What is the "Free Market" and do we want it?

[perspective]

sailor
ahh now we’re talking. Thank you for your thoughtful reply.

*Originally posted by sailor *
A free market does not mean a lawless market any more than a free society means a lawless society. The function of the state is to create a framework where we can enjoy freedom of choice in our daily lives and in our commerce. To that end the state creates a framework of laws which, on the one hand, restrict our freedom but, on the other, enhance other’s freedom. The only reason to restrict a person’s freedom is if it protects other people’s freedom (the proverbial “your right to stretch your fist out ends where my nose begins”).

So the actions of one person (not a government) can limit the freedom of another? It’s still not clear to me how some form of trade can abrogate someone elses freedom (without accepting some radical notions on property). You’re still appealing to principles outside of economics. Ones that seem political/personal to me. IOW a “free market” is as undefinable as the people’s political will.

When there is an important divergence between private interest and social welfare] some method other than competition may have to be found to supply the services in question.

Aye, that’s the rub.

So what effect do laws and regulations have on the freedom of the markets? Which things should be subject to the free market and what things should be restricted? As has been said above, there are certain things which cannot be effectively subject to the free market.
…
Clearly, these are services which cannot be bought individually cannot be therefore provided and bought individually.

The examples you provided can and have been bought individually. Toll roads compete with public ones why can’t toll roads compete with other private ones? I agree that they’re better off in the public realm, but I think it’s a matter of efficiency and public good not impossibility.

So… if public healthcare could be shown to be more efficient or effective, would it be acceptable in a free market? What are the standards for efficiency? The greater public good? Best price per unit? The highest quality no matter what price?

Now, what kinds of regulations are admissible? Laws and regulations which are of a general nature and do not intend directly to have the effect of altering prices or quantities or inducing people to alter their behavior in the market. These laws and regulations may have these effects indirectly and inevitably, but it should not be their purpose.

So good intentions are sufficient?

[perspective]

*Originally posted by Sam Stone *
And why do I get the feeling you’re trying to lay some kind of trap? Every time I outline a principle, you want me to be ‘more specific’, or offer examples and proofs. When I gave you examples of radio broadcasts and harbors, you bring up energy and mass in general?

I was trying to clarify your position. Land is also a limited resource just like bandwidth. Tell me why one is subject to government distribution and the other not.

With many of these things, there are no bright lines or hard and fast rules that you can apply.
…
You seem to be looking for absolutes. In economics, they rarely exist.

I’m looking for guiding principles that make for a consistent position. If there are none of those in economics I guess I can accept that. But if that’s the case then I would like to seperate the idealogical positions from the economic ones.

[sailor]

Borrowing even more from Hayek: Freedom is an end in itself and one of the basic premises is that governments should be limited in their powers by that thing we call the Rule of Law. the Rule of Law does not mean only that the government follows certain formalities but, more widely, that there is a set of rules in place which is as general and as limited as possible and as needed and which allow everybody to plan their decisions and affairs knowing what to expect from the society they are immersed in. The negation of the Rule of Law is arbitrary government.

Most Western Countries have a tradition of Rule of Law. Rules were put in place and respected, even if sometimes they yielded results which were unexpected or even undesirable. But the certainty of the law helped people plan ahead their actions. Other countries have a stronger tradition of arbitrary government. The idea was that the law could not foresee all the cases and all the consequences and therefore it was better to have government officials decide each specific case. While that argument may seem plausible, in fact, countries with such government have always had much less freedom.

