I’m a capitalist. I believe that free markets are the most efficient way of allocating resources. Put more simply, free markets have greater potential to feed the hungry, heal the sick, clothe the naked and house the homeless than any other system of dividing up the things we all want. The point has been proven time and again in practice to the point that it really can’t even be argued against by rational means.
So why mess with markets? I can see three reasonable justifications with the federal government interfering with markets. (There are a fourth and fifth that are largely, I think, fantasy.) National security, public health and serious poverty.
National security is, frankly, a given. National security is the essential reason for the existence of the federal government in the first place. Plus, security from foreign invasion is one of the prerequisites for a market to function. Certainly restricting the sale of sensitive technology to countries like North Korea, Cuba, Syria and Iran is a reasonable interference with the market. Likewise, encouraging domestic ability to produce vital strategic assets even in peacetime is to some degree reasonable.
Public health is often used as a nice catchall for market interference in anything related to health care. When I write that public health can justify market interference I’m writing much more narrowly. There’s a legitimate federal role in preventing the spread of infectious diseases or of harmful substances. Of course, the latter often falls under the rubric of preventing fraud, but there is arguably some reasonable role in at least assuring that when a consumer buys a carcinogen they know it’s a carcinogen.
Serious poverty is most effectively handled by simply letting the market function, but political costs have to be considered from time to time. The political cost of allowing starvation in a country that can easily feed its entire population with a few percent of its domestic economic production is simply too high, in addition to (or in spite of) any purely moral claims. Realistically, the federal government will have a role, so its best that role be as a safety net of last resort after the market itself, private charity, local government and state government (ideally in that order) have all been exhausted.
So, where am I going with this? Well, there are several issues out there that I’m going to take a look at over the next few days and I’ll be making reference to this, asking the question on those issues “Why mess with the markets?” and if it looks like there is any reason to mess with them then “How and how much?”
Oh yeah, the fourth and fifth reasons to mess with markets. Monopoly. I’m simply not convinced that a monopoly can occur in a truly free market in the first place and if it does it can’t sustain itself without providing its products at a price so low that no one else can make a profit. That’s good for consumers, so the only monopolies we really need to worry about are government created in the first place. Market failure. There’s a concept that because some people want something and no one is providing it at the price they are willing to pay that the market has failed. Nonsense. I want 1000 ounces of gold and I’m willing to pay $1 an ounce for it, but no one is selling. Has the market failed? No. That’s an extreme example, but it illustrates the point – so called “market failures” are almost always a simple matter of someone wanting to use government power to get what they aren’t willing to pay for themselves.