Myths about a Free Market

The ideas of Conservatives and free market advocates have been attributed with many wrongdoings over the years. The free market has been portrayed as the tool of the evil capitalist to enslave the poor. Ever since the Presidencies of Woodrow Wilson and FDR, America has been moving toward the idea that government is the only solution to social problems. This is the starting point of Progressivism in America.

Progressivism, Communism, Socialism, and Fascism are all a part of the same family tree of Collectivism. They all start with the fallacy that individual’s greed and ambition must be controlled by an elite class for the sake of the common man, which historically has never been the end result of Collectivist policy. This fallacy is spread through Democratic Socialists, and modern day Progressives, in some dangerous ways. It is very simple and easy to point to someone with a vast wealth, and say that they don’t need all that money. That money belongs to those who don’t have any themselves. All without even considering production or how many jobs the wealthy person provides for the economy. As moral as this argument may sound it is absolutely immoral when enforced by the government. The government gains power and control through spreading this agenda. Often with the unwitting consent of the hard working, middle class who are being robbed. In this I will explain why the free market is the only moral and maximally productive way to run an economy. I will argue a few of the most common myths that I myself struggled with about the free market system. If there are any that I have missed, then please leave a comment. This site is as much for our mutual education and dialogue as it is to support good policy.

We are told in America that Progressives care about the poor, and that it is Conservatives and free market advocates that just want to maintain their elitist hold on the country. It is said that their ideas are simple minded, and that they do not understand the plight of the impoverished. Every day I see both parties spout this propaganda. I would like to respond to any of you who hold these beliefs, or even have legitimate doubts that freedom is morally possible in America.

The free market system is accused of what Democrats commonly call, “the reverse robin hood plan”. The idea is that conservatives take from the poor and give to the rich. This simply is not the case. There has never been a time in America when the government has taken money that was taxed from the lowest income earners and given to the highest income earners. When Democrats speak of stealing money it is not theft they are speaking of, but tax credits. There needs to be a line drawn here. Tax credits and other tax breaks mean that an income earner pays less of their own money in taxes to the government. If a high-income earner pays less of their own money there is absolutely no theft involved, because there is no second party in the transaction. To call tax credits theft is to assume that the lowest income earners are morally owed the income of the highest income earners. This is a pretty greedy mindset for the party who is supposedly leading the fight against greed. It is absolutely immoral to take the production of another and claim it as your own. This is regardless of socioeconomic level, race, orientation, gender, or any other identity. So whatever the highest income earners do with their money, it does not belong to the lowest income earners. But what about those people who can’t feed their families? Why should they struggle while the ultra-wealthy prosper? This is a strongly sentimental argument that many cannot get past. I myself struggled with this as a Christian and during my time as a social worker. I continually met with families who struggled to feed their children, and keep a job. People without the education to know how to climb the economic ladder. It breaks my heart to see someone stuck just surviving. However, the government cannot force morality at the point of a gun (or fines) and call their action just. These circumstances do not change the fact that the income produced by one man does not belong to another for the simple fact that they are poorer, just as the poorer man’s income does not belong to the wealthier for his societal station or past financial achievements. Identity does not determine merit or value, production does. As a Christian I believe that God made us and our world through work. He gave us the world, and our two commands were to increase in number, and master the world. Production is a holy action. It is honoring the image of God in which we are made. If you are not a Christian, then in purely economic terms the value of a producer to society is far greater. Given that not all people are able to produce at the same level, and that there is natural inequality in the world, there is a need for altruism that covers short term needs. The only time long term altruism is just is in the case of mental or physical disability that makes production impossible. That may sound like the system we currently have in place, but it is far from it. With today’s technology, the population that truly cannot produce for themselves is vastly smaller than the population currently on government disability lists. These long-term needs can be met by the community. The role of the Federal government is to protect its people from foreign attack, uphold the Constitution of the United States as it was written, and ensure domestic peace. For these services the people send the Federal government taxes. The local and State governments provide a framework to ensure people can live generally safe and maximally productive lives if they make the right choices. I will go into greater detail of the limited roles of government in the next post.

This is where grace and a strong, local community is a necessity to caring for the poor. Data from the American Enterprise Institute shows that Conservatives actually give 30% more in charity donations than Progressives on average. This dispels that rumor that no one would give if the government did not mandate it. On the contrary, throughout American history when taxes have been raised charity donations go down. This takes power away from neighbors helping neighbors, and gives it to a bureaucrat who does not even know the community in need. Communities provide needed help to those who are living well, making good choices, working a job, and who have hit a hard time in life. The United States has approximately 330 million people living in it today. Of those 549,928 people were homeless in January 2016. However, of those homeless that month only 10% are chronically homeless according to Project HOME, and about 15% according to the National Alliance to End Homelessness. The temporarily homeless and the chronically homeless groups are treated as the same, because a large federal government can do no more than send a check to each. However, they are very different groups with extremely different needs. Local communities and State governments are the people with the power to identify individual needs and address them efficiently. Multiple studies have shown that a change of this kind would save cities millions of dollars per year.

The fact is many high-income earners started their lives in the bottom 20% of the income earning families according to the IRS. Giving the power to the people to provide for those who are in need their own community empowers people from both sides of the transaction. People who give gain a strengthened community, stronger economy, and a safer place to raise a family. People who receive gain the immediate help they need to survive the moment, while working their own way out of poverty. This is deeply empowering, and its impact lasts for generations. It will become quickly apparent that good choices and values along with working to produce are rewarded as opposed to what has been happening in our country with the welfare system since the Second World War.

