Can The Free Market Solve Society’s Problems? Hell Yes!
One of the biggest myths that reverberates in social sciences today is that the government does a better job than the free market in solving societal and economic complacencies and crises. People have been manipulated by the perpetual propagations of politicians, their corporate sponsors, bureaucrats, and think-tank intellectuals to believe that government is needed to solve problems. Ironically, history continually proves that when people autonomously and organically solve problems in the free market, then progress is unquestionable. Alternatively, government intervention and intrusion into the private affairs of citizens often causes more confusion, stagnation, and inefficiency in the long term; at the expense of billions and sometimes trillions of dollars. Ayn Rand, the legendary novelist and philosopher, stated, “Government ‘help’ to business is just as disastrous as government persecution… the only way a government can be of service to national prosperity is by keeping its hands off.”
The aforementioned claims are not primarily ideological or tendentious; rather, they are statistically proven in a plethora of industries and circumstances. The reason the free market can solve society’s problems, without government, is because people have the natural proclivity to pursue certain actions for their own gratification. Hence, the purpose of the free market is for an individual (or group of individuals) to monetize from the problems and preferences of the consumers within their inclined target market. This means, it would be sensible and efficient for people to compete in the marketplace by solving problems; this, in turn, contributes to the elasticity and volatility of supply and demand for producers to meet the infinite needs and desires of citizens with limited resources. Government intervention has done nothing but forcibly appropriate resources from one group of people and allocate them to another group of people, which lessens the incentive for people to freely earn their living and solve financial problems. The net effect of governmental interventionism is costly projects and programs, as well as regulations that increase national deficits. This creates disparities and resentfulness between classes, races, and cultures which only exacerbates the problem.
There are countless examples of governmental failures in the free market. One such example is when price controls were implemented on meat products during the Great Depression, resulting in farm income plummeting from $6 billion to $2 billion between 1929 and 1932. Additionally, we could look at the enhanced interventionist policies of the Smoot-Hawley Tariff Act, enacted by President Herbert Hoover in response to the stock market crash in 1929. The Smoot-Hawley Tariff resulted in an international trade decline of 66% and joblessness for 60,000 workers in the garment industry (mostly) due to the 140% tariff increase on wool rags.
Furthermore, with the Revenue Act of 1932, President Hoover raised income tax rates for citizens in the top tax bracket from 24% to 63%. Unemployment also increased from 8.2% (at the onset of the Great Depression in 1929) to 25% by the end of Hoover’s administration in 1932!
Since the “War on Poverty” began, (a program implemented by President Lyndon Banes Johnson at the beginning of his presidency in 1964) $22 trillion has been spent on government programs to alleviate poverty in America. Yet the poverty rate that was 12.1% five years after these policies were enforced, is still at 13.5% as of 2015!
Hence, the “altruism” and categorical priorities of government – at the expense of the forcible appropriation of our resources – have made problems worse.
Another, more recent example is the Affordable Care Act, or Obamacare, which was legislated and ratified to make healthcare affordable for the masses.
This was government’s response to exploitative and avaricious medical insurers and doctors who were making healthcare unaffordable. Ironically, premium increases are at 25% and counting. Moreover, 16 of the 23 healthcare coops, or consumer operated plans (some with over 800,000 enrollees), have shut down and Aetna, Humana and UnitedHealth are leaving the program or mitigating their services. The government’s role in making healthcare affordable only increased the cost of healthcare for tax paying citizens. It also lessened the incentives for Obamacare recipients and prevents opportunities for financial advancement or affording healthcare. Enrollees who apply for 2 or more jobs or accumulate a certain amount of income can get penalized and lose “benefits” just for trying to advance financially and to afford “affordable healthcare.” Although there are numerous examples of both failed and failing government programs, the focus is on examples of when the free market has remedied problems that occur within a given society and economy.
Governmental regulations manipulate and handicap the vitalization of a society. We can look at the collapse of the Soviet Union as a perfect example of disastrous central planning. Contrarily, deregulation and laissez-faire economics have historically been more successful at solving problems; such as consumer protection.
For example, the Civil Aeronautics Act of 1938 was created by government to regulate airline safety, commerce, and routes of air carriers. However, when deregulation of the airline industry reached its critical juncture (after the ratification of the Airline Deregulation Act of 1978, and the eventual discontinuation of the Civil Aeronautics Board) airfare declined by 25% since 1991; this is 22% lower than it would have been if airline regulation had continued.
With regards to safety: from 1972 to 1978 (during regulation) there were 2.35 accidents per 100,000 aircraft hours flown, compared to the 1.3 accidents per 100,000 hours flown since 1978.
In the trucking, airlines, and railroads industries, there has been a reduction of $35 billion in travel costs due to deregulation. After the deregulation of the railroad industry, (following the ratification of the Railroad Revitalization and Regulatory Reform Act of 1976, and the Stagger Rail Act of 1980) there were more incentives for railroads to modernize. Subsequently, fares decreased by more than 50% for consumers without the regulatory coercion of the Interstate Commerce Commission, which regulated railroads beginning in 1887. The trucking industry experienced similar results, with fares reduced by 35%-75% following the passing of the Motor Carrier Act of 1980. The Motor Carrier Act of 1980 repealed the Motor Carrier Act of 1935, which mandated the regulation of the trucking industry to avoid competition with the railroad industry!
The net effect of the deregulation of the trucking industry was the doubling of trucking carriers from 18,000 to 33,548!
Another example of the free market solving its own problems is in the earthquake and subsequent fire that occurred in San Francisco in 1906! Because of this natural disaster, 200,000 people became homeless. However, this served as a catalyst to a problem that was solved by the free market. Various real estate developers and agencies began advertising apartment availability. Accordingly, 30,000 people were provided with temporary shelter, 75,000 people found residency outside of the San Francisco area, and the remaining 100,000 people eventually settled in newer developments in the Bay Area. The Californians of the San Francisco area found replacement homes in response to this catastrophe, which took place about a century before FEMA!
In closing, after seeing the multiplicity of examples of the free market solving its own problems, the aforementioned facts substantiate the question that is posed in the title of the article: “Can the Free Market Solve Society’s Problems?”
The free market is the ideal, and comprehensible, alternative to solve the crises that occur in societies. Once we as a country and a global society recognize this, then our country will begin to make progress.
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