I feel the need to lead this particular edition off with the reassurance that I am a firm believer in the notions of having a free market, and that I believe it is a superior choice not only for overall efficiency and growth, but for the freedom of the individual as well. There is, however, an aspect to this line of thought that gets some people out over their skis when talking about the virtues and positives of a free market. The observation I’ve made is that all too many libertarians will position the concept of a free market as the be-all and end-all cure to any and all economic issues that arise.
Consumers can’t get a product? Free the markets and there will be more suppliers. A company has a near monopoly on a service? Opening up the markets will result in that being broken down. People starving in the streets? The invisible hand of the free market will provide. This is the chain of thought that’s brought into public discussion to fix whatever ills we observe. Let’s take the concept a little further though.
How does a free market cure the issue of unemployment? According to the Heritage Foundation, Hong Kong currently has the highest rating of economic freedom in the world, and has held this record for several years now. They have next to no restrictions on foreign banking, international trade, or many of the other aspects that we look at for seeing how free a market is. Hong Kong, however, still has an unemployment rate of 2.8%. Further than that, nearly 1.37 million people out of their just under 8 million person population live below what is considered the poverty line. How can 17% of their population (compared to, say, the 13% below the line in the US) be below the poverty line, yet their economy be the freest in the world? That runs counter to the notion that a freer economy means better prosperity for all taking part.
The answer is a simple one, though not as definitive as some of the aforementioned libertarians would like. Having a free market isn’t necessarily better; it is simply preferable overall. If a market is truly free, and people are in turn free to act as they please, then we can neither assume nor build our views of society around people behaving in particular, specific ways. We can make observations and predictions, but if the population is truly free to act as they please in the economic world then it follows that we would have no such control or authority to make those definitive statements. If we got rid of IP laws (something I support personally) that doesn’t mean that a bunch of competitors will spring up in the pharmaceutical industry and start driving prices down immediately. It becomes a possibility that isn’t on the table with our current laws, but it’s not something that will automatically or even necessarily happen.
The point and beauty of the free market is to give people back their freedom. It’s not a concept designed to cure a particular ill (save the ill of government interference into our lives). For us to bring the fight for a free market to our opposition more effectively, we need to stop allowing ourselves to get caught in the realm of absolutes for a concept that’s based directly on not having absolutes. “The freer the market, the freer the people” still rings true, but it should be fought for on the merits of what it is rather than what amounts to little more than hypothetical cures.
You can read more from Killian Hobbs at Think Liberty here.