So what is a market economy and when does it fail? That is
what I will answer today. Let us begin.
Market Economy: A market economy is a form of
Capitalism. It allows for the freedom to buy, sell, and produce more goods.
It also creates winners and losers. However, there being losers is
not a bad thing in the least. The reason being is due to the fact that
losers in a market economy are doing something wrong. Their ideas are
either outmoded, too soon, or their business model or how they treat their
customers is bad. As such, they fail and other businesses see this and
learn from their mistakes. Also, those same losers learn from their
mistakes as well and may eventually become winners later on. This is what
it means to have innovation and growth in a market economy. However it
can only occur when everyone has equal access to the economic system.
When businesses do not have access to the
economic system we lose as consumers and businesses lose as competition is
reduced. This occurs when winners in the economy seek to maintain their
position by turning their wealth into political capital. How does that
work you ask? Well it occurs in two ways. The first form is when
our elected representatives and even the bureaucrats are bribed. Our
other example is when they use their political influence to have the
institutions that attempt to control the economy change the rules to favor
those who have that political clout. As such the market for a certain type
of good, or favorable conditions will be offered while at the same time closing
off any competition. All this the while shifting the playing field in
their favor more and more. And this is what we call corruption.
Here is a real life example. Sugar growers are in Florida and Iowa,
and these two States in the United States are swing States which can determine
the outcome of a Presidential election. Do you know where this is going?
Well it means that they have a bigger say than sugar growers in other
States. They can use this power to have the rules shifted to favor them.
Just think of all the other industries that exist in politically
important States or provide product that cannot be made anywhere else.
This includes defense firms, States with key ports for shipping and
similar. These people get to bribe and manipulate as much as they please
even promising cushy jobs to politicians once they retire. Get it. Good.
Conclusion: So what can we do? Simple,
get rid of the rules. Less rules means more freedom as the rules are
setup to solidify unfair trade practices. Then to ensure that we do not
return to the status quo, we have to eliminate the people who are bribable.
This means less government. You may have saw where this was going, but
government equals corruption. In order to reduce that corruption you need
less government and less rules. But I will talk more about that in the
coming days. In the meantime hope you enjoyed the read.
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