. . since legislators, as well as those to whom the administration of the law is intrusted are fallible men, the essential point, that the discretion left to the executive organs wielding coercive power should be reduced as much as possible is clear enough. While every law restrcits individual freedom to some extent by altering the means which people may use in the pursuit of their aims, under the Rule of Law the government is prevented from stultifying individual efforts by ad hoc action. Within the known rules of the game the individual is free to pursue his personal ends and desires, certain that the powers of the government will not be used to frustrate his efforts.
<snip>
. . . distinction between the Rule of Law and arbitrary government. Under the first the government confines itself to fixing rules determining the conditions under which the available resources may be used, leaving to the individuals the decision for what ends they may be used. Under the second the government directs the use to particular ends.
<snip>
The distinction between formal law and subtantive rules is very important and at the same time most difficult to draw precisely in practice. Yet the general principle involved is simple enough. The difference between the two kinds of rules is the same as between laying down the Rules of the Road (Highway Code) and ordering people where to go; or better yet, between providing signposts and commanding people which road to take.
<snip>
. . . [formal rules are] a means for people to use in making their own plans . Formal rules are thus merely instrumental in the sense that they are expected to be useful to yet unkown people for purposes for which these people will decide to use them and in circumstances which cannor be foreseen in detail. In fact, that we do not know their concrete effect, that we do not know what particular ends these rules will further or which particular people they will assist, that they are merely given on the whole the form most likely on the whole to benefit all the people affected by them ,n is the most important criterion . . .
<snip>
The state should confine itself to establishing rules applying to general types of situations and should allow the individuals freedom in everythuing which depends on the circumstances . . .
<snip>
It is the Rule of Law in the sense of the rule of formal law, the absence of legal privileges of particular people designated by authority, which safeguards that equality before the law which is the opposite of arbitrary government.
<snip>
It cannot be denied that the Rule of Law produces economic inequality – all that can be claimed for it is that this inequality is not designed to affect particular people in a paticular way.

The state should not impose its ends but set the framework so the individual can seek his own ends. The state should be a “utilitarian machinery” and not a “moral judge” who decides what is good or bad.

When it comes to the market all this means the government should set general rules applicable to everybody and not intervene in the market by favoring certain ends over other certain ends.

[sailor]

*Originally posted by perspective *
So the actions of one person (not a government) can limit the freedom of another?

No, what I mean is the government makes laws which says “nobody can do X” in order to protect everybody from the consequences of someone doing X.

You’re still appealing to principles outside of economics. Ones that seem political/personal to me. IOW a “free market” is as undefinable as the people’s political will.

I think the post about the rule of law answers this.

The examples you provided can and have been bought individually. Toll roads compete with public ones why can’t toll roads compete with other private ones?

You know, if I make a general statement, people will ask for examples rather than discuss the statement on its face. But if I give an example, rather than taking it merely as an illustration, someone is bound to pick it apart and find exceptions. Look, I was merely giving a general example where the rule applies. If then you say “but one percent of the time your example doesn’t meet the rule you just gave” then my reply will be “then one percent of the time the rule is not applicable”. Sheesh.

So… if public healthcare could be shown to be more efficient or effective, would it be acceptable in a free market? What are the standards for efficiency? The greater public good? Best price per unit? The highest quality no matter what price?

I am not going to get mired in discussing whether socialised medicine is desirable or not because that would be a whole other thread. But for the purposes of this thread, the answer is clear: socialised medicine is not a free market.

So good intentions are sufficient? **

You missed the entire point. A law may restrict speech if the primary aim is to further a compelling public interest. The fact that it restricts speech which would otherwise be protected is secondary but the intent and the effect of the law are deemed to override the protection of free speech. I do not think that is difficult to understand. Nothing is absolute. If a law has the primary purpose and effect of altering market prices or quantities or inducing people to alter their ends, then it is an unnecesary and harmful law. If it has those effects only secondarily and the primary aim and effect is a compelling social interest then the law is justified.

[perspective]

*Originally posted by sailor *
No, what I mean is the government makes laws which says “nobody can do X” in order to protect everybody from the consequences of someone doing X.

You said “The only reason to restrict a person’s freedom is if it protects other people’s freedom.” If individuals aren’t threatening each others’ freedom than why do we need a law?

I think I understand your post about abitrary government and the “Rule of Law” although the context in which you’re placing it doesn’t seem clear. In fact, what’s bugging me is the lack of fixed rules from which to determine when it is appropriate to meddle with the market. Your designation of what is “necessary” seems pretty arbitrary so far.

