Free Markets or Greed

by Don Harkey

Wall Street is out of control! Greed has overtaken our country and caused a split in our society between the "haves" and the "have nots". Now we are paying for the bad decisions made on Wall Street while those who made the decisions are living like fat cats. It's time for the government to step in.

Did I do a good job of summing up what we are hearing on the news? Is it really this simple? Can a free market really work or is heavy regulation and control needed? When a company becomes large enough to have a dramatic impact on our nation's economy, should it be left alone, heavily regulated, or prevented from getting that large in the first place?

This week, we will be talking about free markets. Regardless of your political leanings, the government is certainly leaning toward more regulation as a whole. Republican Orrin Hatch (Utah) is presenting a bill to call the college football BCS system an "antitrust violation" while a Democratic Senator Benjamin Cardin (Maryland) is working on a bill to allow newspapers to gain a "non-profit" status. Taxes are being applied backwards to bonuses collected by executives within "bailout" companies. There is serious discussion of limiting the compensation of all corporate executives as well as professional athletes and actors. Are these good ideas?

What type of government do we have in the United States? I would hazard that a majority of citizens today would answer "a Democracy". It would surprise many that the term "democrat" (not related to the current political party) was considered an insult in the days of our Founding Fathers. Do you know the history?

Early America in the late 18th century was a unique time. Government was a favorite topic of many of the best minds in the America and the men who became our Founding Fathers spent hours debating and discussing various forms of government looking for a form of government that would really work. The quick answer at the time would have been to form a democracy where people vote for everything. However, they quickly realized that this type of system is impractical and not prudent. People will vote themselves more and more specific benefits and react too strongly to current events. A democracy is not sustainable.

Of course, a monarchy was not desirable either. Many Americans didn't despise the monarchy as we think of it today, but they saw where the system failed. The system is only as good as its leader and how much information the leader gets. So what were we to do?

Our Founding Fathers realized that they were not out to set up a "perfect" government. They saw the government as a potentially dangerous, "but necessary" entity (or "evil" as Washington called it). So they set out to create a "more perfect" government. They designed a Republic (again, no reference to the current political party). The system is designed to have representatives of the people to serve as a buffer between the currents of public opinion and to ensure that the "best" people were making decisions. The system is designed to allow the government to sometimes make decisions against the will of the people.

The Colonists were also huge believers in a Free Market. They were participating in one of the biggest "free market" experiments in the history of the world. They had come together from multiple countries, often under different (or multiple) flags and set to work making out their own living. The early colonists didn't have a "national" government designed to organize and develop a complex system of trading. It just happened based on supply and demand.

Fast forward to 2009. Can this system still work today? That's the topic of this week!