Let The Free Market Live
August 15, 2010
The City Paper
Our free marketplace is not perfect—and never will be. But it is the most spectacular, wealth-generating machine in the history of the world.
No one likes what has happened to our economy recently, but we should never forget that wealth is created by individuals and business—not government. Our systems of economic freedom, innovation and entrepreneurship will continue to generate powerful, long-term growth—as long as we don’t mess it up.
Paralysis of Perfection
Our nation was founded on the principles of freedom that include limited government and maximum personal rights. We cherish our right to freely pursue any legal business opportunity with minimal government restriction. That’s how our phenomenally successful system works.
More government regulation only means a higher cost to do business, which translates to consumers paying higher prices for goods and services. Attempting to regulate ourselves to perfection will only lead to paralysis.
Right now, we can still try any “wild and crazy” idea for a new product or service, as long as we don’t violate the various laws and regulations. Often it is these very wild and crazy ideas that lead to innovation and wealth creation. These are ideas we should encourage and celebrate.
Incentive to Innovate
Suppose you have an interesting idea about a new product. You borrow a little money, buy some raw materials, assemble your product and then sell it. Most ideas fail, but let’s say yours works. Next you rent a building, lease some equipment, and hire an engineer, a few production folks, an accountant and a sales person. You are creating a product for customers, employing a half-dozen people and generating wealth that you will likely reinvest in your growing start-up business. This is the American way.
As this scenario demonstrates, wealth is created by individuals and businesses, not government. But government can redistribute wealth. It’s a vicious cycle. The more we borrow to redistribute (to be paid back by future taxes), the more we increase taxes and impose additional regulations, which in turn discourage our entrepreneurial spirit. The more the government takes and regulates, the less incentive individuals have to innovate and produce.
Our collective objective should be encouraging wealth-creation systems, processes, regulations and laws. We do have the best economic system in the world, and no matter what has happened recently, we should never forget how we achieved such success in the first place. The free market is our wealth generator, and the wealthier the nation, the more opportunity for every citizen.