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Free Markets at Work

Entry 1332, on 2011-09-26 at 14:44:03 (Rating 4, Politics)

Most of us barely notice what a pathetic, immoral, and inefficient economic system we live under. We are so used to the "system" not working properly, and we are so inundated with propaganda supporting it, that we just think it's obvious inadequacies are normal. But occasionally it becomes more obvious that in fact free-market capitalism doesn't work and it should be then that people push for change.

I should first talk about what I mean by "work" in this context. Many conservatives and libertarians like to define work as what successful business does and then go on to define success in terms of whether the business works or not. It's a circular argument and that argument is one thing that definitely doesn't work.

I'll give an example. New Zealand has very expensive phone, internet, and other communications despite having two large multinationals allegedly competing with each other. When I talk to people about this many say the prices are fair because that's what the companies can charge and that's just the normal operation of successful business.

There's never any discussion on the quality of service, or the prices compared with other countries, or how the practices of the two companies affect the country as a whole. It's just simply that they get away with it so it's OK.

As I said above, sometimes extreme situations can make these deficiencies more obvious. The Christchurch earthquakes started almost a year ago now but the re-building of the city doesn't seem to be going far. Why? Because insurance companies are slow paying out on damage and they aren't insuring new buildings, and property developers are restricting land for building to keep the prices high. I'm sure there are many other factors, including on-going minor quakes, but they are less significant.

The current government is sticking with its standard laissez faire economic approach. Not interfering with the market is more important to them than helping the victims of the disaster. In contrast the opposition has said they would interfere by buying and re-selling property to bring prices down and by intervening in the insurance market if necessary.

Of course the government ridicules the idea without really saying why because there is no reason except it's against their pernicious political principles to interfere in free markets even when they don't work. But there's that word "work" again. According to the government the system is working because they define that as doing whatever the market wants to. After all, it is "free".

A similar problem exists in other parts of the world. The US has a hopelessly inefficient health system largely because of the insurance companies operating there. Shut down all of them and the problem would be largely solved. But even the so-called socialist Obama wouldn't do that because he also has faith in the free market to solve all the world's problems.

Well it won't. In fact the free market is the source of many of the world's problems. Wasn't that obvious after the banking debacle and the ongoing financial predicament many countries are in?

I'm not advocating moving everything to a government controlled fully socialist system. There are many places where the private sector works adequately. But if it is going to be allowed into essential areas like health, insurance and banking it must be very carefully monitored and controlled. Being allowed to operate in those areas is a privilege and if the companies involved make a mess of it and then are disadvantaged by government intervention then that's their fault for not getting it right to start with.

I'm not a raving lefty, or an advocate for total government control, or a communist, or even an extreme socialist. I just want people to admit that free markets really deliver only one thing: maximum profit to shareholders who don't really care about the side effects of their investments. If that's the system "working" then I think we need to look at a new definition of that word.

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