Sunday, September 12, 2010

How to Ruin a Free Market Society

Frequently I hear people question why I believe that capitalism and free markets are the answer to the woes of the US economy.  Their understanding of economics is as good as mine.  I am not an economic expert, but I am a small business owner and I have loads of experience with the ‘run by the seat of their pants’ governance and regulations that drive all business owners nuts.  Notice that I didn’t say small, medium or large business owners.  Because the constantly changing rules of the road are a large part of the problem that ‘all’ business owners deal with.

As business owners we endeavor, everyday to comply with the ‘rules of the road’ as laid our by our local, state and federal governments.  Each time we ‘think’ that we’ve managed to resituate ourselves into a successful model and be in compliance with the new regulations, taxes and fees; “BOOM”, they change them.  This is not the ‘free market’ working, this is government medaling into the private business models through the interjection of regulation for the purpose of economic, social planning.  The public is told that this new regulation will protect them from some evil of the private sector.  The reality is that in most cases the private citizen is not negatively impacted by the capitalist system, but by the immoral actions of political collusion with private industry.  What do I mean by that statement?  For profit private business (or possibly a non-profit private/public business) work in collusion together to create regulations to force their competitors to follow their model, fight the new rules and be fined or go out of business.  The parties working in collusion, typically sell their idea to the masses as; “For the collective good”.  But, the reality is that they are nudging society towards their idea of ‘the collective good’.

This behavior is the antithesis of ‘free markets’.  Friedrich Hayek showed the great minds of socialism, back in the mid 1900’s, that unless competition is fostered and encouraged in economics,it  will always lead to ‘large centralization and control’ of markets and thus , lead the people to tyranny.

True free market principles of ‘creative/destruction’ have not been followed for decades.  People, naturally, do not want to see failure for themselves or others.  What they fail to remember is, that by not allowing the act of destruction to happen, they deter the act of creation to occur.  The end result of this is a failure to grow and improve ourselves and our surroundings.  It is through the confluence of government and private business, that free markets are hampered and eventually choked off.  The natural cycle is for people to see a problem and to find a solution to that through creative thought, trial and error, with the eventual result in finding the best practices to produce as a result.

The more we resist the warm and fuzzy emotions of ‘for the collective good’, keep politics and business separate of each other, reduce regulatory restrictions on the rights of private citizens to work and produce, the more we will foster and preserve the ‘free markets’ that produced the strongest nation in history.  If we are looking for perfection or nirvana, we shall come much closer to this ideal through the free markets than progressive socialism could even dream of.

Yours In Truth  ;-)  Shelly

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