I think you’ll have to be a little more methodical about how you see the “Rule of Law” relating to the free market. You’ve said there’s a connnection, but you haven’t demonstrated it.

You know, if I make a general statement, people will ask for examples rather than discuss the statement on its face. But if I give an example, rather than taking it merely as an illustration, someone is bound to pick it apart and find exceptions. Look, I was merely giving a general example where the rule applies. If then you say “but one percent of the time your example doesn’t meet the rule you just gave” then my reply will be “then one percent of the time the rule is not applicable”.

Examples should work hand in hand with the generalizations to illustrate them. My point wasn’t that your example didn’t work “one percent of the time”, my point was that your examples did not support what you were saying.
You made argument for public roads based on practicality. So either practicality is the true measure of the necessity of regulation or you’ve simply provided an “arbitrary” decision made on a case by case basis.

Sheesh.I am not going to get mired in discussing whether socialised medicine is desirable or not because that would be a whole other thread. But for the purposes of this thread, the answer is clear: socialised medicine is not a free market.

I wasn’t trying to get into socialized medicine debate per se, I was supposing if socialized medicine was deemed more practical than private. I was trying to show you how vague your parameters were. If “socialized” roads are fine in a free market but “socialized medicine” is not, can you provide reasons why that aren’t arbitrary? You say it’s clear, but provided no explanation.

If you say it isn’t practical, I guess that’s one tack. But suppose our road system was poorly designed, corruptly and ineptly managed. Wouldn’t you then be calling for privatized roads?

If it has those effects only secondarily and the primary aim and effect is a compelling social interest then the law is justified.

Surely socialized roads put it’s private competitors at a disadvantage. Wouldn’t socialized medicine too? Why is a transportation system a “compelling” social interest and healthcare not?

[Ms2001]

Originally posted by perspective
Land is also a limited resource just like bandwidth. Tell me why one is subject to government distribution and the other not.

The difference between land and the broadcast spectrum is that you can’t have two buildings in the same place.

Suppose, in a world without regulated airwaves, that I start an Eighties radio station and decide to broadcast on FM 96.9 with a 300 watt transmitter. During an extended Flock Of Seagulls marathon, you begin to wish I’d play different songs, so you start up your own station. But you want to save money on marketing, so you broadcast on the same frequency with a 1000 watt transmitter, drowning out my signal and stealing my audience.

I retaliate by buying a 5000 watt transmitter, drowning you out. Now it’s an arms race. Soon our monthly electric bills are in the ten-digits, and the neighborhood kids glow in the dark.

The solution is to give one of us ownership of the frequency, so everyone knows who has a right to use it. In fact, regulation of the airwaves isn’t so different from land ownership after all.

[sailor]

The allocation of the radio spectrum does not necessarily have to be done by the government or a government agency but it has to be done by somebody or chaos will ensue. Some things are common sense. You cannot have two stations broadcasting in the same frequency in the same geographical area and so someone has to allocate them. Just like you cannot have use other company’s registered trademarks or their patented inventions. The government is there to put a little order in the market. Nothing wrong with that.

perspective, I am not trying to argue with you but only trying to explain my view. Obviously I am not doing a good job of explaining it and this thread has become a heavier homework assignment for me that I intended to take on so I’m going to try to wrap up my intervention here. Even though I cannot explain it well, I have the concept quite clear and maybe it is because I have read those two works by Hayek many times over. I recommend them to everyone.

I see many parallels in freedom of the market and freedom of speech. Both are important and both have limits. The fact that different people believe the limits ought to be placed differently does not mean that one is automatically right over the other. It is a judgment call and different societies place their limits in different places. Like everything there is a matter of degree and a matter of value judgment. There is no absolute right to freedom of speech anywhere in the world. The US has a greater freedom of speech while in some European countries the apology of the Nazi party is prohibited. And then you have China and Cuba. It is a long continuum and it is not possible to draw a line and say to one side there is freedom and to the other there is none. Freedom of markets is similar in that is is a matter of graduation. And, like pornography, I know it when I see it. I have no doubt that there is greater freedom of speech in the US than in China and there is geater freedom of market in Europe than in Cuba and that, in general terms, both freedoms are a good thing.

