Free Markets

The citizens of the US are not made richer by raising taxes or other barriers to foreign consumption goods, writes Robert Murphy, and this is true whether factors of production are immobile (as Ricardo assumed) or mobile. We should not fear the cost-cutting advancements in data transmission, or the improved skills and education of foreign workers. On the contrary, we should welcome these developments because they mean lower prices for imported goods and services, and hence a higher standard of living for Americans.

The case for free trade is based on David Ricardo’s principle of comparative advantage. Ricardo addressed the question how trade could take place between country A and country B (England and Portugal in his example) if country B was more efficient in the production of tradable goods (cloth and wine in his example) than A.

The Economist magazine asked in a recent issue: "Why on earth can’t the world’s richest country ensure that Baghdad has water and electricity?" One might think that a publication dedicated to covering the world of markets would already know the answer. The US government is trying to solve economic problems in Iraq, including the provision of essentials like utilities, through military means. If guns and force could provide the essentials of life, the Soviet Union would have been a utopia.

It is not a short step from poverty to prosperity, and the transition itself has long been exploited by opponents of the market economy.

A growing recognition of the superiority of markets over planning has created an unviable hybrid: the planned market, one created not by property owners by the state and for the state.

The fundamental issue in banking and monetary policy, writes Guido Hülsmann, is whether government can improve the monetary institutions of the unhampered market. All government intervention in this field boils down to schemes that increase the quantity of money beyond what it otherwise would be. Such schemes confer no social benefit but rather only serve redistributive purposes.

Wilfred Beckerman is an outstanding economist of a type probably more common in Britain than America. Like Anthony de Jasay, Amartya Sen, and I.M.D. Little, Beckerman is thoroughly at home in philosophy;

Complete privatization will not lead to ideal results, but it will unravel most of the anticompetitive practices that exist in the cable industry. The lesson that we should draw from the results of the Telecommunications Act of 1996 is that efforts to partially privatize the industry are likely to retain those elements of regulations that benefit concentrated interests in business most.