Free Markets - making friends with neighbors
Free markets are equivalent to neighbors trading vegetables for fruit at a garden gate.
An insightful quote from perhaps the greatest economist of the last century:
"The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another." - Milton Friedman
And an eloquent summation by an earlier great economist.
"When goods do not cross borders, soldiers will." - C. F. BastiatGovernments do not create free markets.
Trade agreements, financial interventions, national trade agencies, regulations, and tinkering with money supply and interest rates by central banks destroy free markets. Every government program interferes with and adds injustice to what we humans would do naturally. Too big corporations, institutions, and monopolies are enabled by these and other government actions.
"In a free society the state does not administer the affairs of men. It administers justice among men who conduct their own affairs." - Walter Lippmann
Free markets are like free people; they are adaptable and self-correcting.
We are born willing to share; as long as the benefit we receive is greater in our personal perception than a benefit offered. Free trade is two individuals each benefiting themselves, based on their unique value systems; money, knowledge, self worth, safety, and all other values can be enhanced within a direct trade. In a free market, an exchange will not occur unless we see greater value for ourselves.
Both parties in an unregulated trade profit. That is how free markets create wealth rather than transfer and diminish wealth.
It is naught, it is naught, saith the buyer: but when he is gone his way, then he boasteth. - Proverbs 20:12 - The Bible
There is one constant. When economies fail, governments that destroyed open trade will blame free markets and their former ersatz laissez-faire policies. They will then demand even more power for themselves.
Contents at a Glance
- Tariffs, subsidies, and trade restrictions help the politically connected few and hurt everyone else.
- "It is dangerous to be right when the government is wrong." - Voltaire
- Let's Race - But In Which Direction?
Tariffs, subsidies, and trade restrictions help the politically connected few and hurt everyone else.
"A government which robs Peter to pay Paul can always depend on the support of Paul." - George Bernard Shaw
With Tariff protections a native shoe industry can produce poor quality shoes, raise the price 80%, and still be competitive. The local manufacturers have no incentive to invest in a better product, and outside producers will improve processes while the locals do nothing but profit - for a while.
Everyone that wears shoes suffers higher prices and lower quality. With no incentive to improve the native shoe makers fall behind in world markets. Eventually they are so far behind that their government is forced to drop the tariffs - and the native shoe industry dies.
Short term politically based gains were stolen from the many for the benefit of a few. In the long term the few will also be sacrificed.
"There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen." - Bastiat
A basic economic rule: every government action will eventually bring the opposite of the desired effect. It is only by inaction, by refusing to interfere with voluntary exchange, that governments can promote justice and prosperity.
Another benefit of free markets and cooperative self interest can be demonstrated with shoes. Even as the Soviet Union made poor quality shoes for its citizens its bureaucrats would not admit the errors or seek outside suppliers. Free markets in contrast provide wide ranges of quality and price as individuals compete according to their personal insights of business processes.
Some capitalist shoe makers will be wrong and go out of business - but all consumers will benefit from their overly-competitive pricing and high quality before they depart. Others will take their place and continue to keep overall quality high and prices low by constantly introducing new technologies.
Market driven improvements remain undiscovered by central planners; controlled markets always favor the well connected few and hurt everyone else. Central planning can't even produce a simple pencil, only natural enterprise has that power.
Oh, and government keeps the tariff money as another form of hidden taxes.
"Often the masses are plundered and do not know it." - Bastiat
On The Wealth of Nations (Books That Changed the World)
"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes and a tolerable administration of justice.." - Adam Smith
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The Church and the Market: A Catholic Defense of the Free Economy (Studies in Ethics and Economics)
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"It is dangerous to be right when the government is wrong." - Voltaire
"A nation of sheep will beget a government of wolves." - Edward R. Murrow
Bureaucracies that sprang to life from the fertile soil of economies of scale are doomed. We are leaving behind the bureaucratic one size fits most society and entering an individualistic self-tailored society.
Technology is empowering individuals to run their own lives.
Do not expect bureaucracies and governments to shrink and die gracefully. They will do anything to retain every bit of power they have. That includes taking you down with them.
"Government is not reason; it is not eloquence; it is force. Like fire, it is a dangerous servant and a fearful master." - George Washington
"Political power grows out of the barrel of a gun." - Mao Zedong
"A little government and a little luck are necessary in life, but only a fool trusts either of them." - P. J. O'Rourke
Be careful out there - to bureaucrats you are just a number to be exploited and toyed with, and then tossed aside.
"Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone." - Bastiat
As governments fight liberty to retain power we might anticipate the return of famines and plagues that had been controlled or eliminated under natural individualistic enterprise. Hence a squeeze on free markets may ignite a disaster for the earth.
"People who create things nowadays can expect to be prosecuted by highly moralistic people who are incapable of creating anything. There is no way to measure the chilling effect on innovation that results from the threats of taxation, regulation and prosecution against anything that succeeds. We'll never know how many ideas our government has aborted in the name of protecting us." - Joseph Sobran
Our future is a race between catastrophe and innovation; only individual initiative can inspire the innovation needed.
Let's Race - But In Which Direction?
Regulations and taxes are but two of the tools used to stop prosperity.
Look at Alibaba to see where international trade is a reality rather than a theory: International Sourcing from Alibaba.com. Click Here!