Many European countries had government run and owned airlines because they deemed it desirable to not let airlines be subject to the free market. Same thing with the phone companies and other sectors. In the last twenty years they have been moving away from that and airlines and other industries which were protected are now subject to the free market. On the whole Europe has moved to more freedom in the marketplace.

>> You said “The only reason to restrict a person’s freedom is if it protects other people’s freedom.” If individuals aren’t threatening each others’ freedom than why do we need a law?

We see things differently. If a company is polluting they are taking away my freedom to breathe clean air. Other laws are deemed necessary and, although they may restrict some freedom, they apply across the board and provide a greater benefit than the freedom they restrict. Just like a law preventing me from driving on the left side of the road restricts my freedom in exchange for a greater good, a law mandating accurate labeling is considered to be worth the cost. The fundamental fact is that it applies to everybody across the board and that it does not have the primary intention or effect of encouraging the consumption of one product or service over another. For instance: a law prohibiting lead in canned food containers is reasonably acceptable to me while a law exempting cans of condensed milk is not.

Laws which have the primary aim and effect of changing the price and/or quantities / availability of products on the market are interventionist laws which take away freedom of the market. Farm subsidies and socialised health care are examples of this. Whether they are worth the price is a value judgment. If you believe farmers are somehow special and should be protected, then the law, even though it restricts freedom of the market, is one that you want even if it comes at the cost of that loss of freedom. I happen to believe otherwise but that is just me.

Some people believe drugs are very harmful and should be outlawed no matter what. And so, the government has taken away our freedom in this market. Whether that is a good thing or not remains a matter of opinion, but the fact is that I do not have the freedom to sell dope. But you cannot say the market in such country is or is not free. It is a matter of looking at all the sectors of the market and weighing the complete picture.

My point is that, as a general rule, laws and regulations which have the primary aim and effect of protecting vital and general interests are much more acceptable than those which seek to promote narrow objectives. A law prohibiting child labor is therefore acceptable to me because it applies to every industry regardless of time and place. In Western countries most people believe prohibiting child labor is an important goal. It is definitely an intervention but we consider that the restriction is worth it. In other instances there is less of a consensus. On the other hand, laws protecting certain industries or certain groups of people are discriminatory and take freedom away from the market. It is a matter of degree.

I am not trying to give a rule which will determine when government intervention is desirable or not. The question asked in the OP is What is the “Free Market” and do we want it? My answer is that a free market is one where competition is freely allowed with as little government intervention as is deemed necessary to allow the market to function and to protect interests which are considered to be more important than out individual freedom in the market. Do we want it? In general terms yes because where competition is possible it is the best system of providing the best service at the lowest cost. Where competition is not possible then other ways of dealing with allocation have to be sought. And in some cases we may restrict the freedom of the market with the aim of achieving an objective which we deem more important like avoiding child labor or pollution. That’s my answer and I’m sticking with it.

[perspective]

*Originally posted by sailor *
The allocation of the radio spectrum does not necessarily have to be done by the government or a government agency but it has to be done by somebody or chaos will ensue. Some things are common sense. You cannot have two stations broadcasting in the same frequency in the same geographical area and so someone has to allocate them.

Nor can you have two farmer’s trying to grow food in the same area. So?

perspective, I am not trying to argue with you but only trying to explain my view. Obviously I am not doing a good job of explaining it and this thread has become a heavier homework assignment for me that I intended to take on so I’m going to try to wrap up my intervention here.

Fair enough. I wasn’t really trying to argue with you either (at least not yet). It’s just that because coming from a different viewpoint I need rigorous explanations. It’s not a matter of intuition for me. I understand if that’s tiring. You’ve made some detailed posts already.

I see many parallels in freedom of the market and freedom of speech. Both are important and both have limits.

