21 September 2008

what is a free market?

i am always baffled by the willful ignorance some people have of history. gubmint has always sought to control the flow of capital in deference to one or more special interest, and this mortgage mess is no exception. while skepticism of a pro-business utopia full of happy high-fructose-corn-syrup-swilling children should be applauded, coming down in blind favor of 'more regulation' is equally ignorant.

many have used the US health care system as a poster child of the wrongness of free markets. i'm not sure in what sense that claim is made, since it is given as a simple Truth without any backing facts. what is never really addressed in all the webs-wide diatribes are price controls. under a universal coverage scheme, there would still be limits placed on health care, perhaps different from the ones we have today, especially limited access to procedures such as those being seen in the UK. the only difference would be who gets shafted. the flaw is in the semantic packaging of health care as "insurance" when it is actually a group payment plan. by removing the consumer from the cost of the service, we are distorting consumption decisions. prices are free to rise, unchecked by the people who should care the most.

in a free market, prices are free to fluctuate as necessary, without any artificial ceilings or floors imposed by external forces, especially central planners. if pollution has a cost, why is it not reflected in the price of the polluting fuel? granted, there are great arguments to be had on how to determine and apportion these costs, but the fundamental problem remains: once a price becomes mired in political influence, decision-making necessarily becomes distorted. the same politicians who spout pro-alternative energy rhetoric are the same people that demand lower oil prices, necessarily driving people to ignore their consumption habits.

i would argue that the gubmint's role in a market is to provide non-proscriptive regulations that promote transparency and seek to prevent fraud, even including watchdog groups in the fray (since they aren't as susceptible to political influence pedling). i would consider this approach to be a breech of the levy that is the regulatory monopoly gubmint holds over the market.

i invite folks to give up on the Government Control Fairy that is the true cause of all of our current woes. free markets are not good or evil, but the embodiment of voluntary, non-coercive exchange of property between participants. gubmint does have a role in protecting people in this environment, but should recuse itself from presuming to know how to implement these exchanges.

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