Conservatives & Liberals - Do you think the "Free Market" will produce the best economic and social results?

[Andy F]

If so - why? What are the mechanisms involved, the reasons that you think will cause "free market" policies to do this?

If not -- why not? Why do you think the "invisible hand of the market" won't automatically do what's best for our society, despite the claims of those who say the market knows best?

Whether you're "pro-free market" or "anti-free market," where do you think other YA members should go for information & insights about this important question?

[Erick]

The free market may not produce the best economic results, but if you count freedom as a social result, then I think it qualifies as the "best" system, proper weighting applied to freedom.

[Riot106]

It will produce the best results more often than one with government control. Government has a role in helping markets like enforcing property rights and providing a legal system that allows you to sue a party that fails to keep its end up.

To illustrate how it would work is imagine a buyer and seller come together to do business. They each have a set of circumstances that would allow a transaction. By adding a third party, government, into the transaction the parameters of acceptable transactions a reduced.

Now make a list of all nations ranking them in order of how free their markets are. Then make lists of nations ranked by standard of living, freedom, wealth, etc. You will see a high correlation.

Free markets aren't perfect and often fail at valuating goods, but free markets are self-correcting. Government controlled markets have systematic deficiencies.

[TK]

Yes. I believe free market capitalism has and always will produce the largest range and greatest number of private sector jobs for the greatest number of people, skilled and unskilled, over longer periods of time than any alternative economic system. And if that is true, then free market capitalism should also produce the greatest amount of tax revenues on a sustainable basis than any other economic system.

If free market capitalism produces the greatest wealth generating private sector and therefore the best financed public sector, then it must produce the best overall economic results by definition. (If there are economic measurements that can be made to suggest otherwise, then I am not aware of them.) By social results I assume you mean social structure.

I believe free market capitalism provides the greatest opportunity for people to progress from one socioeconomic class to another by virtue of individual initiative, intellect and creative innovation. Free market capitalism not only promotes individual economic improvement and social mobility; it makes it inevitable. Conversely, the public sector has the responsibility for maintaining the stability of the social structure by devising and maintaining complementary safety net and/or entitlement programs that can be sustained by private sector economic activity. The public sector also has a responsibility to sustain the private sector by providing public education, police, fire, and national security services at the state, local and federal levels as necessary, and to regulate and oversee the private sector reasonably and appropriately.

I like to watch CNBC and Bloomberg TV for all types of business/private sector information and analysis. I like to watch MSNBC for political/public sector information and analysis. There are all sorts of business, economics and political websites and blogs as well. I spend almost no time perusing political websites or blogs. I occasionally check Brad DeLong's economics blog, which he used to call "Grasping Reality with Both Hands." I also peek at the Baseline Scenario, which can be quite intelligent. (But mainly I scan it because I have a weird feeling that Simon Johnson don't much care for me. I wouldn't say the feeling is mutual, but he does takes himself far more seriously than I take him or any other academic.)

Bill Wheaton is a Professor of Economics and Urban Studies at MIT. He also ran/runs MIT's Center for Real Estate Studies. I have no idea if Bill has a blog, but if he does I'm certain it would be worth your while to read it since the U.S. real estate market is the Achille's heel of our economic recovery. And since we're on the subject, I'm more than a little bit surprised that economists like Bill Wheaton from MIT, Karl Case from Wellesley, and Robert Schiller from Yale and others haven't been consulted by the White House to talk about ideas and solutions with respect to reviving/reforming the U.S. real estate markets and mortgage instruments. Personally, I would never overlook their collective intelligence and creativity in these matters.

Take care. Hope this helps. Have a great Thanksgiving!