Progressive Econ 101: Free Markets

Free markets are the goal of many.  ”Let the Free Market decide” is a rallying cry to bring the troops to the email and phones.  But, what is a Free Market?

The simplest explanation is a free market is a  market where the individuals are free to exchange goods and money without the interference of government, which means regulation or taxes.  At each step of creating and selling goods in a free market, the argument goes, money is voluntarily given for goods, services,  labor and other resources.  The price and terms of the exchange are decided only between the people involved in the exchange.  

This free and open voluntary exchange without any oversight or interference is Nirvana for many.  The Liberty Fund describes the free market as such “The peaceful market competition of producers and suppliers is a profoundly cooperative process in which everyone benefits and where everyone’s living standard flourishes (compared to what it would be in an unfree society.)

Now we have theory, let’s find examples of how this works:

Octomom and her doctor:  Nadya Suleman was free to contract with Dr. Michael Kamrava at the West Coast IVF Clinic to fertilize and implant as many embryos as Nadya wanted.  There’s no government oversight of how many embryos can be fertilized or implanted, so this is a good example of the free market in action.  The peaceful free market cooperated to benefit everyone and raise everyone’s standard of living? 

Okay, just because there’s one bad example doesn’t mean we still can’t find Nirvana, let’s look somewhere else:  mortgages.

Each homeowner was free to contract with any mortgage lender to craft their deal.  (Most people think there are loans which cannot be made because the interest rates and fees are too high, but this is not the case. Loans with very high interest rates and fees can be made, the borrower just has to sign more papers and have a cooling off period.)  The mortgage market was a very unregulated market, very free of government interference. There was peaceful cooperation between lenders and borrowers and Wall Street which led to a society where everyone’s standard of living flourished…..

 

Okay, let me do some research on this and I’ll get right back to you on it!  ; )