What does “the freer the market, the freer the people” mean?
Demand determines pricing in a free market with minimum government intervention. It has both benefits and drawbacks.
Manufacturers must innovate to stay up with changing client demands, and product quality is a vital component of competitiveness. In a free market, a commodity shortage is impossible to achieve because demand drives supply. This form of transaction, on the other hand, is vulnerable to economic downturns and volatility. Even if it appears to be the reverse at first glance, the phrase “the free market, the freer people” is not totally accurate.
The free market does not ensure that everyone who is qualified will be able to find work. Only individuals in high-demand professions can find work; as a result, unemployment rises, and social responsibility and support among the general public fall.
The term “market” can be used to describe a notion in a variety of ways. For some, the market is a mythological beast that grants humans complete freedom, but for others, it is a dictator who oppresses people.
Following the collapse of Lehman Brothers and the ensuing credit crisis, recommendations for greater and less government intervention have been presented.
We must investigate how the market interacts with freedom of choice in order to determine what (if anything) needs to be done.
According to Wikipedia, a market is “a collection of many systems, institutions, procedures, social interactions, and infrastructures through which individuals trade.” A market is just a location where people conduct business.
A market with fewer restraints is said to be more free.
This type of market analysis appears to indicate that we leave things alone at first glance. How can we say that any form of commerce is unfair because a market is fundamentally a place where people meet and trade freely? What basis do we have for attempting to prevent people from doing what they want?
The statement that more open markets lead to more individual liberty and enjoyment is valid if we accept this market perspective. Such a market approach, however, is simplistic.
Individual activities are not guaranteed to be voluntary in a society where we distance ourselves from government activity. What exactly do I mean? Other groups in society may arise in the absence of government to force behaviors or transfer resources.
It is not necessary to use coercion for a specific cause. We can nevertheless consider a trade coercive when a voluntary transaction between two people impacts the choice of a third, unrelated individual. When it comes to private compulsion, the government can help individuals enjoy more freedom and happiness.
People who reject the free market do so because it conjures up thoughts of powerful groups trying to manipulate and control people’s behavior. People who want more market freedom do so because they believe the government is a coercive force.
When we look at the problem in this perspective, it becomes clear that the underlying issue is not the market (or its lack thereof), but the concept of compulsion and power.
Differences in opinions on the government’s and private groups’ authority and readiness to influence people’s decisions are sometimes at the root of political conflict between the left and right.
Consider the most recent credit crisis. Some claim that a lack of regulation caused the credit market collapse, while others contend too much limitation. Yet, others argue that there were no regulatory defects, and we were simply unlucky.
Those who hold the government responsible will say:
- Previous government bailouts meant that financial institutions did not suffer the entire risk of their actions because the risk was shared by everyone in society, leading to excessive risk-taking.
Those who accuse the financial industry of being to blame will say:
- People in the financial sector had the power to shift risk away from themselves and onto others, leading to excessive risk-taking.
Those who refuse to point the finger at anyone will say:
- There were good and bad times; we had bad luck and did not take any additional risks.
Various factors influenced or limited people’s choices in the first two cases, implying that what occurred was not the optimal alternative. In the previous instance, there was no issue; society was unlucky.
It demonstrates that, even in the aftermath of a big event like the financial crisis, it’s impossible to say whether private or public coercion contributed to the deterioration of the situation or whether things could have been better.
It does, however, suggest that all regulation, whether private or public, is founded on the principle of avoiding coercion.
There have been proposals to limit bonuses in the banking sector, for example, during the current financial crisis. However, because it is a choice act, such a bonus fails our coercion test.
Rather than concentrating on the act of giving rewards, we should consider what mechanisms have resulted in “too much” risk taking and how we might ensure that people face the full cost of the risks they take.
Another idea was that the government could help coordinate openness in financial institution accounts, thereby quantifying the risk of different investments.
This policy passes our coercion test since its primary goal is to increase access to knowledge rather than limit their options. As a result, such policies appear to warrant additional investigation.
If you suggest a higher quality of life by “the freer the people,” the free market does not include public or merit goods.
As a result, society has degraded into an authoritarian and repressive culture that rewards the wealthy while failing to provide for the poor. A healthy balance, in my opinion, is the best option we currently have. Even if it appears to be the reverse at first glance, the phrase “the free market, the freer people” is not totally accurate.
The free market does not ensure that everyone who is qualified will be able to find work. In a free market, a commodity shortage is impossible to achieve because demand drives supply. This form of transaction, on the other hand, is vulnerable to economic downturns and volatility. In a free market with limited government intervention, demand decides prices. It has both advantages and disadvantages.