Posted on 08/08/2007 8:10:09 AM PDT by Kaput
Freedom Is Not Free by: Matt Hadro, August 08, 2007
This cliché of government intervention might not be the effective long-term solution for the economy that many trust it to be. John R. Lott, Jr., PhD, author of the newly-published book Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don’t, believes that government intervention into a free market can adversely affect the economy. Lott further maintains that many so-called “market failures” actually become profit opportunities for those people who work to solve the problems.
Dr. Lott was at the Heritage Foundation last Wednesday to discuss his book and explain his thesis supporting a free economy despite its shortcomings. Lott drew upon multiple examples from his book to prove that the free market works most effectively with as little government intervention as possible, and is actually able to solve its own market failures over time, contrary to popular opinion. Also, Lott expounded upon the long-term domino effects that touch society when the government exercises sufficient power.
For example, the common consumer complaint is that in the car sales market, the corporations have a detailed agenda to rip them off. Once a new car is out of the sales lot, it loses its value by a supposed 20-25%. How can this not be a blatant example of free-market inferiority? Well, Lott began, it is actually quite easy to test this premise. By researching certain books on used cars and their values, looking at private transfer prices and transferable warranties, consulting automobile mechanics and convincing the potential buyer of the true value of the car, the consumer could very well find that the actual depreciation in value of the car is about only 4%. Though this particular case may be a specific example, it can be generally proven that through hard work and research, one can see that there is no such stone wall between consumer and corporation. After all, the businesses are accountable to the customer, because with competition in the market, they must cater to the consumer to sell their goods. Blatantly trying to cheat the consumer would be senseless in a competitive market.
In like fashion, the high prices for pharmaceutical products remain at the center of one of the most virulent economic debates today. With the threat of price controls from the government on drugs in America, the pharmaceutical industry is uncertain about its economic future. The cost is quite cheap for pharmacies to stamp and manufacture pills and drugs, but the real underlying cost sits in the drug companies’ research and development of new drugs, a process that takes years and hundreds of thousands of dollars to carry out. However, the general public does not view the issue like so, rather criticizing the drug companies for making money off of the low-income population who can not afford the high prices for American drugs. The possibility remains that the U.S. government may soon begin importing Canadian price-controlled drugs, through which the American drug companies would lose money and subsequently stall new drug development, with the full consequences taking years to completely unveil themselves. The costs aside from printing and manufacturing drugs are enormous, and yet many Americans remain ignorant of this.
“The problem is,” he continued, “we’re trying to get someone else to be altruistic rather than ourselves.” Personal accountability and incentive is the driving force of the free market, but trouble is brewing when the majority of a country’s citizens desire to pin the responsibility, and therefore the power, to solve economic problems, on the government.
“Government intervention is responsible for more than we think,” holds Lott. He shattered yet another commonly held myth when he spoke of the recent campaign finance regulations. Wishing to check the financial effects of money on elections, the government actually causes the opposite results to happen than intended. With the limits on donations to a candidate, an incumbent could very well have the advantage over a challenger if the experienced incumbent does indeed possess a longer list of donors. Since the incumbent might then be far ahead in the race, voter turnout would then drop, since a competitive contest spurs greater turnout in the voting booths.
Matt Hadro is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.
If you would like to comment on this article, please e-mail mal.kline@academia.org
The biggest government screwup in the pharmacetical industry comes from the “War on Drugs”.
http://www.express.co.uk/posts/view/15642/4,000-people-a-week-trying-to-leave-UK
4,000 PEOPLE A WEEK TRYING TO LEAVE UK
Immigration is rife, but thousands are quitting Britain
Sunday August 5,2007
By Michael Knapp, Home Affairs Editor
BRITAIN is facing a mass exodus of people looking to escape the crime and grime of modern living.
The country’s biggest foreign visa consultancy firm has revealed that applications have soared in the last seven months by 80 per cent to almost 4,000 a week. Ten years ago the figure was just 300 a week.
Most people are relocating within the Commonwealth – in Australia, Canada and South Africa. They are almost all young professionals and skilled workers aged 20-40.
And many cite their reason for wanting to quit as immigration to these shores – and the burden it is placing on their communities and local authorities. The dearth of good schools, spiralling house prices, rising crime and tax increases are also driving people away.
-And we want to adopt UK’s socialist principals?? -gris-
And the FDA.
And the AMA.
Vying for the Fastest Thread Hijack of the Day award?
Sheesh!
Whining about the WoD is relevant to a thread on government interference in free market economics? Umm... No.
Hey, you want to talk about screwups, how about the way Major League Baseball has screwed up by allowing Barry Bonds to break the record! And if we want to talk about government intervention, how about government intervention that prevents creation science from getting their word out? And what about the government mistake of allowing abortion all these years?
Oh wait a sec...
I’m trying a little too hard to hijack this thread.
Never mind. I think I’ll just drop the box cutter and slowly back away.
Good researcher, John Lott. He makes some very good points.
No. Just pointing out the obvious: the "War on Drugs" not only violates the rights of users and sellers, but it massively distorts the market in legal pharmaceuticals.
You don't think the value of cocaine or marijuana is dominated by the fact that it is illegal? If it was legal, you could buy a wheelbarrow full for a few bucks. We might have more addicts if it was legal, though I think that is an unproven fact.
But there is little doubt that the profits would be miniscule compared to what is presently financing the illicit drug trade.
I have at least two neighbors who could probably put me in touch with a dealer. Should I drop a dime on them based on this reasonable suspicion? Would the world be better off with them in jail or in one of the many "programs" being paid for with our tax dollars? I don't think so.
You've turned the whole thread on its head. Yes, the WoD is relevant in terms of the economics of illegal drug trafficking, but that isn't what the thread is about, is it?
The WoD is not a significant factor in the US economy as a whole. That's the subject of the article.
As much as the WoD is a huge, massive, critical, life-and-death matter to some, it isn't (wasn't, prior to the hijacking) what this thread is about.
And the resale value of used automobiles IS relevant? The rules must be very complicated.
YES!!!
As hard as this might be to believe, more Americans are concerned with the price/value of their car than they are with the legalization of illicit drugs. And, to further blow your mind, more money is wrapped up in the automotive industry.
The rules must be very complicated.
The rules are only complicated when your world-view is warped by bizarre priorities of libertarianism.
Exactly. Hence much less money for the Islamic gangs from that source.
Your point bears directly on the subject of the article.
Oops! Thread confusion. Need a nap.
He has nailed this one. Yes it is wrong to ask the government to try and rectify all the so-called problems with the free market system. But it is also wrong, as many on this site love to do, to assume that the free market system necessarily eliminates all chicanery immediately.
Lots of people get screwed, and will continue to get screwed, through no fault of their own because it takes some time for the free market to catch up with the crooks.
That is why there will forever be a demand for government action, even if the cure ends up being worse than the disease.
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