Sunday, January 16, 2011

Government Restrictions Versus Free Market Regulation

I like to write these articles as an attempt to get people to think. Certainly having a platform to voice one's opinion is nice, but for the most part I built the platform I shout from. I am not always right, if being right or wrong are even appropriate terms when it comes to opinion, but I do enjoy it when one of my articles strikes up a buzz or an interesting conversation. Such is what happened recently when I wrote an article expressing my view on the inappropriateness of congress passing resolutions that are largely symbolic in nature rather than working on cutting the size of the federal government which I believe is way too large.

The conversation seemed to settle around one sentence in the article rather than the general concept I was trying to convey. I find that happens quite often, a critic will pick one sentence in the body of an article which expresses a concept he disagrees with and will try to pick apart the entire article because of it. With this article, the discussion evolved into a debate about government over regulation and interpreting the Constitution. It was quite an interesting discussion with good points being made on both sides. As I read it, however, I decided that perhaps I should write something clarifying my view on why I believe there is too much government regulation.

To simplify things, the two sides taken were that government should regulate more versus government should regulate less. I don't believe that there'd be much of an argument if I was to say that many people, if not most, realize that regulations have failed in one way or another. It seems to me that what many people seem to believe is that without government restrictions markets would be unregulated. They seem to believe that if government wasn't there to control business we would all be subjected to buying inferior products at over inflated prices while evil and greedy businessmen laughed at us from their mansions high on the hillside. They seem to believe that food would be poisoned, medicine would be prohibitively expensive, energy would be unavailable, there'd be mayhem in the streets and we'd all be slaves to a few elite robber barons. I think the opposite is true. Government has been there my entire life and they've failed miserably not because they haven't done their job, but because they've restricted businesses too much and stifled competition. I've seen it in my lifetime as I watch the economy crumble to dust.

Ask yourself one simple question, and it is especially pertinent if you are a businessman or trying to start your own business. Ask yourself, "Should government regulate my business?" I'm guessing there's a good chance you're going to say no. Oh, there's a few who might say yes, perhaps someone from a huge corporation or some other established or establishment enterprise that wants to limit their competition, but for the most part I would guess that most small businessmen would say no. However, many of those same people would say it's ok for the government to regulate other people's businesses. It's ok for them to pass laws restricting the operations of the banks, or insurance companies, or energy companies, or utility companies, or restaurants, etc, etc, etc, but don't regulate my candle shop, or coffee store, or newspaper, or blog, or lemonade stand, etc. You see, the good businessman understands that in order to make a profit, in order to make a living, he needs to provide a product or service that people demand. He knows that in order to continue to survive he needs to do a satisfactory job. He knows that in order to grow and thrive he needs to do a better job, he needs to provide quality products and services at fair prices so that people will recommend him to others.

Only monopolies or those involved in limited and restricted markets can afford to provide poor products or services at high prices. If they try that in a market where true competition exists, they will drive business to their competitor. If they don't listen to the complaints and concerns of their customers, they will drive business to their competitors. Of course, the biggest monopoly is government. Perhaps that explains why so many seem to have a problem with government. Perhaps that explains why government is so non responsive. They don't have to be responsive. Not only don't they care about their customers, they don't care if their customers stop using their services, they're going to get their money from them anyway.

It is government protection that causes monopolies to exist. The evidence is all around us. One has to but look at the bailouts and one starts to realize the role government plays in the creation of monopolies. The "too big to fail" that the government bailed out are profiting and growing while their competition has become either "too small to succeed" or are being bought out. Consumer choice is dwindling. The government has been working on creating laws restricting businesses in this country for centuries now, and they have managed to create legislation that only large corporations can afford to obey and so the small entrepreneur starting off can't even begin to compete with the behemoths that dominate the marketplace. Government and corporations have, in essence, teamed up to keep the little guy from participating in the system.

The biggest difference between free market regulation and government restriction is the use of force. Government is force. It has shown this many times. It is the only tool they use for compliance. The only way they know how to do business is by threats and coercion. They make the laws and then steal your money if you fail to obey. If you feel they were wrong and you were doing business on the up and up, the court system they set up as a supposed remedy is often prohibitively expensive. Many times you can pay the fine, or you can pay more to take it to court. If you decide not to pay the fees and fines they charge, they have men with guns who will put you in a place you don't want to be. They will shut down your business and take everything you own regardless of fairness or circumstances, even if it puts people out of work. Is it any wonder people mumble their complaints about government but then reluctantly give into their demands?

A true free market, however, works on the principle of voluntary association. I don't mean what has become known as a free market today, for we haven't seen a truly free market in a long time. What we have today in supposedly free societies are markets dominated by the politically connected. It is crony capitalism, or corporatism. I'm talking about a market where if I have the money to create a product or service I can enter the marketplace and start selling. I wouldn't have to get a license or ask permission from some government bureaucrat, or otherwise pay my tributes or bribes or protection money to our overlords. I would open my doors and you can decide for yourself whether or not you want to do business with me. If you like my product, you would continue to do business with me and perhaps recommend my business to people you know. If you don't like my product you would decide to go elsewhere and tell the people you know not to do business with me. This would be a completely voluntary system between a customer and a business with no third parties involved.

I'm fairly sure that some people will argue for the need to use force to bring certain businesses to heel. I would guess that some would argue that a greater force was needed to see to it that certain businesses wouldn't become too powerful or monopolistic. Again, I believe that modern corporatism shows us that it is government that causes these things. They think the common folk are too stupid to decide where to spend their money, or how to vote with their dollar. I disagree and think that consumers can make important decisions in the open marketplace when a business starts enacting unpopular policies or causes harm in some shape or form, especially with modern communications the way they are. I also think that free market pressures is more likely to actually succeed where government fails.

Such a marketplace would necessitate that the consumer become more knowledgeable and make better decisions as to which company to spend his money on. It would put more responsibility on the consumer in order to regulate the markets. When consumers become lazy and refuse to educate themselves as to who they're doing business with, then they will start to lose money, pay more than they should, and even get ripped off or defrauded. That is, in essence, what is happening today even with government regulation, and I feel it is why there is such a push to prevent people from learning Austrian economics. The corporate world and their government cronies want people to remain uneducated so they can continue to fleece the masses.

I'm not sure what remedies would crop up in a truly free market to hold businesses accountable when consumers are wronged, but I can say that in the corporate dominated world of today they are not held to account on many occasions. Again, as evidence, one can point to the bank bailouts. One can point to the auto industry bailouts. One can point to the BP oil spill in the Gulf of Mexico. All these recent events are examples of how the federal government has failed miserably to carry out their mandate or hold corporate interests accountable. Why would we want to keep giving this institution chances? I think we as free humans need to take matters into our own hands and quit depending on bureaucracies which fail again and again. We can do a better job. We don't need the federal government regulating every aspect of our lives.

My archived articles are available at Please visit there to help support me and my efforts. I also have an ebook available entitled "The Ouijiers" by Matthew Wayne.

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