The Free Market

As I see it now, there are really two economies—two distinct systems of producing and exchanging wealth. Or rather, two systems that purport to do these things, though only one of them really produces anything, and the other is organized by a peculiar form of exchange.

The first is what is called the trade economy—the one summed up in the phrase "the free market." The other might be called "the tax economy."

Project Head Start is supposed to be the exception to the Great Society rule—a welfare program that actually works.

Has it occurred to many citizens that, for the few blessed days of federal shutdown, the world does not come to an end? That the stars remain in their courses, and everyone goes about their daily life as before?

Amidst the near-universal hoopla for President Bush's massive intervention into the Arabian Peninsula, a few sober observers have pointed out the curious lack of clarity in Mr. Bush's strategic objective: is it to defend Saudi Arabia (and is that kingdom really under attack?); to kick Iraq out of Kuwait; to restore what Bush has oddly referred to as the "legitimate government" of Kuwait (made "legitimate" by what process?); to dispose and/or murder Saddam Hussein (and to replace him with whom or what?); or to carpet-bomb Iraq back to the Stone Age?

Sometimes it seems that our entire apparatus of economic education: countless courses, students, professors, textbooks, backed up—in the case of oil pricing—by a decade of experience in the 1970s, is a gigantic waste of time. Certainly it seems that way when we ponder the near-universal reaction to the Kuwait crisis.

The "partnership of government and business" is a new term for an old, old condition. We often fail to realize that the point of much of Big Government is precisely to set up such "partnerships," for the benefit of both government and business, or rather, of certain business firms and groups that happen to be in political favor.

Government control takes freedom of choice away from the public and puts it in the hands of bureaucrats responsive only to their own interests and those of the state, instead of the buying public. Private enterprise in medical care means patient sovereignty. The Soviets ignored this principle, and the public is now paying for it with their health and lives.

He had been widely touted by the American media as the savior of Peru from hyperinflation and from the dangers posed by the current socialistic Garcia regime as well as the fanatical Maoist-type guerrillas who call themselves "The Shining Path." Mario Vargas Llosa, tall, aristocratic, eminent avant-garde novelist and ex-leftist, was running for president of Peru.

Riots in the streets; protest against a hated government; cops arresting protesters. A familiar story these days. But suddenly we find that the protests are directed, not against a hated Communist tyranny in Eastern Europe, but against Mrs. Thatcher's regime in Britain, a supposed paragon of liberty and the free market.

The sudden collapse of Communism in Eastern Europe has amazed and elated the West. But what does it mean? If Communism has lost, what has won?

Senator Daniel P. Moynihan (D-NY) has performed a signal service for all Americans by calling into question, for the first time since the early 1980s, the soundness of the nation's beloved Social Security System.

It is generally agreed, both inside and outside Eastern Europe, that the only cure for their intensifying and grinding poverty is to abandon socialism and central planning, and to adopt private property rights and a free-market economy. But a critical problem is that Western conventional wisdom counsels going slowly, "phasing-in" freedom, rather than taking the always-reviled path of radical and comprehensive social change.

The banking dilemma seems eternal, like the monetary dilemma, the tax dilemma, and the marital dilemma. The essence of the banking dilemma, however, is that the depositors' money is not in the vault awaiting the depositors' decision to withdraw it. Instead it is out on loan or invested in the money market or in mortgage-backed securities.

The pace of change in the Soviet Union and Eastern Europe is so brisk that it is risky to write anything about it. Nevertheless, the virtual dismantling of the Berlin Wall and the beginning of liberalization in East Germany are exhilarating news, the climax of months of historic developments.

Why must taxpayers A and B be forced to pay for natural disasters that strike C? Why can't C—and his private insurance carriers—foot the bill?

American agricultural policy offers many instructive lessons on how to cripple a major sector of the economy. For 60 years, the U.S. government has waged a war against the market. And for 60 years, American taxpayers and consumers have been the biggest losers. 

The belief in over-population is an ancient one. The leaders of the French Revolution were convinced that there were too many Frenchmen, and that an ideal France necessitated the elimination of many people. The myth of over-population did not originate with them. It is an ancient belief of statist man

Government cannot be trusted to pick and choose acceptable art, and that's merely one more reason to junk the two endowments. It's time Congress i and the administration promoted unlimited free expression by abolishing federal handouts to those doing the expressing.

History usually proceeds at a glacial pace, so glacial that often no institutional or political changes seem to be occurring at all. And then, wham! a piling up of a large number of other minor grievances and tensions reaches a certain point, and there is an explosion of radical social change. Changes begin to occur at so rapid a pace that old markets quickly dissolve. Social and political life shifts with blinding speed from stagnation to escalation and volatility. This is what it must have been like living through the French Revolution.

When Ronald Reagan was elected to the presidency in 1980, many conservatives (myself among them) were euphoric. They expected a wholesale reform in American government; there was even talk of a "Reagan Revolution." 

When Reagan left office eight years later, it looked as if the liberals had been right.