There was some explanatory power in this analogy. But I don’t really think of us as “free” here in the United States. I think we’re closer to “somewhat minimally regulated.” Not as catchy to be sure, but far more accurate.

Calling us “free” sounds absolute but is only relative. It’s more rhetoric than truth.

Something I expected to see in starting this thread was something like the “free market is an ideal not a practical reality, therefore we don’t really want a free market.” Which I’m fine with more or less. But to say we have a free market when in fact we have a thoroughly regulated market doesn’t work for me. Unless of course one could explain why some regulations somehow maximized freedom and others didn’t without being arbitrary. I think you’ve made a worthwhile attempt at this, and I’m glad you did, but so far I’m not convinced.

Laws which have the primary aim and effect of changing the price and/or quantities / availability of products on the market are interventionist laws which take away freedom of the market. Farm subsidies and socialised health care are examples of this.

So we’re left with value judgments? OK. Then it’s arbitrary and a political/personal decision when to control our markets.

My point is that, as a general rule, laws and regulations which have the primary aim and effect of protecting vital and general interests are much more acceptable than those which seek to promote narrow objectives.

Is healthcare a narrow objective? I don’t understand how it is more so than socialized roads.

My answer is that a free market is one where competition is freely allowed with as little government intervention as is deemed necessary to allow the market to function and to protect interests which are considered to be more important than out individual freedom in the market.

The only problem I have with this definition is that it can’t differentiate itself from socialism except through abitrary and unpredictable exceptions.

[sailor]

>> Nor can you have two farmer’s trying to grow food in the same area. So?

So that’s why the land has an owner and the radio waves, which are deemed to be owned by the state are leased to people for their use. I really do not understand what is the problem you have. The state could choose to sell the spectrum in perpetuity but it chooses to lease the use instead. So long as this is done impartially, not favoring certain ends over certain other ends, it is allowing the maximum freedom compatible with the use. It does not allow two people to broadcast in the same slot for the same reason it does not allow two companies to call themselves Cocacola. It would be a mess.

>> I don’t really think of us as “free” here in the United States. I think we’re closer to “somewhat minimally regulated.” Not as catchy to be sure, but far more accurate.

I have been saying all along that freedom is relative and is a matter of degree. American markets, in general, are less reguilated than European markets were 20 years ago. I have said there is no such thing as absolute freedom of commerce as there is no such thing as absolute freedom of speech. We had a thread recent asking whether America could be called the land of the free. I said “free” was a relative term and the USA could be freer in some ways and less free in others but on the whole it can be considered a free country. Another poster disagreed and said it was the most oppresive country in the world. Too bad she never returned to explain that interesting and unsupported opinion.

>> So we’re left with value judgments? OK

Man, I really do not know how to explain this further. I see it as quite simple and I have repeated it many times so I guess repeating it once more is not going to help but I will give it a last try. Laws which are general in nature and which do not have as a primary objective or effect the alteration of prices, quantities or availability are justified if they serve a compelling government interest. OTOH laws which have the specific intent and effect of altering the price, quantity and availability of specific products are laws which result in much greater loss of market freedom.

Parallel in freedom of expression: A law which is general in nature and which does not attempt to affect the ends of the speech is more acceptable than a law which attempts to regulate the matter being expressed. A law saying you cannot shout your message, political or otherwise, when you are in an airport or other public building because it results in disorderly conduct is a law which would be acceptable even though it restricts the freedom of speech. But a law stating you cannot shout your message only if the message is directed against the government is a hugely different matter. At least it is obviously clear to me. What you are saying is that a freedom is either all or nothing and what I am saying is that there are degrees and those degrees depend on other factors.

>> The only problem I have with this definition is that it can’t differentiate itself from socialism except through abitrary and unpredictable exceptions.

