Reply #67: There is a difference... [View All]

[QuestioningStudent]

between the quality of the government regulation of the market under a market liberal (m.l.) or free market system, and the quality of the government regulation present in mixed economies like those present in pretty much all nations today. M.l. system government intervention exists only to: secure physical property rights; secure intellectual property rights; ensure all transactions are voluntary, and punish those that are not; provide courts to adjudicate disputes arising out of either alledged force/fraud in a transaction, or out of the disputed terms of a voluntary transaction; and--this is debated depending upon the m.l. enthusiast you're talking to--provide for the minimum economic needs of those individuals in society who are unable, through some circumstance--be it a profound mental or physical handicap, youth, senility, etc.--to provide for themselves. That last point is endorsed by such m.l. luminaries as Smith and Friedman, while being attacked by Rand, and, in the past, Greenspan.

Every government intervention in the market, the m.l. argument goes, beyond those basics listed above, which are necessary to ensure the existence of a liberal market, will damage the ability of the marketplace to determine income according to each individual actor's adherence to the incentive of following that old economic maxim "buy low, sell high." If each actor has the information flowing to and from him in the form of prices obfuscated or altered by intervention in the market by the government, whether such alteration be by the implemenation of a minimum wage, price cap, business subisidies, the existenc of protected unions, government restricted entry into a business field, or anything remotely similiar, the m.l. system begins to break down, and become less effective.

So, really, the argument that reducing the tax rate on the rich WORKS can only effectively be made in an economy that is essentially m.l. in nature; if the economy is not, the signals transmitted in the economy through prices, and the incentives thereby provided, will not serve effectively to stimulate the economy to growth. Therefore, any discussion that attempts to explain why reducing or altering tax rates will stimulate the economy must also venture onto the grounds of explaining a m.l. system.

Right or wrong, that's how a market liberal thinks. Incidentally, I use the phrase market liberal to isolate just the relevant economic philosophy, and distinguish it from any political or social philosophies, such as libertarianism--which purports to believe strongly in this model, or conservatism--which believes, albeit to a lesser degree than libertarianism, in market liberalism.