Our Market Economy - well, almost

We're supposed to have a market economy where supply and demand drives the price of products and services. A key element in the free market is competition, and that effects things like cost, availability and quality of goods and services.

For the most part we do have a free and competitive marketplace, but there are so many government influences in the economy that it's more of a free mess than a free market.

And, we clearly see the results.

With government involved, the marketplace certainly isn't free, but we might as well get a good laugh while we're paying for it.

Libertarians would love to have a more free market. There are many benefits to it. Government control freaks, do-gooders and "officials" prone to panic attacks won't let the market be a fluid place where it finds its own level. They are just not brave enough.

Instead, they promote constant adjustment of this and that to get the desired result - whatever that might be. Prices are either too high or too low, and unemployment is always an issue - no matter what that number might be.

In a market economy, it may seem a bit odd to include discussion about the government, but we absolutely have to because they are a player - not a very good player, and certainly not a team player, but a player nonetheless. We also need to include the producers of wealth and the employees who do their part as well.

It's all very complicated, and perhaps we'll never get it sorted out, but our American market economy is what it is, and that's that.

There are only four things in the American market economy that you can always count on:

1. The Federal Reserve knows everything about the economy that there is to know and can solve any problem by simply adjusting interest rates.
2. The current administration is always responsible for the success of a healthy and vibrant economy.
3. A bad economy is always the fault of a previous administration.
4. The taxpayer always pays for the consequences of government meddling.

In our discussion of the market economy, we'll look at a wide range of issues, activities and outcomes to learn how well a free market works. We'll also look at how and why our tanglefoot government tries to influence the market - and the predictable outcomes of those misadventures.

Before we begin, I should get something out on the table in front of us - I'm no expert in economics. I really have no business writing this, but I thought it might be interesting to see how an average citizen with no economic training or expertise grasps the situation. It might be good for a laugh.

Alternatively, if what I write makes sense, and my assessment of the market and government appear to be reasonable, then it should speak to how easy it is to understand economics. Yes, I know that there are a lot of complexities in the marketplace and economics isn't child's play, but I also know that the natural world is infinitely more complex, and it works just fine when we leave it alone.

Perhaps it's all the "fiddling" that we do that does the damage.

If we would ever give our market system a chance to be free, we'd see that it's self-regulating. That's a nasty concept with government types because they feel it's their job to regulate the marketplace - the very source of wealth that pays for the government.

It's a lot like a child who insists on regulating its parents, and ends up doing so to its own detriment. The free market creates wealth, and this provides revenue for government in the form of taxes. The government then regulates the marketplace which in almost all cases harms the "free" part of it which adversely affects the ability of the marketplace to grow and prosper.

Government interference in our market economy also discourages people from investing and that in turn hurts our ability to produce wealth, which in turn affects employment, and it all results in reduced revenues for the government.

Ultimately, the child creates a worsening situation for all, and the ensuing tantrums, admonishments and finger pointing are what we see on the nightly news.

With that, let's overview the topics of discussion here as we examine our market economy. In no particular order, they are:

The free market system, or at least what it is supposed to be in an ideal world. It's really a sort of double oxymoron here in America - it isn't free, and it can't be understood like a typical system. It's much more fluid and dynamic, and much of this is driven by entrepreneurs that are successful despite all the "help" from our government.

Next, there is the ever popular economic stimulus plan. It's popular among the masses because they get a government check courtesy of the taxpayers. Whoopee! Free money from the government! Okay, that's not exactly true, but many are fooled into thinking about it that way.

It's really a handy form of income redistribution from high income taxpayers to others. I don't think it does any good at all. Let's look at the reasoning behind it all, and see if we might find some logic. I doubt it.

For those with a eye for detail, here are some insights from the legislation that shows just how much this "plan" is really not an economic stimulus package, but more a government stimulus package.

Then there is the bank bailout. If there's one thing you wouldn't expect a bank would need, it's money. But apparently with all the mortgage defaults, the banks aren't getting payments on loans and that means they own the houses but aren't making income.

So, they have lots of wealth in real estate, right? Not exactly. It's the old warning from money wise friends: "Don't count on your home as your savings because it isn't exactly a liquid asset. How true. With the mortgage defaults, the banks have lots of real estate on their hands, and not many enthusiastic buyers.

How did all this happen?

Oh, and don't forget the auto bailout. The rally cry from the auto executives is something like "millions of jobs are at stake". Did they just figure this out? Wasn't this foremost on their minds? Apparently they had other priorities.

It seems that the "better hype for no better product" has backfired on the auto industry. Of course, they're caught up in the mortgage crises too. If you can't pay for a house, why would you be interested in a new car?

But, why bailout the auto industry? We did it before with Chrysler, but that doesn't mean it's a good idea again.

A key part of our market economy is the labor force. There are lots of issues to discuss here, most notably the idea of a minimum wage. It's more interference from the government with the idea that it will somehow help those that are in poverty. If you look closely, it does no such thing because the poor aren't there because they don't make above minimum wage, they're there mainly because they don't work.

All my fellow citizens with libertarian ideals, please sit down and hang on. We're going to find out about how our government tramples on our market economy and then wonders why it's in such sad shape.

Done with Market Economy, take me back Home