We aren't really free

We tend to think of America as being a generally free market. We think of housing as being part of this free market and road construction as being a controlled market. We are dealing, however, with superficialities. There are thousands of regulations, tax penalties, tax incentives, standards, zoning laws, etc., etc., etc., that really stand between America's current business system and a real free market.

Here's an article about our recent economic troubles. It starts as a critique of an article published by Paul Krugman, then goes on to explain what's really going on. Long story short, you can't blame free markets as long as the government is manipulating the banking system and the money supply. You can certainly blame the market in its current form, but you can't blame free markets in general.

http://mises.org/story/3046

Overdub 2008-07-30 12:42
After having read the Paul Krugman article in the New York Times, I have to add a few comments.

1) While I wouldn't say that low health care premiums would lead to a "boom" because there are different definitions of what constitutes a "boom". I WOULD say that lowering costs in ANY industry ANYWHERE promotes a higher standard of living.

The author of the Mises article already pointed out that Clinton's reforms wouldn't have necessarily reduced costs. I would add that Republicans made similar attempts to reform health care by limiting physicians' liability to lawsuits in order to lower health care costs, which Democrats blocked.

Ultimately, lower health care premiums can lead to greater employment, but so can separating health insurance from employment altogether. If employers didn't have to pay for health care at all, they could afford to hire even MORE people. This kind of argument could be used in favor of socialized medecine and consumer driven medecine.

2) According to Krugman, high energy costs are slowing down our economy. His solution? We should have raised energy costs (via taxation) earlier. How does that work? If high energy costs are slowing the economy, then raising taxes 8 years ago would have provoked this recession 8 years ago. If promoting fuel efficient technology was his goal, then today's recession is doing exactly what he wanted it to do 8 years ago. What difference does the timing make? If low gas prices were a "problem", then can't we pin the blame for vehicles like the Ford Excursion squarely on the Clinton Administration who presided over $.98/gallon gas prices?