What Free Market?

It's all over the media. Stock prices are down, gas is going up, unemployment is a whopping 6%, people are spontaneously combusting, America sucks...the world is coming to an end!!

So who's to blame for all of the calamity? Well, that depends on who you want to listen to and whether or not the truth matters. According to the US House and Senate Democrats (and unfortunately some Republicans as well), the blame always seems to land squarely on the free market. It's the investors' fault, or the CEOs' fault, or Big ______s' fault(fill in the blank with any industry), or not enough regulation for those industries. The demons are the successful, demonized for wanting to make a profit. Their answer is more government control through regulation, or lately by simply bailing out and taking over the company. This mantra is amplified by the "main stream media" every single day and the problems just compound.

With all of the regulation that has been thrown on the private sector the "Free Market" is no longer free to work. Instead we end up with a semi-socialized market where the government tries to micro-manage the entire economy by centralizing control over as much as possible. We want a completely risk-free market with no ups and downs so the micro-management gets tighter and tighter. This ties the hands of the market not allowing it to self-correct in the normal business cycle which eventually results in a much worse correction when it finally gets to the saturation point. I'm not a believer in a complete "hands-off" market so please don't think I'm saying zero regulation would make everything just fine.

So with this in mind, whose' fault is this current situation we find ourselves in? It's our fault. Before you pop a few expletives at me and disappear for blaming you, please hear me out.

Here are three of my reasons:

1) For years we have put up with an education system (also centralized) that teaches very little, if anything at all, about real economics. Sure, they teach you how to balance a checkbook and go grocery shopping, but that's about it. This lack of economic education makes us vulnerable to all of the propaganda that is thrown our way. Some of the comments made by leaders of the United States House and Senate are laughable to anyone who has studied basic economics, but they sound good to most people.

2) We play the class warfare game. We used to long to be like that successful person we saw on TV. Now most of us want to punish the successful to cut them down to size. Instead of asking "how can I do that?" we demand it be taken away from them by force to "level the playing field".

3) The final reason it's our fault is the lack of respect for our duty to vote. In most local elections, 10% turnout is high even though those people have the most control over our communities. 35% is good for a mid-term national election and 50% for the presidential election. We are neglecting our duty so we "get what we pay for".

Since the school systems don't teach the basics, I'm going to attempt to explain the economics behind a few of the problems we are currently experiencing. Over the next several posts I'll talk about economics of gas/oil, housing, banking and general economics.

Stay tuned...