Dean Baker at Beat the Press:
Listeners might think that it is after listening to a segment this morning that discussed increased public opposition to trade in the context of the Republican presidential debate in Detroit tonight. They could have saved air time and increased accuracy by dropping the word "free." After all recent trade agreements have done little or nothing to remove barriers to trade in highly paid professional services, like physicians' and lawyers' services (or reporters' services), so they are really only about reducing some trade barriers. The upward redistribution discussed in the segment is not an accident, it is the expected outcome of such trade deals. [read the post]
Two things to remember about free markets: They are not divinely inspired, and they require government regulation.
- They are not divinely inspired. A free market can be a good idea in one context, and still be a very bad idea in another.
If I'm selling a service or commodity that's relatively easy to produce, and, at the same time, possible to do without—like oranges or catering—a free market does a great job of assigning a fair value, and regulating that value according to supply and demand. On the other hand, if I'm selling a product that is hard to come by, and, at the same time, impossible to do without—like medicine or surgery—a free market will quickly raise the price, especially if there's a way for the providers to block the entry of new providers into the market. - A free market, like a free country, requires government regulation. The U.S. is a free country precisely because we have laws (government regulations) that make it one. If you decide to rough me up because I don't agree with your politics, you'll very likely end up in jail. That fact is essential to my freedom.
The same is true of a free market. If there is no regulation, the wealthy (individuals or corporations or both) will quickly find ways to use their power to control the market. Then it will no longer be free. The idea that the only threat to a free market comes from government is naive.
If we want the best of both worlds—minimum government control and minimum control by the wealthy—the answer is to limit wealth. That means a highly progressive set of taxes, which then get funneled into services for the poor or for everyone: free education, social security, medical care, etc. By limiting excessive wealth, we can limit excessive control of both the market and the government by the wealthy. A highly progressive tax system is not a new idea—we actually tried it, quite successfully, in this country once already.
