Sunday, August 16, 2009

America's Unfree Markets by Yaron Brooks and Don Watkins

Since day one of the financial crisis, we have been told that the free market has failed. But this is a myth. Regardless of what one thinks were the actual causes of the crisis, the free market could not have been the source because, whatever you wish to call America’s economy post World War I, you cannot call it a free market. America today is a mixed economy -- a market that retains some elements of freedom, but which is subject to pervasive and entrenched government control.

The actual meaning of “free market” is: the economic system of laissez-faire capitalism. Under capitalism, the government’s sole purpose is to protect the individual’s rights to life, liberty, property, and the pursuit of happiness from violation by force or fraud. This means a government is limited to three basic functions: the military, the police, and the court system. In a truly free market, there is no income tax, no alphabet agencies regulating every aspect of the economy, no handouts or business subsidies, no Federal Reserve. The government plays no more role in the economic lives of its citizens than it does in their sex lives.

Thus a free market is a market totally free from the initiation of physical force. Under such a system, individuals are free to exercise and act on their own judgment. They are free to produce and trade as they see fit. They are fully free from interference, regulation, or control by the government.

Historically, a fully free market has not yet existed. But it was America’s unsurpassed economic freedom that enabled her, in the period between the Civil War and World War I, to become an economic juggernaut, and the symbol of freedom and prosperity.

That freedom has largely been curtailed. But one sector that remains relatively free is America’s high-tech industry. Throughout the late 20th century, the computer industry had no significant barriers to entry, no licensing requirements, no government-mandated certification tests. Individuals were left free for the most part to think, produce, innovate and take risks: if they succeeded, they reaped the rewards; if they failed, they could not run to Washington for help.
The results speak for themselves.

Between 1981 and 1985, about 6 million personal computers were sold worldwide. During the first half of this decade, that number climbed to 855 million. Meanwhile, the quality of computers surged as prices plummeted. For instance, the cost per megabyte for a personal computer during the early 1980s was generally between $100 and $200; today it’s less than a cent.

That is what a free economy would look like: unbridled choice in production and trade with innovation and prosperity as the result.

But this is hardly what the economy looks like today.

The latest Federal budget was $3.6 trillion dollars, up from less than $1 billion a century ago. Taxes eat up nearly half of the average American’s income. A mammoth welfare state doles out favors to individuals and to businesses. Hundreds of thousands of regulations direct virtually every aspect of our lives. The Federal Reserve holds virtually unlimited control over the U.S. monetary and banking systems.

All of this represents the injection of government force into the market..(continue reading at The Ayn Rand Center For Individual Rights)

1 comment:

Autumn Cote said...

Would it be OK if I cross-posted this article to There is no fee; I’m simply trying to add more content diversity for our community and I enjoyed reading your work. I’ll be sure to give you complete credit as the author. If “OK” please let me know vian email.