Friday, January 23, 2015

A Free Market is the Only ‘Natural Order of Things’

Continuing my critique of the New Jersey Star-Ledger’s editorial regarding Obama’s State of the Union address,  Obama's Robin Hood plan is overdue, I addressed a tactic that proponents of liberty are often accused of; that if you oppose the latest statist proposal, you’re for the status quo. Tom Moran, for the Star-Ledger editorial board, wrote in the comments:

I don't regard the current distribution of wealth as given from God, or even the free market. The government makes choices that influence it now. It makes the rules on minimum wage, on organizing unions, on trade agreements, on preferential treatment for income coming from capital over labor, on education.

Even subsidizing home mortgages, which is a giant benefit to the rich.

So those who say this natural order of things should be left alone are missing that. Obama would bring some measure of justice to this

I left this reply:

“So those who say this natural order of things should be left alone are missing that.”

The current status quo is not the “natural order of things.” We don’t have a free market. We have a mixed economy; an economy corrupted by government controls and political favor peddling. In today’s system, some of the wealth of the rich comes from cashing in on government favors or asset prices inflated by the Federal Reserve’s inflationary easy money policies. But that is a consequence of our mixed economy, regulatory welfare state and the Federal Reserve. In our politically corrupted system, the coercive power of government undermines the justice of the free market elements. Notice that the stagnant wages since the late 1990s alluded to above coincides with a huge expansion in government spending, debt, and regulations under Bush/Obama. Obama’s policies don’t fix anything. They only double down on the status quo. The cure is not more redistributive taxes, which doesn’t distinguish between fortunes by favor and fortunes by productive work—between the unearned and the earned. We should instead roll back the government’s power over our economic affairs, institute a non-discriminatory low-rate flat income tax after a single personal exemption for each individual, and abolish the Federal Reserve.

The justice of the free market derives from the fact that people’s wealth is determined not only by the individual’s own efforts but by the voluntary choices of those he trades with. Government is force, and when the government interferes in the economy, it brings the power of aggressive force (the power of a gun) to bear against private decision-making. A free market is the absence of aggressive government force. That fact makes free market capitalism the only system of economic justice because it is based on voluntary, mutually beneficial association and contract.

Of course, property rights—the essence of economic justice—requires a government to protect those rights. That government has to be paid for. That’s where taxes come in. Ideally, taxes should be voluntary. But that’s obviously not possible today, given the widespread entitlement mentality. The next best thing; a flat tax. Steve Forbes suggested a good one. His plan would have only a healthy personal exemption for every individual, which would exempt roughly the first $46,000 of income for a family of 4. After that, a non-discriminatory 17% tax on all income. That’s fairness. That’s real economic justice.

Related Reading:

Capitalism: The Unknown Ideal—Ayn Rand

No comments: