A recent article from the LA Times website with the headline “Americans may be losing faith in free markets” uses this teaser line:
Things are hard all over the financial landscape, and politicians and experts are now looking with favor at more, not less, government involvement in the economy.
Here are the first few paragraphs of the article to give more of a flavor of what is being stated:
For a generation, most people accepted the idea that the core of what makes America tick was an economy governed by free markets. And whatever combination of goods, services and jobs the market cooked up was presumed to be fine for the nation and for its citizens — certainly better than government meddling.
Spurred by the continued housing crisis, turmoil in financial markets, spiking oil prices, disappearing jobs and shrinking retirement savings, the nation and its political leaders have begun to sour on the notion that the current market system is the key to a fair, stable and efficient society.
There are two assumptions this article makes that are particularly concerning but in no way new to how the United States economy is viewed by much of the media and many citizens as well. First, it assumes that our current economy is governed by a free market. Secondly it assumes that more government intervention will somehow solve current and future economic problems. Characterizing the United States’ current economy as “free market” is fundamentally incorrect and shows how blind many are to these three realities:
1. We don’t have a truly free market – to assume otherwise is a fundamental misunderstanding of the nature of our economy
2. Current economic difficulties are a result of too much government intervention and involvement in the economy, not the free market
3. Problems caused because of government intervention/planning cannot be solved with more government intervention/planning
The LA Times article shows a failure to understand the first two realities listed above and thus the conclusion of the article that more government involvement is necessary. This is like the doctor concluding that a bleeding patient needs to bleed more to heal. Sound silly? Well so does this LA Times article.