reserve lowering reserve requirements and interest rates to near zero, and government encouragement of reducing lending standards combined with insane levels of leverage fueled the largest housing bubble in history.

We do need some dramatic changes, but not the kind being sought today. We need drastically smaller government and much more freedom. We need to let the market correct itself and remove scores of regulations and taxes to end this crisis quickly and pave the way for future sustainable growth.

December 3, 2008

Reporters

Timothy Heacock

Staff Columnist


2 COMMENTS ON THIS POST To “We need a free market solution”

  1. Tim Heacock says:

    Clever name.

    “Yes, you are correct…”

    Of course there will be hard times for many people, unfortunately that is the nature of the world. The only proven way to permanently make everyone better off is with free markets. Please provide evidence to the contrary. If you feel badly then why not set up a charity to help these people? Why must you force others to pay?

    “Scarce capital directed away from productive firms? Are you seriously advocating giving more money to already fabulously wealthy companies in favor of, say, allowing Ford pay its employees so that they can afford their rent over Christmas? Oh! That’s right! ‘Atlas Shrugged’ is your Bible! Expecting logic from an obvious objectivist was my mistake, apologies.”

    I have never read Atlas Shrugged and probably never will because I disagree on many points with the Objectivists. I’m not advocating giving more money to other companies; I would never force anyone to give anything to anyone. That’s what the government does. I advocate letting the Big 3 go into chapter 11 reorganization. The companies will not disappear, they will still have employees but will make major cuts and changes.

    I am what you probably call yourself: a liberal. However, I don’t believe that the government can improve the lives of citizens by forcibly redistributing wealth, which makes everyone poorer. Classical liberalism was just plain liberalism before the socialists co-opted the term. I use Frederic Bastiat’s definition of socialist, so don’t quibble over semantics.

    “I am glad that …”

    You assume far too much. I am by no means a trust fund baby. I am paying for college with scholarships and student loans. I apologize if this breaks your naïve stereotype of only rich people being for free markets. The point I was trying to make that apparently flew right over your head is that nobody can run an economy. Mao tried it, the Soviets tried it, Castro tried it, etc. And to think that economists work to keep the economy prosperous is absolutely preposterous. If you cannot understand the simple fact that markets overwhelmingly direct the economic activity in this nation then it is of no use trying to reason with you. The government is not a group composed of super humans who know how to “run an economy.” No one can run an economy.

    “The comment about ’seemingly endless’ goods on US-1 is so inane that I will not deign to give it further notice than this sentence.”

    How was this inane? I feel the only reason you don’t want to discuss it further is that it is true that the markets have provided unimaginable wealth.

    “Alan Greenspan, devout follower of Randian ‘deregulate eerything’…”

    Greenspan, follower of deregulate everything???? How is a man who chaired one of the most anti-free market institutions, the Federal Reserve, come close to advocating anything resembling a free market? And once again you assume far too much; I don’t wish for there to be no government or law. Read up on classical liberalism if you dare. It is those in government and the misinformed such as yourself who have foggy visions of history and facts. Greenspan is a main culprit in making the housing bubble grow as large as it did, he is trying to scapegoat the always scary “deregulation.”

    “Under the appalling and incompetent regime …”

    I despise Bush probably more than you do. Everything from his horrible foreign policy to his out of control spending sickens me. Inflation, the direct result of Federal Reserve policies, is the most vicious form of taxation and disproportionately hurts the poor and middle class. To claim that Bush has deregulated anything is to live in a fantasy land where Bush is some kind of free market fanatic. There has been no deregulation, only more regulation.

    Fannie and Freddie grew so large that they controlled 85% of the mortgage market. A government entity monopolizing almost an entire market is evidence of deregulation? Give me a break. There are of course countless other regulations and interventions in both the financial markets and the housing market that contributed to this. Some private businesses are also to blame for the crisis, a point I should have made. But only with the complicity of the government and huge moral hazards could their actions bring the whole house of cards crashing down.
    “The market surely will correct itself…”

    The ignorance displayed here is astounding. It really might not be worth trying to talk economics with you any longer.

    “But the exquisite jewel in the shining crown of your incoherent bilge? This: ‘The poor in America live better than the kings of just centuries ago.’ This is the single most repulsive…”

    Of course with that statement I made a generalization, don’t make a straw man out of it. There have always been the ultra-impoverished and unfortunately always will be. I bet that I come from a much poorer place than you do, I can empathize with the poor. The only thing that has lifted the destitute out of such horrible poverty is private property and free markets. 99% of humans used to live worse than the poorest in America. Cries of helping the poor coming from governments are almost always used to fill their own coffers and keep their people poor. The food we send to Africa is simply stolen by the governments and then sold.

