Free Markets....................

Throughout of the duration of the American and Soviet Cold War, there were many strategies undertaken in America’s fight against the spread of Communism. In the end America came out on top not because of better tactics or strategy, but because of capitalism itself. Capitalism works, Communism doesn’t' t. The economic and political contradictions in Soviet Socialism would be the cause of it’s own downfall. It was evident to Americans working in free-market conditions that a society could not survive economically when decisions on production, and use of resources, were based on political interests. Free Markets allow the people to direct the growth of an economy. It efficiently allocates scarce resources to where they are most needed, and rations by prices that are determined by supply and demand.

Dan Oliver, of National Review, writes:
When a collection of free individuals are willing to pay a price for a product that creates “excess” profits, it signals producers to provide more of that product. If the market does not support a given price, producers are forced to redeploy their assets for more pressing social needs. Similarly, if a factor of production, such as labor or capital, changes in price, producers instantly react, sending signals — through the prices of intermediate goods — down to the consumer. Prices effortlessly allocate society’s assets to reflect consumer preference and adjust to accommodate the ever-changing availability of scarce resources.


But governmental interference in prices, through taxation, subsidies, and regulation, complicates this process — affecting not only the consumption of final goods, but also the economic calculations that are necessary to provide intermediate goods and services. Higher-order division of labor fails. Poverty results. For example, while Chinese and Russian central planners were busy setting quotas for steel mills, there was no method for consumers to signal that they preferred food — and millions starved to death.

No matter how well intentioned the government or political activist might be, they are unable to compare with the free market principles that are supposed to guide out economy. Today, the political class’s of the world (left and right) have decided to go with the so-called “Third Way”.
This is still socialism, but it is presented with a compassionate and less aggressive face. It’s intended to look and feel like a free market, but assigns government to the position of market Nanny. This allows politicians to consolidate their power, and guarantee’s their relevance at the expense of efficiency and production. Dan Oliver describes this as the soft or incremental socialism of the west. This type of policy has been well observed in every president since Ronald Reagan. Instead of the fast economic collapse witnessed in the Soviet Union, the Third-Way produces poverty in stages, which allows politicians to shift blame to an "unforgiving market". Whether they actually believe this or not I can't say, but shifting the blame from themselves helps them to continue in positions of power, where they inevitably make the same mistakes over and over again. They prop up the market, create bubbles and spend even more trying to prevent their collapse.

Dan Oliver continues in his article:
Every bureaucratic intervention in the market reduces long-term wealth creation, even if it provides a temporary boost to the economy. In time, this reduction of wealth is blamed on the inefficiencies of the remaining “unfettered” market, which provokes calls for greater intervention, ad infinitum.


Health care is a perfect example of the incremental socialization process. Government programs such as Medicare and Medicaid began by providing limited assistance to the old and the indigent. As health-care costs rose, these programs were expanded and new ones, such as S-CHIP, were added. The government now pays 32 percent of all non-military health-care bills, up from 6 percent in 1960. The remaining private expenditures are heavily regulated, resulting in the anticipated economic chaos. Under Obamacare, the situation can only grow worse. As P. J. O’Rourke quipped: “If you think health care is expensive now, wait until it’s free.”


Housing provides another example. Today, 71 years after Fannie Mae was founded, the central government provides a stunning 90 percent of the liquidity in the mortgage market, enabled by the Federal Reserve’s repurchase of 85 percent of new mortgages with freshly printed money. Banking is next.

The Market will have the final say, and no amount of government planning will change what the people want and need. "The economic laws that brought down Communism apply equally to America." The government can never know how to allocate limited resources, which have alternative uses, in the most productive way. Yet, the masses still clamor for federal intervention. If people continue to put their faith in social-worker politicians, we are doomed to the same economic fate as our Cold War rivals. It is already plain as day in the housing debacle, and signs of it are already showing in our medical care. Look at what Obama said yesterday regarding healthcare reform -- "If we don't pass this bill, the American Government will go bankrupt from Medicare and Medicaid costs" (not a direct quote, but that the gist of it). Explain to me how the government would be in a better financial situation by spending another trillion dollars that we don't have, on legislation that does not even address the cost of medical care. It only focuses on INSURANCE coverage costs, not the price of healthcare. They are very simply bailing out previous legislation that has failed. People need to be more aware of what our government is doing, because against the free market politicians are paper tigers.