Return to Free Markets

cropped-bob-shapiro.jpg   By Bob Shapiro

The workings of the Free Market hasn’t been taught in our schools for generations. That being the case, many (most?) Americans lack the background to understand just what the Free Market is capable of achieving – or even understanding that what the US Economy is, is not a Free Market Economy in the true sense.

Lip service is paid, with various socialist economists saying such foolish things as, “We have a mixed economy – a partnership between the private and the public sector.” But in reality, when one partner has the ability to control the activity of the other, then it’s not really a partnership – it’s a command economy.

'Sure it's a partnership, Elwood, but it's a limited partnership, and you're the one who's limited.'

One problem for most Americans may be summed up in a statement I’ve heard several times: “If the government didn’t do such and such, it just wouldn’t get done. Nobody else has the strength of purpose and the resources to do that function.”

So, let’s imagine for a moment that all the computer gear in the United States – all the CPUs, the screens, the routers and modems – everything, was made by a single manufacturer, and that organization was owned and run by the US government. Prices might be the same as today, with the higher costs being subsidized by taxpayers. I expect that the wide variety of choices simply would never have been created, and the technology would advance little or not at all.

If some “nutcase” were to suggest privatizing this business, he would be laughed off the stage. “It’s too complex for private companies to do.” “There would be duplication of effort on a massive scale.” “Nobody could afford the capital investment.” “Prices would skyrocket since taxpayer subsidies also would end.” “The profit motive will hurt consumers as greedy owners will put out stripped down products at exorbitant prices.”

Greedy Businessman

Does all that sound familiar?

As we know with the benefit of what actually has happened in the computer industry, it not only is possible – is has offered amazing innovation at a breakneck speed. Not every company has survived, which is another way of saying that the best have survived.

Could there be improvements? Of course. They’re happening all the time. If today’s leader doesn’t make those improvements, then it won’t be tomorrow’s leader.

Is innovation in the product or service, in the cost to provide it, and in developing alternatives, something which exists today only in the computer business? I suggest that this is exactly what the Free Market does if the government – the senior partner – will just step out of the way.

I’ve posted on getting rid of the US Department of Education recently. But how about just privatizing education completely? Could the Free Market do better than a couple of generations worth of a stagnant or falling level of educational achievement – and that poor performance at five times the real cost of a couple of generations ago?

Greedy managers won’t care about the kids.” “They’ll provide one size fits all education.” “They won’t cater to the disadvantaged, the gifted, or the challenged students.”

Free Markets

These are the same fallacious arguments, using somewhat different words, that we heard when we looked at the computer industry. However, on closer inspection, we see that these arguments apply more to today’s dysfunctional education system than to the dynamic – if seemingly chaotic – choices which a Free Market would provide at lower cost.

I chose to look at privatizing education because this is where the workings of Free Markets – of Free Enterprise – are being hidden from our children.

Without an appreciation of the economic system which has provided the riches we now enjoy – riches which our leaders are squandering – the US will just continue down the road to being just another socialist, third world country.