Published: April 07, 2008 09:48 pm            

Tar Heel Dispatch: Free markets, free people

Everyone thinks free markets are complicated, unstable and unfair. With the chaotic housing market and bank closings across the country, seems like everyone expects the government to do something to fix the economy. Many say we have to regulate the free market so it does not take advantage of the least well-off in society. However, the free market is the natural expression of individuals' voluntary economic decisions. The only legitimate role for the government to play is insuring that life, liberty and property are protected. Beyond this, society's do-gooders and well-intentioned politicians meddle in affairs they have no right or stake in.

Exchanges in the free market are voluntary and mutually beneficial. When you buy a cup of coffee in the morning, many times you run into what columnist John Stossel has termed the "awkward double-thank you moment." The girl behind the counter hands you the cup and you pay. She says, "Thank you." You reply, "Thank you." The exchange benefits you both; therefore you each thank the other for cooperating in the exchange. You are both better off than before. No one was exploited. In a free market, exploitation is impossible since all transactions are voluntary.

Ah, but everyone knows big business colludes to gang up on the consumers, right? Not really. We forget that there is no such thing as a conglomerate "big business" out there. Each individual business seeks distinct and competing interests. Even oil companies, which are routinely demonized in the popular culture, press and academia, have no singular collective interest. Oil companies have incentives to compete with each other for market share. They take enormous financial risk and by seeking a profit they end up doing the world a great service in providing us with energy.

Still, intuitively we find something unnerving about allowing motivations of profit, some of which might be genuine greed, to determine people's economic livelihoods. It just seems instinctively wrong. Doesn't the government have a responsibility to step in and regulate the free market? Let's flip the question. Doesn't the government have a responsibility not to interfere in the free market?

The free market is the only morally justifiable economic system because it is the only system which does not rely on government coercion. The classical liberal philosopher, John Locke, put it best when he proposed that a man owns himself, and by extension, the fruits of his labor. Modern libertarian philosopher Robert Nozick has built upon this premise, positing any time the government interferes with the free market, it violates our individual rights.

The free market simply produces better results than any other system. It produces the goods and products we need, distributes the most wealth to the most people, and at the same time leaves our liberty intact. Former British Prime Minister Winston Churchill has been quoted as saying, "The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."

Well-intentioned measures interfering with the free market, such as minimum wage laws or rent controls actually hurt the poor. When the minimum wage is increased by law, businesses must pay more to their existing workers. If the business does not have enough money to pay for the artificial increase, workers must be fired. For the same reason, the unemployed who are seeking work suffer a major setback when the minimum wage is increased because this makes it even more difficult for them to find a job.

Rent controls suffer similar defects. Sure we want landlords to offer poor people affordable housing, but when rates are kept artificially low demand for housing far exceeds the supply creating a housing shortage. Also, landlords find other ways to make back the lost revenue by cutting corners on quality and safety. No matter where one cares to look, interference in the free market is usually futile and many times backfires.

Still we worry about who will take care of the poor. The answer is private charity. In 2003 private corporations and individuals contributed $241 billion to charity. This is higher than the amount spent by all 50 states combined, a total of $121 billion. Private charity can help a greater number of people more efficiently than any one-size-fits-all government program. Unlike government programs, private charities fighting poverty on the frontlines know who really needs help, and who needs a kick in the pants to get them motivated to provide for themselves.

The free market trusts individuals to make their own economic decisions. It ensures individual autonomy and freedom. It establishes the principle of property rights. It represents human liberty in its highest form. We should not try to fix some imaginary deficiencies in the free market. We could not attempt to manage or direct the voluntary exchanges of free individuals any more than we could try to hold back the wind. Humans will always seek liberty and the free market is the expression of that freedom.



Tar Heel Dispatch is written by Tyler Younts, a senior at the University of North Carolina at Chapel Hill. Younts, who grew up in Farmer, has a passion for writing and for politics and for writing about politics. E-mail comments to news@randolphguide.com or directly to Younts at younts@email.unc.edu

        

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