The free market is the propensity of someone — an individual, a tribe, a corporation — to willingly trade something he has — labor, rhubarbs, intellectual property — for something he prefers. As understood by economists, the free market has rules. Economists do not consider kiboshing someone on the head and taking their Microsoft stock a free market transaction.
The rules should provide for the sanctity of contract and protect property rights.
If there are neighborhood effects, noise or air pollution, those causing injury should pay recompense.
An enterprise should not be allowed to restrict free exchange or to exact monopolistic prices.
In natural monopolies — utilities and roads — where competition would require the construction of costly parallel infrastructures, government or government regulated, monopoly is preferable.
Paul Boor, in his column (“Column gravely overstated free market’s virtue,” The Daily News, Nov. 16) suggests my earlier column overstated the free market’s wonderfulness, a view which reflects the common miscomputation that “free market” means “no rules.”
I wrote: “The free market is unrivaled at producing the goods and services people want at the lowest possible price. It is the most democratic of institutions. Everyone’s dollar has the same value, and the voting of those dollars evidences demand and determines what will be produced.
“When the market is coerced to respond to something other than aggregate demand, it operates less efficiently, shifting resources to produce things people want less.”
In rebuttal, Boor suggests that the VA benefits initiated for Word War II veterans were contrary to the market as the veterans had previously been paid. Bad example: many veterans were conscripted, some enlisted in anticipation of conscription, others from duty, but few, if any, for the below market pay. Further, the market does not prohibit bonuses for a job well done.
Boor descries the possibility that roads might become toll roads, yet, most state and U.S. highways are now, and have been for years, de facto toll roads, being largely paid for with gasoline tax, which serves as a proxy for a toll booth.
Boor suggests that we all want the Cadillac version of medical care even if we are unable to pay for a Ford and that our care is dependent on the dedication of practitioners. Both are undeniable.
But physicians of a hundred years ago were no less dedicated, but were less successful. They did not have the benefit of the medical instruments, devices, medications that are largely the product of the market, even if much of the basic science, at least, that of the last half century has been funded by market produced tax dollars.
The market is not a religion; it will not solve every problem. It is a process similar to evolution or distributive computing that is unbiased, democratic and efficient. It has innumerable interlocking cogs, and, when government uses a monkey wrench to adjusts the cogs, even seeking a laudable result, it may (or may not) give the people more of what some bureaucrat wants them to have, but it will undoubtedly give them less of what they want themselves.