You Decide

"Irreconcilable Differences
Free-Markets and Interventions

By Barry A. Liebling 07 Apr 2009
Source TCS Daily

"The debate on how to address the economic crisis can leave you breathless. Discerning free-market advocates understand that government meddling contributed to the troubles and restricting the government to its proper function of protecting individual rights is the path to setting things right.

Interventionists take the opposite view. They are convinced that the problems are due to inadequate regulation and describe the last eight years of the Bush administration as being inspired by an "anything goes" keep-the-government-out ideology. They argue that if the government had used a stronger hand the current malaise might have been avoided. The long-term remedy is to increase government involvement in business.

Free-market enthusiasts counter that Bush's policies were not characterized by deregulation, "anything goes," or hands-off - but were marked by massive increases in government domestic spending. The United States has not had anything close to a free market at least since the Federal Reserve System was established in 1913. During the New Deal the government's muscular reach was prodigiously expanded and has been growing ever since.

We live in a mixed economy - where some activities are free-market while others are regulated by the government. So when things go wrong the mixture serves as a talking point for both sides. Free-marketers identify government interference as the culprit, while interventionists say that a lack of government supervision leads to pain.

Bring a principled free-market advocate and a committed interventionist together for a calm, unhurried discussion. Can they ever see eye-to-eye? Have them review the historical evidence, discuss the anticipated consequences of interventions and what they think public policy ought to be. What is the prospect that they will agree with one another about what should be done? Anorexically slim.

When you drill down, the conflict between conscientious free-marketers and interventionists is not about facts or about what people are likely to do. It is about values - what each regards as the way things should be.

The core premise supporting the free-market is individual rights. Every person has the right to life, liberty, property, and the pursuit of happiness. This means that all economic exchanges must be by voluntary mutual consent. No one has the right to anyone else's efforts or property without his or her permission. No outside force, whether bandits or a governmental body, can justifiably interfere with what terms you or your trading partners decide among yourselves. Government is essential for the maintenance of a free-market, and its role is protecting individual rights - prohibiting the use of force or fraud.

By contrast, the assumption of the interventionist is that society and the state take precedence over the individual. It is the group that counts and has rights. Thus, interventionists focus their attention on "social justice" which is different from genuine justice. They have antipathy for "unfettered" individual freedom because they realize that when people act according to their own judgement and preferences the outcome may not be to the interventionist's liking. Interventionists see wealth redistribution as a key function of government. Money should be taken from those they despise and given to those they favor.

How do the adversaries think differently about the creation of wealth? Both agree that free-markets have historically been highly effective engines for generating riches. The principled free-market advocate understands that individual freedom is the essential rationale for non-interference. It is true that free-markets create more prosperity than any regulated system, but that beneficial consequence is not the primary justification. If it were, it would open the door to meddlers who would endlessly propose schemes that violate individual rights in an attempt to crank out more wealth.

The interventionist understands that more freedom and less interference leads to greater productivity, so he does not want to institute too much of a command economy. Interventionists are perpetually searching for ways of encouraging producers to create lots of wealth that later can be confiscated for "the common good." The interventionist conundrum is how to squeeze the most out of producers without demoralizing them.

What do free-marketers and interventionists think about criminals? Both are incensed by thieves and fraudsters. The principled free-marketer knows that villains who violate the rights of individuals should be stopped in their tracks. This is where government should take a strong stand.

Interventionists are ambivalent about criminals. On the one hand they believe that force or fraud perpetrated by private individuals is odious and deserves penalties. But every time a criminal is exposed there is opportunity. The incident can be used as a rallying cry for more control of the economy. Interventionists can proclaim that in spite of any laws that are on the books, criminals are still doing mischief. And the solution is more laws, rules, and regulations.

Principled free-marketers and interventionists cannot reach consensus because they have incompatible visions about how people should live. Of course, interventionists might learn to understand and appreciate the value of individual rights. Don't hold your breath."

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