Well, I can tell the difference even if I cannot get you to understand it. Government intervention is not a yes /no proposition. It is also a matter of degree. You mention health care. Government intervention can go all over the range from zero to 100%. What is clear is that the purpose and effect of government intervention is “altering the price, quantity and availability of specific products or services” so yes, the answer is that when the government intervenes in the health care market, then freedom is lost in proportion to government intervention and when the government intervenes the market 100% then the individual has zero freedom in that market. If the government then goes on to interven other markets then freedom is lost accordingly. And once the government has 100% control of the entire economy, then the individual has zero freedom. But even in Cuba the people are allowed small parcels of freedom. It is not an all or nothing deal any more than freedom of expression is all or nothing.

[David_Simmons]

*Originally posted by perspective *
**What does it mean for a market to be “free”?
**

I would define “free market” as a commercial system in which economic decisions are made by private indviduals or combinations of them and depend only upon the economic results arising within the market place. Such a system doesn’t exist now and most likely never did exist except as a simplified model in basic studies. The system would be used only to define terms and establish a rudimentary benchmark, or point of departure.

On striking weakness of such a pure “free market” is the neglect of the political and sociological effects of economics. In the system the goal of the producer would be to make products cheaply enough so as to always be able to underprice the competition when necessary. This would mean that the producer would take as one goal the externalizing of as many costs as possible.

Running a shop without regard to safety of workers would be one way to cut costs. If the producer could cut corners on safety and have the risk for accidents assumed by the worker or society at large, then the producer’s cost would be lowered. This was actually the mode of operation of the “free market” for much of the time, especially from the start of the industrial revolution up until quite recently.

Another method would be to pay workers the least possible wage. This is possible because working people are more or less fixed in their location. That is, it is not easy for workers with a family to pick up and move to a location where wages are better. This can lead to a two class world of the “gentry” and the “peasants” in which the great mass of “peasants” work mere for subsistance in order to provide relative luxury for the “gentry.” If there is illness or injury, tough, the alms house or the charitable organization can pick up the slack. True, the cost of such charity is borne by society at large, but each producer is stuck with approximately the same burden so there is little competive disadvantage for charitable contributions. This was also the case for most of history.

A third example is child labor. Children are not always regarded as something to be valued and taken care of. In many cases children are used as an economic asset and such was the case in western culture among the “peasants” until relatively recent times. So, if you are living at the subsistance level then have a lot of children, farm them out to factories at a cheap wage so that you can at least survive. I can’t think of a single “free market” corrective for the use of child labor.

The “free market” can be thought of as a feedback system in which a sample of the output is used to correct the input so as to optimize the output. The difficulty is that there is always a delay between input and output in any realizeable system. Some sort of anticipation is needed to account for possible changes that arise in the response of the output to the input. Laissez Faire free enterprisers will always insist that this anticipation is best left in private hands. Those who favor more government involvment will point to things like the great depression of the 1930’s and other economic panics over the years in order to show that “private hands” fail all too often with a tremendous amount of misery as a result.

I don’t see any end to the argument partly because economic systems cannot be disentangled from political and sociological affairs. I don’t see how some government regulation of the economic system can be avoided but I have no real idea as the the proper limits for it. Nor, it would seem, does anyone else as shown by the continuing disputes although there are lots of ideas about it.

[Maeglin]

I’m looking for guiding principles that make for a consistent position.

Well that’s easy, I am surprised so many people are beating around the bush.

Bottom line, you impose a regulation when it creates a Pareto Improvement. If a regulation is not going to improve conditions for one group and not worsen them for another, it is much more difficult to justify economically.

The difficulty lies in the unintended consequences of said regulation. The Pareto improvement you thought you would achieve from regulation does not always occur. Hence when and how to regulate is a source of lively debate for economists, not for lack of basic guiding principles, but due to the priorities they assign relevant pieces of data.

What’s the big deal?

[Maeglin]

Oh, by way of definition (and I prefer the term competitive market to free market):

1. Firms can enter and leave the market whenever they want.
2. The goods produced within markets are fundamentally the same.
3. Prices are taken.

That’s all, really. The rest is detail.

[sailor]

>> I can’t think of a single “free market” corrective for the use of child labor.