    Mao Zedong tried to feed everyone by putting them on collective farms. He decreed that seeds grow happiest and best when they are planted very close together. This led to great famines that starved tens of millions to death and left parents cannibalizing children in order to eat. I am not making this up.

    I don’t like the economic system we have in place now, it steals from the poor and middle class to give to well connected friends of the government.

    “A fantastic industry of growth and advancement, indeed.”

    Compare 2008 to 1808. In just 200 years, the blink of an eye in history, mankind has advanced so far that it boggles the mind. This is thanks to the relatively free markets in place for much of that time and in spite of the heavy hand of government interference.

    “In summary, what you advocate is madness…”

    It is the politicians who ride around all day in gilded carriages shaking hands with the poor while picking their back pocket. It is the politicians who talk of spreading the wealth but then use their power to enrich themselves and a select few friends. It is the politicians who lie, manipulate, and wish to control the people. It is the politicians who think they are God’s gift to mankind and think they are above everyone else. Open your eyes.

  2. A. Nonymous says:

    Yes, you are correct. Allowing thousands of Americans to lose their jobs, watching a critical money earner to collapse and having retirees lose their pensions so that they can no longer afford fuel during the winter will improve the ecomony and lead us to the libertarian utopia you dream of.

    Scarce capital directed away from productive firms? Are you seriously advocating giving more money to already fabulously wealthy companies in favor of, say, allowing Ford pay its employees so that they can afford their rent over Christmas? Oh! That’s right! ‘Atlas Shrugged’ is your Bible! Expecting logic from an obvious objectivist was my mistake, apologies.

    I am glad that we have you to tell the ‘self-proclaimed’ geniuses how the economy works! Incidentally, please give me a source (not you) which proclaimed you captain expert of all things economy wise. You don’t hae one? That’s weird. If no-one else proclaimed that you are king intelligent of money, then who…you proclaimed it yourself? Er… well, I’m sure that as a college student you still have more smarts than those ‘economists’ who have only been working at keeping America prosperous for ‘decades’ and who actively ‘work’ (you know this word? It’s what you’ll have to do when daddy’s trust fund runs dry!) towards not letting the lower and middle classes ‘die on the street’.

    The comment about ‘seemingly endless’ goods on US-1 is so inane that I will not deign to give it further notice than this sentence.

    Alan Greenspan, devout follower of Randian ‘deregulate eerything, I am positive that no-one immoral could ever become rich and companies are always just and work for the betterment of mankind’ politics admitted himself that deregulation was a prime factor in the housing process. Wait, once more I have forgotten that your adoration for a world where government is gone and law is meaningless has clouded facts and history from your already foggy vision.

    Under the appalling and incompetent regime – sorry, administration – of the last eight years has seen spending go wildly out of control, amongst non-stop deregulation seeing the average American’s paycheck decrease against inflation from only 10 years ago, whilst the average CEO has seen his rise dramatically. Yes, deregulation definitely helps poor people.

    The market surely will correct itself. Just look at other countries with free-market economies, such as Somalia, a paradise and utopia of civil war and indiscriminant murder. Wait, no, sorry. I meant Sierra Leone, a nation bristling with the glory of the free market and abysmal poverty I would not wish upon my worst enemy. Wait, hold on, got that wrong too. I must be thinking of some other country with free-market economies that have worked out, such as… hm. Drawing a blank, fancy that.

    But the exquisite jewel in the shining crown of your incoherent bilge? This:

    “The poor in America live better than the kings of just centuries ago.”

    This is the single most repulsive, despicable, sickening, ignorant, vile and disgraceful thing I have had the great misfortune of reading all year. You, sir, obviously do not go outside much. Have you not seen homelessness? Have you ever lost your home to downsizing through your company’s ineptness, whilst the CEO grabs his golden parachute? Have you been to a Native American Reservtion and seen the crippling poverty which they must live with every day? Have you ever searched your pockets, and then your meagre jacket, and then your pockets again, desperate to find the extra 10 cents you need for bread?

    A fantastic industry of growth and advancement, indeed.

    In summary, what you advocate is madness, what you propose is a nightmare and what you wish for is lunacy. I Sincerely hope that you come to your senses, step out of your gilded carriage (though you might have to mingle with – gasp! – commoners!) and see the world around you. Good day, sir.

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