The Free Market

The Mississippi River Basin is the largest river basin in the world, and stretches from New York to Idaho and from Canada to the Gulf of Mexico. In the course of American history, the river often flooded, but not until 1927 had so many people been killed and left homeless and never had such a large land area been covered by water. It was the greatest flood in history, but this fact is not as well known: government caused it.

Keynesian economics continues to infect much public debate, despite being debunked for decades by Austrian economists, some mainstream economists, and reality itself.

America's "War on Drugs" has become primarily a war on marijuana smokers. Federal data released this year reveals almost half of all drug arrests are for marijuana, and that approximately one in seven drug prisoners is now behind bars for marijuana offenses. Research reported by the Federation of American Scientists (FAS) in June found that 59,300 Americans are sitting behind bars on marijuana charges.

Making splashy headlines, the National Marriage Project of Rutgers University reported this summer that marriage rates are at an historic low. Americans are waiting longer to get married and are choosing alternative arrangements to marriage. Data showing that divorce is on the decline turn out to be more complicated: people are taking fewer risks with marriage in the first place. In thirty years, the percentage of adults living as a partner in marriage has slipped from 68 to 56.

The Titanic story began to be politicized as soon as news arrived that the ship had gone down in the North Atlantic during the early hours of April 15, 1912. Senator William Alden Smith, a "progressive" Republican and friend of activist government, called the White House to find out what President Taft intended to do about the disaster. He discovered that Taft did not hold the typical twentieth-century assumption that the president of the United States is responsible for solving every problem in the world. Smith was told that Taft intended to do nothing about the Titanic.

Those arguing that Wall Street and other major industries cannot survive without a strong regulatory structure because regulators keep markets fair must now answer a basic question: Who regulates the regulators?

Statists never admit their failures. Indeed, to the statist failure is "success." For rather than acknowledging the interventionist "root causes" of urban decay (to borrow one of Janet Reno's favorite phrases), they propose even more intervention. The proposal is to have state governments impose on metropolitan areas, without a vote of the citizens of those areas, a new "regional" taxing authority that could impose a new layer of taxation on the residents of all counties within a metropolitan area. The tax revenues would then be used to continue to fund the failed government school monopoly, welfare, government housing projects, and any number of equally destructive government programs. As Mises warned, one government intervention always begets another.

Private subways-even though highly regulated, even though the fare was held to a nickel by government decree--fueled the expansion of the city. As lines were extended, neighborhoods and shopping centers grew around the stations. But by 1940, through rigorous regulation and through Communist labor unions that sabotaged private ownership, the subways were taken over by the city.

The most obvious alternative to government-mandated service is to use a free labor market. The government should advertise and recruit appropriate individuals and pay competitive wages. (When I proposed this to a local attorney he looked at me like I was from another planet. Yet, this same attorney thinks nothing of hiring his own paralegal help or advertising in the newspaper to sell his own services.)

When Janet Yellen, Clinton's chair of the Council of Economic Advisors, resigned her post, she said it was for purely personal reasons. But according to inside reports, the personal reasons included frustration at having to lie day-in and day-out. No matter what the economic data of the week, she was expected to give it a spin that would boost the president and smear his enemies.

Civilization is subverted by inflation. Readers old enough to remember 13 percent inflation remember how it turned life upside down. Savers were considered to be suckers while financial profligacy was considered wise. Plans of a lifetime were gutted, employees were always angry, and businessmen found even the simplest accounting tasks to be maddeningly confusing. And yet 13 percent is hardly high by this century's egregious standards.

The internet provides a remarkable test case of the free market. What have we learned?

Free markets may be productive, a common complaint runs, but they lead to unjust results.

According to the hoopla, the World Trade Organization (WTO) was created in 1995 as an instrument of global free trade. Instead, it is proving to be a vehicle for corruption, economic reprisals, and politicization of trade.

The international socialist movement, led by Bill Clinton, British Prime Minister Tony Blair, and German Chancellor Gerhard Schroeder, is attempting to revive the disastrous policy of war socialism with which the current century began.

Nowadays every frontier of human achievement faces a regulatory barrier that must be crossed. Those regulatory barriers are often prompted by interest group fears based more in political theory than reality. In particular, biotechnology is one of the more contested and feared additions to man's arsenal of control over his environment.

After the US government attacked Yugoslavia, the first act of the Republicans was to take tax cuts off the table (if they were ever really on it). This symbolic gesture underscores a point: when a war is on, the work of liberty is off. For this reason, everyone concerned about freedom must oppose war.

Without an accurate accounting picture, federal agencies do not know the costs of their programs and do not have the financial information needed to make informed day-to-day decisions. The government's failure to maintain common accounting standards creates the possibility that billions of dollars have been stolen or wasted.

There is no magic in democracy or in democratic processes that transcends the inherent defects and limitations of government itself. A democratic government will still be a government, and this fact is more important than the mechanism by which leaders are selected.

Murray Rothbard once asked Ludwig von Mises at what point on the spectrum of statism can a country be designated as "socialist." To his surprise, Mises said that there was, indeed, a clear-cut delineation: the stock market.