The name for what has been happening is moral hazard. People understand that they will be supported by someone else no matter how they act. They can get a job or not. They can have children out of marriage, or dropout of high school. No matter what, they will keep receiving someone else’s money. There is one simple rule they have to follow: do not produce or earn too much. In 2013 welfare in 35 states paid more than a minimum wage job according to the Cato Institute. People are incentivized to stop working and simply collect a check. This keeps people in the lowest class of income earners, and teaches laziness. Similarly, this disempowerment can last for generations. This is the opposite of the American dream. The truth is Democrats want to lump people who are working 50-80+ hours per week, caring for their families, and living responsibly with those who are falling into a moral hazard. This is disgraceful to the families who work. Those families rise out of poverty, but are often put back down to pay for the looters who live off government checks without working. This happens daily, because the progressive tax system penalizes the middle class the most. The high income earners are often older and more established financially. The lower class pays little tax, but also produces little for the economy with little expenses. The middle class, which is the largest population in the United States, own the majority of small businesses being punished by over regulation, and are often in middle age still saving for a house, kids, and a future. These taxes to pay for the unemployed take away their opportunity to actually employ people, and can even send them back into poverty.

I need to take some space here to acknowledge that many of those on the Right have made this same generalization in reverse. They have claimed that all poor families who accept welfare are lazy and just looking to live off other people’s money. This is just as destructive a generalization, and it is just as disgusting. I hope that the next generation of Conservatives will let the Democrats be the party of generalities, and stick to the truth wherever it leads.

The free market is the best friend of the poor family who has big dreams. Limited government, strong community participation, and personal responsibility are rewarded. Another added layer of security for the poor is increasing local government and limiting Federal government. Local government can identify trends and real problems that a community can come to together to fix instead of a Federal government that simply hands out taxes dollars to anyone in an income bracket regardless of choice. To strengthen local government and communities, the Federal government must be limited.

That covers the moral argument for the free market. Now to the maximally productive economy. The real myth is that the economy can be planned by any single entity. No board, group, or government has enough collected knowledge of the economy to plan it at any one point. The only possible way to sustain progress in an economy is the free market. An economy runs on an amazing amount of interconnected knowledge at any one moment. No one person has even a fraction of a percent of the knowledge of what goes on in the economy any one day. Even a group of thousands of people cannot obtain the knowledge they would need to plan the economy in any day, let alone for a sustained period of time. This was put to the test in Soviet Russia where an elite class planned how much steel companies could produce, how much wheat to grow, and so on. What happened was an excessive amount of steel and steel products were lying in factories unused, and people were starving due to massive shortages of wheat. This is just one example of the mess that was made by their central planning. Since the government cannot predict the actions of individuals in an economy the answer is to control individual actions by getting rid of individual liberty. This happens slowly and overtime. For those who think my example of Soviet Russia is extreme or not relatable, Obamacare is the first step down this road of central planning. Obamacare has set forth a planned model for how individuals will pay for healthcare, and then forces citizens into that model no matter how unaffordable it is for them.

There is a solution to this wide disparity in knowledge. A free market that allows only the people involved in individual transactions to set prices with a local and State government setting laws as a framework to maintain healthy competition. Instead of an elite government employee making a decision for an entire economy without knowing the budget of individuals or the production costs of businesses, the individual store owner can know what to charge for their product on the open market based on what he or she can produce the product for, and what people are willing to pay above that cost of goods. Value traded for value. If the business owner decides to charge an exorbitant amount then, based on the economic principle of substitution, they will go out of business due to lack of sales. But what if people don’t know that lower prices exist? Won’t big companies run smaller businesses out of business? If a company is charging lower prices it is on them to make people of aware of those lower prices. It is also up to the individual consumer to research prices. In a free market economy, the consumer, not the government, has the power to make decisions. If people see that a company is not treating a particular group well, then they have all the power to bankrupt that company in a completely moral way. Instead of a system that pits your neighbor as your enemy, the free market makes your neighbor your helper to make a better world. Consumers cannot expect to be lazy and still be part of a fair market transaction. This being said, there does need to be some small forms of planning such as laws against corporate collusion, which takes the free out the market. Other examples include child labor laws, copyright laws, financial reporting laws that help to protect investors, and others. The point is that none of these laws need to be set by the Federal government. The States must be the ones to impose these laws. If Texas, in a worst-case scenario, abolishes all laws on business then soon businesses will all move out of Texas. They may enjoy the privilege at first, but after being ripped off a few times they will move to a state that protects them. Texas will be forced to provide some forms of protection to its citizens to maintain healthy competition. On the other side, if California mandates consumption of a product or quotas for production then businesses will move to a state that is free for them to do business in, and California will have to change its laws. These regulations are much different than price setting, mandatory consumption, or production quotas, because the first encourages competition while the second takes it away. All economic regulation should be made to encourage healthy competition.

If you have made it this far, then gold star. Really what I want to get across is that the economy is incredibly complicated, and I see so many hardworking people allowing government politicians to put them into moral slavery through simple 90 second sound bites about what they owe society. Let’s start with a free market that is protected by local legislation, and as community members take care of the needy in order to form a better society. These are some of the answers I have found to why the free market is the most moral and maximally productive means to run an economy. It does not matter how complex the industry, and in fact the more complex the industry the more the free market is absolutely necessary.

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