Part 2 – Do You Free Market Bro?
If you missed it, here is Part 1 of this post from last week.
To follow on from last weeks post on Free Markets this week I wish to cover two things briefly: The myths about a Free Market, and how economically less free countries fare compared to freer countries.
The most overused myth about the Free Market is that it caused the financial collapse, but as I covered last week the financial markets are the most heavily regulated in the world, thus they ain’t free. There was other reasons for the collapse, far from too much freedom, but networks of corruption and cronyism. A free market is when there is absolutely no regulation where two people, or companies can trade freely without government interference.
Venezuela where 36 Trojan condoms cost $755
Part 2 – Do You Free Market Bro? – Myths
The main fear of Free Markets is the theory that rich people or companies will buy up all the smaller companies and form monopolies and charge us whatever they like. Take water for example, a common fear these days is that some corporations want to control water and see it as the new oil. Well under a government non-Free Market system that is highly possible, the government after all can legislate that we cannot collect rain or river water. We’d have no competition to go to, we’d have no choice of suppliers to choose from. Recognise anything? Yes that’s basically the same as some government services, no competition and bad service.
But in a free market there would not be any government controls on companies, so how could one company stop an entire country from collecting rain water, river water, desalination of sea water or drilling wells? Plus in a Free Market anyone else could instantly enter the market and sell their water from their well or stream, thus the monopoly is broken.
Collusion is another myth, of companies working together to raise prices and milk the consumer. This obviously does happen in a closed market under government, the reason being that the companies in bed with the government use regulations and licensure to stop other smaller companies entering the market to compete, so with the market to themselves, they can charge what they like. Without government protection, again anyone could compete and drive down prices.
Stephan Molyneux destroys 4 Free Market Myths in under 6 minutes
Part 2 – Do You Free Market Bro? – Test Cases
So we are told by academics and talking heads in government that the Free Market results in inequality and poverty. Let’s take a look at a couple of actual economies and see why they have a greater or lesser quality of life than others. The exact opposite of a Free Market is a fully centrally planned economy – Communism. I will not try to prove that Communism is a disaster, the deaths of 100 million people and our knowledge of China and Russia among others is sufficient. But the little sister of communism is socialism, so take a look at Sweden and Venezuela. Socialist countries rarely become more economically free until some sort of collapse. They tend to become increasingly top heavy until the state can no longer fund itself, or more precisely, until the state runs out of money taken from the private sector.
Venezuela is a perfect example, an oil rich country that has worked its way steadily towards communism, immersed in corruption, has drained all oil profits and is now actually borrowing money to stay operational. In my opinion the CIA has been involved in trying to overthrow the government for some time, but the reality is the economic policies of Chavez and now Maduro has led to disaster, not CIA or US manipulation.
- This oil rich country kicked private businesses and repatriated services and land, so surely if this economic model worked they should sit among the super rich by now.
- Far from it, today Venezuela sits 176 out of 178 countries ranked for economic freedom, only just ahead of Cuba and North Korea!
- By the way the queues in the image used for this post are food lines outside a supermarket in San Cristobal.
- A pack of 36 Trojan condoms costs $755, due to government restrictions.
- And the currency has been destroyed by the state just to finish any last bit of life off.
Finally on to Sweden, which is still being held up as a country with a lot of central planning, high taxation and yet seems, from the outside to be able to cater for the needy, and provide pretty good services. The problem I find with most of these cases is that from the outside all we can go along with are a few select comments from politicians who obviously have a motive to push. Yes Sweden has a decent quality of life, but on closer inspection the country is tightly controlled and quite oppressive. Anyone believing the Swedish model is the way to have good quality government services to rival the world absolutely must read the articles below before making up their minds.
- Sweden had the highest per-capita income growth in the world between 1870 and 1950, before the welfare state increased in size and growth of the economy began to slow.
- By Swedish author Johan Norberg read How The Free Market Made Sweden Rich.
- Listen to Swedish Red Ice Radio host Henrik Palmgren interview Alex Newman an American living in ‘Sweden’s totalitarian style socialist system’.
There are plenty of examples out there of central planning and control hampers growth of business, and thus jobs and quality of life. The freer countries throughout history have shown to have the highest standard of living. Above all I think it of utmost importance to not blindly believe the politicians and academics who praise Sweden or indeed the great minds they suggest will plan your economy. Personal research and preferably direct information from people with experience of the country in question is best.
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