The Free Market

If we had the medical system that a number of politicians and newspaper editorial writers in this country have been demanding, I very likely could have died.

People are right to feel excluded, ignored, and otherwise ill-served by the political system. And yet what do the two parties do about this?

Last year, the governor of Alabama proposed and then overwhelmingly lost a bitter referendum to increase taxes and boost revenue. Voters rightly saw the campaign as a slick attempt to expand the public sector’s power, prestige, and wealth transfers by increasing the degree of legal plunder in Alabama’s tax system.

Mises was right that unions have always been a primary source of anti-capitalistic propaganda. But since he wrote Human Action, American unions have also been at the forefront of lobbying efforts on behalf of the regulation and taxation of business—of capital—that has severely hampered the market economy, making everyone, including unionists, worse off economically.

A recent article in the Wall Street Journal is a perfect example of how bad economic arguments in support of good ends can be easily twisted and used to confuse the general public.

Colleges offer their students a taste of reality by simulating the political atmosphere of society with the presence of student government associations (SGAs). The election process succeeds in mimicking many aspects of real political campaigns: the cutthroat environment of campaign promises combined with the relentless schmoozing of constituencies, and mindless pride.

Today we demand that the price of computers and bandwidth fall month by month but we oddly expect the prices of many other goods to constantly rise (houses, education, health care, taxes). And so we adjust our expectations accordingly. It takes some imagination to see how the system would work if we were guaranteed our right to deflation.

With the recent rate hike, the mainstream press obediently parrots the macroeconomic analysis offered by our friendly central planners at the Federal Reserve. The average citizen knows that he or she is not nearly smart enough to understand the complex interrelationships of various price indices, yield curves, consumer confidence, and so forth—that’s Greenspan’s job.

Critics level two charges against capitalism: First, they say, that the possession of a motor car, a television set, and a refrigera­tor does not make a man happy. Secondly, they add that there are still people who own none of these gadg­ets. Both propositions are correct, but they do not cast blame upon the capitalistic system of social cooperation.

My impression is that we are now working with the most educated and most exposed generation ever. Rather than going through grade school and high school with only appointed texts, the students have the opportunity to seek out other points of view.

Booming home prices and record low interest rates are allowing homeowners to refinance their mortgages, "extract equity" to increase their spending, and lower their monthly payment! As one loan officer explained to me: "It’s almost too good to be true."

In recent years an increasing number of economists have understandably become disillusioned by the inflationary record of fiat currencies. They have therefore concluded that leaving the government and its central bank power to fine tune the money supply, but abjuring them to use that power wisely in accordance with various rules, is simply leaving the fox in charge of the proverbial henhouse.

The Ludwig von Mises Institute has published a new edition of Murray N. Rothbard’s Man, Economy, and State, and united this great treatise with Power and Market, which was originally written as the final section of the book but was published only eight years later.

With the ousting of head man Saddam Hussein, the production of security completely collapsed. While I saw burgeoning businesses in fence building, satellite dish installations, used car sales, and agriculture in southern Iraq, the production of security floundered.

Blaming free trade for the present predicament of so many workers is misplaced. But who should be blamed?

Popular contempt for the market is distressing. Few institutions are so universally reviled, and perhaps fewer institutions are so universally misunderstood.

In the game Monopoly, owners of land and houses and hotels, through acquiring their possessions by luck, are flattered into believing they are masters of the universe, extracting profits from anyone who passes their way. There is no consumer choice and no consumer sovereignty. This is not a small detail.

Given the reality that markets are self-regulating, how did the US economy (not to mention economies of other nations) become a morass of hundreds of thousands of state, local, and federal regulations that govern things to the minutest detail? Furthermore, why have we not seen a revolt of business owners and consumers alike, who ultimately pay the price for the modern regulatory state? The answer is both simple— and complex.

That some factors of production are mobile, says the new protectionist, "proves" that free trade is not as attractive as (supposedly) David Ricardo argued. But factor mobility is not new. It has long been accepted by economists that either goods or people (and other factors of production) move.

It often happens that an ideological movement will make great strides through education and organization and cultural influence, only to take the fateful step of believing that politics is the next rung on the ladder to success.

It is particularly important that believers in liberty not take this course.