Free Market Economics

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I am a great fan of Free Market economics. It is a good idea that we might want to try one day.

What about all those politicians who are screaming about the Free Market and letting the Market work? They wouldn't know the Free Market if it leaped out of a bowl of caviar and bit them in the face.

What is the "Free Market"?
The concept of the Free Market is that commerce, unfettered by regulation, will result in fair prices due to the forces of competition among buyers and sellers.

I will illustrate this using a simple example. You decide that you want to make a little money by collecting pretty seashells at the seashore and selling them to people in town. A few other people see you doing it and start doing the same thing. You will be limited in what you can charge because you know that your competitors will undercut your prices if you get too greedy. On the other hand, your price won't go too low because if a customer offers you less that you are willing to accept, you can go to another customer who will pay you more.

This situation encourages innovation. If you start bringing a backpack to the beach so that you can carry more shells, you will be able to sell more with a lower cost of production, increasing your profits and allowing you to sell at a lower price. Eventually, everyone will get a backpack, but then you might come up with another innovation. Besides price, this is the other major benefit to the Free Market.
This is a simple example, but it is illustrative of the Free Market. You will notice that there are a few things going on there.

Requirements for a Free Market
Low Barriers to Entry - Anyone could enter the market by going down to the beach to collect shells.
Consumer Information - Consumers know what the guy next to you is charging pretty quickly.
Fair Practices - Everyone is playing fair. No one is selling fake shells, intimidating competition, etc.
Property Rights - No one can just grab your shells and take them without paying for them.
No Regulation - The government is not involved in policing this at all, either with taxes or rules.

The Government's Role in the Free Market
These four things are all pretty important for a true Free Market to exist. Ironically, the only entity that is really in a position to make sure that most of these things occur is the government. The government can create educational and investment programs to encourage people to start new businesses. The government can regulate labeling and advertising to ensure that customers get what they think they are buying. The government can prevent anti-competitive practices that drive competitors out of the market. The government can enforce contacts and provide police to prevent outright theft of goods, and the government can produce and guarantee a currency which allows commerce to occur at all.

In other words, the Free Market can only properly function with considerable government assistance. This is not a bad thing. This is what the government is for.

What is a bad thing is when the usual political tug-of-war pulls the debate right past Free Market into absurdity.

Radical Left Wing View: The government must tightly control all industries, tax profits, and protect the interests of all people, bending every business' activity into the "public good".


Radical Right Wing View: The government must remove all regulations, privatize as many government functions as possible, and let the Market take care of things.

While regulation is necessary to preserve the proper functioning of the Free Market, those on the Left sometimes have trouble leaving well enough alone. They start with the regulation that keeps things fair, but then they smell the opportunity to "improve it," but creating regulations that mandate business behavior, such as price ceilings or floors, and other regulations requiring action. For example, requiring banks to give home loans to people who are not necessarily in a position to repay them. This rarely works as it should.

In fact, it usually leads to a backlash of deregulation, as all of the unreasonable regulations are removed. It doesn't stop there. They keep going, removing many regulations that were needed to keep the system functioning properly. Without proper regulation, competition diminishes; dirty tricks are used to eliminate competitors or competitors merge to cooperate; and the public suffers.

The Fallacy of Privatization
The greatest fallacy of all in this is the idea of "privatization." Right-wingers will say that private business is more efficient than government. This is partly true. Private business is more efficient at making itself money than government. In competition, this efficiency trickles down to the public. In monopoly, it does not. When a single company is given charge of a government function, such as Amtrak, or if that company can operate without fear of losing their contract, such as Blackwater, then the company serves its own interests and not those of the public: the interests that the government was formed to serve.


I will conclude as I began, expressing my deep and abiding belief in the Free Market, and my desire that perhaps, one day in the future, we might try implementing it to solve the problems in the American economy.

Abortion: The Debate Where Both Sides Are "Pro-"

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One of the most contentious issues of our time is about an extremely specific yet very personal issue, that of abortion. The purpose of this blog is to break down very heated issues into their rational core, and this seemed a good issue to start with.

Let us start by looking at the rhetoric of each side.
Pro-Choice: Protect a mother's right to choose how to conduct her own reproductive decisions. Unwanted pregnancies forced to go to term will lead to children who are unwanted, abused, and neglected.

Pro-Life: Protect the life of innocent unborn children. Every life is precious, and to kill a child, even one who has not yet been born, is an abominable act.

With rhetoric like that, is it any wonder that there can be no reasonable debate on this topic? Those on the pro-choice side think that their opponents are trying to take control of women's bodies away from them, to be
controlled by the government. The pro-life side thinks that their opponents are trying to kill children.

Let's break it down to just the bare bones of each side's objective.

Pro-Choice: To keep abortion legal, safe, and available to women who need it.

Pro-Life: To make abortion illegal in order to stop abortions from taking place.

Any reasonable discussion has to start with common ground, so let's consider what both sides agree on.

Common Ground

• Children are precious
• Abuse and neglect of children is undesirable
• Abortion is a terrible thing which should be avoided if at all possible
• Unwanted pregnancies are the result, not the cause, of other problems

Points of Disagreement
The point at which life begins
Most pro-life people believe that life begins at conception, while most pro-choice people believe that life begins at birth or viability (the point at which the fetus could survive outside the womb with or without medical assistance).

The cause of unwanted pregnancy
This is a much more varied opinion within both camps, but the pro-life side as a whole tends to see unwanted pregnancies as the result of a moral failure on the part of the mother while the pro-choice side tends to see unwanted pregnancies as the result of factors external to the mother such as poor education, rape, or bad luck.


I would now like to take us through an exercise that I will use extensively in this blog in the future. That is the exercise of considering what philosophical shift it would take to convert an individual from one side to the other.

The key difference between most pro-choice and pro-life people is when they believe life begins. Most pro-lifers put it at conception, and others put it at birth/viability. I suggest that if an average pro-choicer were to have it revealed to them that life began at conception, they might well change sides. Likewise, if a pro-lifer became convinced that life began at birth rather than conception, much of the wind would come out of her sails to oppose abortion. Frankly, the people on the opposite sides of this issue are not that different.

Regarding viability, that is also a very slippery topic. In the foreseeable future, we will have uterine replicator technology, meaning that an embryo could be placed in a machine which would gestate it until "birth". On the other hand, a 3 month old infant is almost completely helpless, completely unable to find food or conduct any other basic life functions without assistance. So, what really is the point of viability?

Law vs. Reality
Most of the debate over abortion is what the laws should be on it. As we know, making something illegal ends it completely. That is why no one travels faster than the speed limit, the drug market has completely vanished, and domestic violence is unheard of in America. The law has an effect, but not always the one that is intended.

When a woman decides that she needs an abortion, she will find a way to get one, regardless of what the law says. A ban would certainly prevent many abortions, but those who are desperate would do whatever they needed to, including risky back-alley procedures or dangerous drug combinations to end their pregnancy.

On the other hand, a great deal can be done to reduce the number of abortions that women get without using the law to make it more difficult. Abortion is a terrible and traumatic choice for anyone who faces it. Taking steps to reduce unwanted pregnancy through effective education would make a difference. These programs must include both making good decisions about when and with whom to have sex as well as reliable, accurate information on how to have sex more safely. Improving the adoption system and giving women better education about it would also encourage more women to take unwanted pregnancies to term.

The law, whether around abortion, drugs, or motor vehicles, is a blunt and imprecise instrument. When considering public policies to achieve a desired end, simply passing a law is rarely the correct solution. Instead, we must carefully consider the problem, its root causes, and the solutions which will alter the causes, not just the effects.