Saturday, 14 July 2012

Freedom to Create and Prosper

The second part of our educational task - imaging how a market-run world would function - is much more difficult. Murray Rothbard once remarked that if the government were the only producer of shoes, most people would be unable to imagine how the market could possibly produce them. How could the market accommodate all sizes? Wouldn't it be wasteful to produce styles for every taste? What about fraudulent shoes and poor quality producers? And shoes are arguably too important a good to turn over to the vicissitudes of market anarchy.
Published in a recent Article by Llewellyn Rockwell

Most intellectuals claim they have all the answers to so called 'market failures'. Llewellyn Rockwell debunks this belief with a wonderfully written article (link above) which I recommend to read. Larry Page, one of Googles co-founders is quoted as saying, "Always have a healthy disregard for the impossible", which I think sums up human ingenuity throughout history and the spirit of the Entrepreneur. Government Officials meanwhile will promise you the world, but later declare its impossible to deliver on its prior commitments. Central planners and the selfish 'ethical' do-gooders will tell you because of 'market failures' they need to intervene in peoples lives, stealing societies resources. As always, they lack imagination and keep the public believing they can deliver what a free market can't.

The Technology sector is one of the few areas in the global economy with very little Government interference. The prime reason is its recent appearance. When Big Welfare was hatched, computers were the preserve of Governments and large companies; as a percentage of GDP the industry was insignificant. Yet in a short time-frame, technology is now embedded into all of our lives. Only 15 years ago I remember using slow dial up connections, paying for low storage email accounts with minimal content existing in the web.

Since then the range of services that are offered for free has been phenomenal. Ideas and concepts that were deemed 'impossible' back in the past are now a reality. No one could have envisaged the progress that has been made. Multi-language translation, navigation systems in phones, films and music on demand, self driving cars, global consumer marketplaces, computers for $25 (less than a pair of shoes) and many other innovations. The list is endless. One of the most important points I want to make is the cost. Its all either free (paid either through advertising or premium users) or next to nothing. This always benefits the poorest members of society. 

Its tragic that many other sectors are crowded out by Government control. I could pick a number. For sake of example the progress of healthcare has dramatically being curtailed by the socialisation of medicine. We can not speculate what innovations would have occurred if it was run by the free market, but like the technology sector the poorest members of society would have been the main beneficiaries, not the rich. The rich can always afford the best possible healthcare. Costs are so high because of Government intervention.

The great myth is that America has free market healthcare, the reality of course if not the case. Medicare and Medicaid are a form of socialised healthcare, similar to the NHS in Britain, regulations on insurance companies such as no age discrimination or the mandatory cover of doctor checkups, tax breaks for companies offering third party insurance as part of an employees employment contract, Medical organisations that prevent entry thus raising wages and prices; the list goes beyond this and is worthy of another post to do the topic justice. Its sufficient to say socialised medicine is falsely proclaimed by 'liberals' to help the poor, when in fact it is doing the complete opposite. Heathcare is rationed, sometimes available to a lucky few. Spending is out of control and can only be solved by the creativity of a free market, not Politicians.

I, like any other author, can not speculate on what the free market may have done more efficiently. However a common fallacy used to excuse escalating costs in healthcare is the equipment used has become increasingly sophisticated, thus one of the reasons behind rising costs. I pick this example as in contrast the technology sectors equipment has become increasingly sophisticated, yet the cost has at the same time come down dramatically, benefiting the poor. When I got a PC in the nineties very few people had them, due to cost. Now everyone who wants one has a personal computer. In free markets tools always get more sophisticated. In agriculture we use sophisticated machinery that costs tens of thousands of dollars (compared to a primitive plough) yet such nations live in massive calorie surpluses. Its the lack of Regulations, Interference, Selective Monopolisation that enable this to occur.

The fact the equipment has become more sophisticated means costs should have come down. X-rays, CT Scans; such equipment is not cheap but it provides rapid diagnosis, freeing up humans to perform other functions. There is no need for specialists to agonise over such medical issues, the machines do that for them in a matter of seconds. All they have to do is fix the issue. Costs go up in healthcare due to Government interference; a classic case of Socialism impoverishing us all, but in-particular the poor. By not allowing prices, freedom and consumer sovereignty to do their job, the poorest among society are the hardest hit.

There is no reason why we need a Government full stop. All goods can be provided efficiently when we allow people the freedom to run such services. Governments however don't want people to use their imaginations and want us to believe free markets can't provide services they have monopolised and interfered in for decades. The quotation above provides such an example that we need not use our imagination for, yet if provided by the Government many could not imagine how a free market could provide such goods. Free markets are smart and creative. Governments are not.

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