Free Markets... Unencumbered?

In the past, we addressed in one form or another, the topic of free markets. The positive response from our readers showed a keen and timely interest in the subject. It would be helpful, in any further consideration of the subject, to refine and define several key terms. The word "free" is a treasured word in the English language and a treasured concept throughout the world. And the application of its definition is particularly appropriate here.

Everyone benefits from free markets. But the degree of benefit is related to the degree of freedom in which free markets are permitted to operate. There is an old Jewish concept called 'midah k'neged midah' -- literally, 'measure for measure,' and this concept applies here. The measure of quality of free markets is related to the measure of freedom from encumbrances. "Free" refers to freedom of choice, not freedom from cost or responsibility. "Free" refers to freedom from regulation and restriction, other than those laws necessary to protect individuals from force or fraud. The free market implies the willful exchange of goods or services, either directly or through the intermediate utilization of a stable measure of valued consideration.

The heath of free markets is tied to a number of factors, one of which is in the definition of "rights" a case in point, "entitlements." We hear of "rights" not only of life, liberty, and the pursuit of happiness, but of a host of other things, such as the right of employment, of a certain level of income, the right of freedom of economic insecurity, of health care, and the like. If we consider the original rights expressed in the Declaration of Independence and enumerated in the U. S. Constitution, it should be clear that there are massive differences between those rights and the newer ones we hear about today. The original rights were rights to live by one's personal effort without interference of others. The Declaration of Independence speaks of the right to pursue happiness; it does not offer a guarantee of it. Truly, this makes all the difference; for in a free society with free markets there can be no guarantee that effort will meet with success. In a free society with unimpeded free markets, no one can go back and make a new beginning, but everyone can start here and make a brand new end. It is up to the individual. Socrates said, " The way to gain a reputation is to endeavor to be what you desire to appear."

Our country's economy was originally based upon a free market system, which prospered in direct proportion to the extent of adherence to the principles involved. From the beginning, there were those who realized the distinct advantages to the people. The principle of market exchange and pricing is that it tends to bring supply and demand toward a balance.

"Perfect competition is the most equitable distributor of resources, not government" as stated by one of our columnist (M. Andrew Burr) in a recent presentation. When there is unnecessary intervention of government into the process, the free market is deprived of the pricing mechanism indispensable to its success. It is the ultimate irony for those responsible for any dilemma that they justify further intervention by claiming that the free market does not work, when in reality it is unnecessary government intervention which created and intensifies the problem in the first place. Inflation illustrates clearly how government creates problems. Inflation is purely the expansion of the money supply. By printing virtually valued-down paper dollars to pay for deficit spending, previously circulating money is diluted and devalued. Rising prices, rising wages, and the rising cost of living are NOT the cause of inflation; they are its results. And appeals to "fight inflation" by voluntary or even mandatory restraints constitute a camouflage of the primary cause in the first place.

Often we have seen, in order to obtain public favor during an election, there are those public officials who will bring innumerable programs in place, thus causing an involuntary transfer of capitol, clearly impacting free markets. It is an effective political practice to appeal to the electorate with the messages of "soak the rich" as an approach. Almost every additional government regulation created in the past recent years can be shown to offer an advantage to some individuals or group, at the expense of competitors and the general public. Subsidies, bailouts, wage and price controls, minimum wages, "free" services, and "out of control " entitlements further disrupt and even destroy what is left of our free markets.

A government that sees itself as in the business of fulfilling endless entitlements will soon finds itself under pressure to grant more and more with less and less. And the vicious cycle continues with burgeoning bureaucracies, declining opportunities and declining prosperity. And the health, vibrancy and underpinnings for solid growth of the free market economy will have suffered another potentially disabling stroke. Ronald Reagan said " Government has an important role in helping a country's economic foundation. But the critical test is whether government is genuinely working to liberate individuals by creating incentives to work, save, invest, and succeed."

The strength of our economy is tied into our definition of free markets. A number of decisions must be make, one of which is define the distinction between what are "rights" and what are "entitlements." Then and only then will we begin to restore the purpose of government as protector of the former, and not guarantor of the latter. That is how we see it FROM OUR PERSPECTIVE.