"If your compulsory schooling has made you uncomfortable with the concept of capitalism, use the words 'creative enterprise' instead. This is much the same as the American political center calling themselves 'progressives' rather than socialists." - Allan Wallace
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Sovereign Speculator - a blog
"Giving money and power to government is like giving whiskey and car keys to teenage boys." - P.J. O'Rourke
"Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter, by peaceful or revolutionary means, into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it." - Bastiat
Fetching RSS feed... please stand byPeace, commerce and honest friendship with all nations; entangling alliances with none. - Thomas Jefferson
The basis of American wealth was the free market ideals that shaped its founding.
- "The more corrupt the state, the more it legislates."
Tacitus: 55 BC - "When buying and selling are controlled by legislation, the first things to be bought and sold are legislators."
P.J. O'Rourke - A wise and frugal government which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.
Thomas Jefferson - "When under the pretext of fraternity, the legal code imposes mutual sacrifices on the citizens, human nature is not thereby abrogated. Everyone will then direct his efforts toward contributing little to, and taking much from, the common fund of sacrifices. Now, is it the most unfortunate who gains from this struggle? Certainly not, but rather the most influential and calculating."
C. F. Bastiat - Sometimes it is said that man cannot be trusted with the government of himself. Can he, then, be trusted with the government of others?
Thomas Jefferson
"When goods do not cross borders, soldiers will." - Bastiat
Government never furthered any enterprise but by the alacrity with which it got out of its way. - Henry David Thoreau
Cicero was an alarmist. So am I.
IT has not happened, does not mean IT will not happen. When the fire department tells you your untrimmed weeds are a fire hazard, they are not wrong because your house has not yet burned down.
Free trade is fought mainly through politics by those that seek small gains for themselves at the expense of everyone else.
The politicians, a few workers, and some incompetent companies prosper for a while - everyone else is made poorer.
As we enter this next depression expect the howls of self-serving dogs demanding protection, and guaranteed profits, to increase.
Also expect politicians to agree and raise tariffs and trade restrictions.
We will all be hurt.
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explore the economic realities of natural enterprise
Be part of a better future.
Markets will solve problems if left alone; governments will enslave if given opportunity.
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages." - Adam Smith
The world is in transition - you can help avoid a vicious change and also assist in the creation of a virtuous social cycle.
The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else
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Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics
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The Road to Serfdom Fiftieth Anniversary Edition
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The Adventures of Jonathan Gullible: A Free Market Odyssey
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Free to Choose: A Personal Statement
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What about exploited labor and sweat shops?
"By virtue of exchange, one man's prosperity is beneficial to all others." - Bastiat
If it is a choice made by locals because it is better than their other options it is great. Japan was once a nation of sweat shops - their prosperity today is due in large part to step by step gains of competition.
If your choice is to face starvation working in fields all day or gain a living wage, however small, working in a factory - you must be free to make your own choice.
"No one should have to be locked into whatever job someone else assigns him, if he doesn't want it and can find other work he likes better." - Christopher Stasheff
As more factories are built to take advantage of cheap labor, competition will raise the wages. To deny labor the right to chose is to steal hope.
That is why liberals and unions are in bed with each other. Unions want to guarantee their income at the cost of others, liberals want to protect the poor at the cost of the poor's freedom of choice to improve their own lives. Like many liberal ideas, it sounds and feels good, and has very bad long term consequences.
"The urge to save humanity is almost always a false front for the urge to rule." - H.L. Mencken
I see no advantage to protecting a high paying job if that protection keeps the poor from earning enough to live; and everyone else from getting a product less expensively.
There is a choice. We can allow everyone the freedom to pursue wealth, or we can be like the Former Soviet Union where without incentive the people pretended to work, and the state pretended to pay them. The end result was everyone suffered.
Individualistic enterprise within open markets allows hope that you or your children can, with effort, be much better off than you are now. That is why America was once thought to have streets paved with gold. As government programs have grown in number and size, that hope has steadily diminished.
"Away with the whims of governmental administrators, their socialized projects, their centralization, their tariffs, their government schools, their state religions, their free credit, their bank monopolies, their regulations, their restrictions, their equalization by taxation, and their pious moralizations! And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." -
Bastiat
Under unfettered capitalism the rich get richer and the gap between rich and poor increases. But the poor will also get much richer. The end result is that the poor can improve their lives and the lives of those they care about - and isn't that a worthy goal?
That will only happen if we can get and keep government out of our business.
A Basic Truth
"No nation was ever ruined by trade."
Benjamin Franklin
Lets get another viewpoint, this one from the internet.
We will let YouTube select a random video based on the term "free markets."
Remember the shoe industry examples.
This free market video may be pro or con, but it will give us an opinion to compare and contrast with what we have already learned about free trade / fair trade.
Documentary: Trade With Japan - Time For Change?
Free societies are prosperous societies.
From each according to their desires, to each according to their contribution.
Free markets allow everyone to prosper.
"Civilization's development has always been initiated by individuals balancing demands within their intimate groups, and personal needs for independence and identity. Social engineers and planners always error at this point. What they endeavor is to convert humankind from small, intimate, flexible tribes to a collective with one mind (their mind of course).
They want to make all the complex human herds and packs composed of individuals into a single hive of drones. They have always failed."
Allan Wallace
Your comments will add another opportunity for readers to compare and contrast ideas. Let us know what you have learned or what bothered you most.
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Squidoo-Pat
I love the Edward R. Murrow comment. That's exactly what has and is happening. More and more people are becoming weak knee'd sheeple. Posted June 16, 2008 |
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"Socialism needs capitalistic market forces to feed and sustain itself. This is mainly why that ideology has spent decades to fight its own shadows and demons. " - SB Kayser