I disafree with your definition of “free”. You are using the same definition of “free” as that woman was using in the thread about whether the US is a free country. She said it was not. According to her definition Afghanistan is a freer country as there are no laws and no one to enforce them. You make your own law as you go. . . if you can, because the warlords are also making their own laws as they go.

For me it just makes no sense to say freedom is the absence of any restrictive laws. I’m sorry but, as I have already explained, the way I see it, laws prohibiting child labor, slavery or unchecked pollution are perfectly compatible with a market whcich can be called free for the same reason that I believe there is great freedom of expression in the US in spite of many laws which regulate it. To say the US is not a free country because it has some regulations makes no sense to me.

[Maeglin]

I agree with sailor. A “free” market doesn’t mean that there is no regulation, it just means that firms can enter and leave at will. In other words, the state (or some other entity with absolute economic control) is not in a position to dictate who may produce and sell goods and in what quantities.

[Sam_Stone]

>> I can’t think of a single “free market” corrective for the use of child labor.

Then why did child labor as a general practice die out long before there were laws preventing it?

The fact is, child labor existed because people needed their children to work in order to survive. Once people became wealthy enough that children no longer needed to work, people stopped sending their children to the factories. People in the 1800’s loved their children too, you know.

So the ‘corrective power’ of the marketplace in preventing child labor comes from the fact that the people who make up the market really don’t want their children working, and would rather have them at home or in school.

Once society becomes wealthy enough that child labor is not only rare, but carries a social stigma, a new corrective power comes into play - consumer revolt against companies who hire children, and social sanction against parents who send their kids to work.

But note that we still have plenty of child labor. It’s just that it has mutated into a form that society finds acceptable. I was working part-time in a grocery store when I was 13. I had a paper route before that. And when I lived on the farm, I was expected to do 3-4 hours of work at day, and more like 10 hours of of work a day during harvest. In addition to going to school.

For a good, non-technical explanation of the power of the market as a social good, I highly recommend “Free To Choose” by Milton Friedman. He gives a lot of good, common sense explanations for how the market protects workers, children, and the public.

[perspective]

*Originally posted by Sam Stone *
Then why did child labor as a general practice die out long before there were laws preventing it?

The fact is, child labor existed because people needed their children to work in order to survive. Once people became wealthy enough that children no longer needed to work, people stopped sending their children to the factories. People in the 1800’s loved their children too, you know.

Please be advised that not everyone lives in a wealthy country. Child labor is still around and yes it’s the old fashioned unnacceptable kind.
cite

If I thought everybody either lived in Russia or the good ol’ US of A I suppose I might have the same peach view of capitalism you have.

[perspective]

*Originally posted by sailor *
>> Nor can you have two farmer’s trying to grow food in the same area. So?

So that’s why the land has an owner and the radio waves, which are deemed to be owned by the state are leased to people for their use. I really do not understand what is the problem you have.

Well, why is one deemed to be owned by the state and not the other? Does have anything to do with real differences between capitalism and socialism or is it a historical accident?

Land was divided up a long time ago, airspace wasn’t considered valuable until recently. So people don’t raise a stink when it’s distributed for the public good. But the distribution of both seems equally socialistic to me.

>> So we’re left with value judgments? OK

Man, I really do not know how to explain this further. I see it as quite simple and I have repeated it many times so I guess repeating it once more is not going to help but I will give it a last try. Laws which are general in nature and which do not have as a primary objective or effect the alteration of prices, quantities or availability are justified if they serve a compelling government interest. OTOH laws which have the specific intent and effect of altering the price, quantity and availability of specific products are laws which result in much greater loss of market freedom.

Yet isn’t this principle violated by public roads as much as public healthcare?

[sailor]

>> Yet isn’t this principle violated by public roads as much as public healthcare?

I cannot see how if all roads were privately owned the owners could collect their fees. Think of any suburban or country road. It has crossroads, sideroads, driveways, etc, every few yards. People get on and off the road at every one of these. Maybe you can see a practical way to collect but I can’t.

[David_Simmons]

*Originally posted by Sam Stone *
**Then why did child labor as a general practice die out long before there were laws preventing it?

