As I’ve been studying economics lately, I’ve learned that the simple laws of supply and demand which are true in every economic system, whether totalitarian or anarchist, capitalist or socialist, dictate many of the consequences in the economic system. In short, the free market always “corrects itself,” as it is doing now. Home prices have, for the past five years, gone sky high because loans were easy to get thanks to “compassionate government” essentially forcing banks to make loans a truly free market would have prohibited. The cost of living has gone up no thanks to spending increases by the government, and the printing of money which is in effect a hidden tax that slowly and invisibly burdens the people.
Over the Bush Administration’s tenure, both the President and Congress have proposed and authorized legislation that has metaphorically dunked the government’s hand in the pond of the free market, and since they induced ripples that weren’t necessary, there’s now a wave of troubles coming to shore. What boggles my mind is that politicians generally opposed to free markets are now blaming those very policies that made the waves in the pond on the pond itself. Even if we allow that rhetoric to be true (“The free market is what makes this happen”), it’s very much akin to saying that getting a fever is an indicator that our body is failing. I’m not a doctor, but last I checked a fever was a natural correction in something going awry in our bodies, a built-in mechanism to keep things normalized. But the argument that the free market is the fault of our current economic crisis is simply unfounded and misleading. What is defined as “the free market” by its opposers is none other than a market influenced by politicians who use free market rhetoric, but nonetheless go through with policies that help them and their constituents. In other words, it’s the facade of a free market, but it really wasn’t one in reality.
Ron Paul recently answered some questions on the New York Times’ Freakonomics blog about his candidacy for President, his thoughts on the economy, and what his plans are for the Congress. I highly recommend reading it, but to highlight a point made here, he was asked: “How do you propose we restore people’s faith in free-market ideas?”
His answer:
Well, we need to start by making sure politicians who talk about free markets practice what they preach. One of the reasons why people may have lost faith in freedom is that leaders used limited-government rhetoric while expanding the size and scope of government. Free markets got a black eye even though the actual policy was intervention and central planning. So again, leaders who profess to support markets need to act like that once in power. If we do that, we’ll prove that freedom really does work.
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