The fact is, child labor existed because people needed their children to work in order to survive. Once people became wealthy enough that children no longer needed to work, people stopped sending their children to the factories. People in the 1800’s loved their children too, you know.

So the ‘corrective power’ of the marketplace in preventing child labor comes from the fact that the people who make up the market really don’t want their children working, and would rather have them at home or in school.
**

If “child labor died out as a general practice long before there were laws preventing it” why were laws passed?

This from Britannica "In the United States, for example, the Fair Labor Standards Act of 1938 set the minimum age at 14 for employment outside of school hours in nonmanufacturing jobs, at 16 for employment during school hours in interstate commerce, and at 18 for occupations called hazardous by the secretary of labor. In less industrially developed countries, on the other hand, millions of children—some as young as seven—still toil in quarries, mines, factories, fields, and service enterprises. They make up more than 10 percent of the labour force in some countries in the Middle East and from 2 to 10 percent in much of Latin America and some parts of Asia. Few, if any, laws govern their employment or the conditions under which work is performed. Restrictive legislation is rendered impractical by family poverty and lack of schools.

The movement to regulate child labour began in Great Britain at the close of the 18th century, when therapid development of large-scale manufacturing had resulted in the exploitation of very young children in mining and industrial work. The first law, in 1802, which was aimed at controlling the apprenticing of pauper children to cotton-mill owners, was ineffective because it did not provide for enforcement. In 1833 the Factory Act did provide a system of factory inspection."

So, unless you claim that the US passed laws when there was no abuse to be corrected, child labor was considered to be a problem in the US as late as 1938.

Now as to the “people who make the market” not wanting their children to work. Those children were part of the “gentry” and never did work so the “people who make the market” never saw child labor as an evil thing.

• Originally posted by sailor*
  **>> I can’t think of a single “free market” corrective for the use of child labor.<<

I disafree with your definition of “free”. You are using the same definition of “free” as that woman was using in the thread about whether the US is a free country. She said it was not. According to her definition Afghanistan is a freer country as there are no laws and no one to enforce them. You make your own law as you go. . . if you can, because the warlords are also making their own laws as they go.**

Well, I didn’t define “free” as the absence of regulation. However, a law against child labor isn’t a “free market corrective” is it?

I think we are on the same side of this issue. I don’t see that government control of the economy is a benefit. The “economy” is just too complex for centralized control.

However, I will say that many who make the complexity argument see nothing wrong with central control by a few individuals in multi-faceted, multi-national corporations who are in exceedingly diverse lines of work.

[perspective]

*Originally posted by sailor *
>> Yet isn’t this principle violated by public roads as much as public healthcare?

I cannot see how if all roads were privately owned the owners could collect their fees. Think of any suburban or country road. It has crossroads, sideroads, driveways, etc, every few yards. People get on and off the road at every one of these. Maybe you can see a practical way to collect but I can’t.

That doesn’t mean someone won’t think of a practical way. It’s also possible that at some point our government could be so inept and/or corrupt to make private roads a practical alternative regardless.

You didn’t answer my question directly, but it seems like a “Yes, but public roads are the most practical solution.” I’m concerned though because practicality and the “greater public good” can be very malleable concepts. Ones that can be bent to political will very easily. Questions like,“Is it more practical to serve everyone somewhat well or a few people really well?” abound.

I have a suspicion that preferring public roads but not public healthcare has more to do with conservatism than free markets. Not the political Conservative label, but rather a preference for the status quo. If you can get to work on time and your street doesn’t have too many potholes, you’ll probably won’t spend your time trying to think of practical private alternatives. If you have good healthcare, you will probably be afraid the government could ruin what you have. If you feel like you have enough choices on your radio dial, you probably won’t question the government’s bandwidth distribution. ect…

Yet some people are not happy with the status quo. I would venture a guess that these people steer either more left or right of the mainstream for that reason. And then when thorny issues come up people start throwing in these appeals to ideals like the “free” market and “greater public good”, yet underlying it all is a simple private interest.