McCarten on free markets

Matt McCarten writes:

The trillion-dollar, taxpayer-funded handout to criminal and irresponsible corporations in the United States surely puts an end to the nonsense that there is any such thing as a “free” market.

Actually it does no such thing, but we will hear more of this sort of nonsense.

First of all no one has ever claimed markets are perfect, just that they tend to be better than the alternatives.

Secondly what actual market are we talking about? There are dozens – the market in labour?, in trade?, in goods? in services? in currency? in financial services?

Beware anyone who rails against free markets generically. Ask them what markets they mean.

The free marketeers’ ideology goes something like this: there should be no regulation and the market is always self-correcting. If managers of enterprises make mistakes, their businesses would fold and new ones would take their place.

Now Matt takes an extreme view. Very very few fans of free markets are against any regulation at all. For example most peopel accept the central bank having a role in banking supervision, and most people accept a role for a Commerce Commission to stop fraudulant promotions etc.

The intelligent debate is about what level of regulation is needed. And there is no one answer fits all. When it comes to trade I would argue almost no regulations except for safety and labeling. In the labour market I would say you do need a wee bit more regulation such as minimum employment rights.

Our politicians and business leaders need to come clean and admit that free market capitalism doesn’t work and never has.

This is nonsense. Free market capitalism is not the total absence of any regulation at all, just as socialism is not the total absence of any markets at all.

The benefits to the world from a moving towards a more market approach have been massive however. No not perfect, but still massive. Living standards has increased massively. Socialism has been abandoned in all but the odd dictatorships or authoritarian regime. China and India have pulled hundreds of millions out of poverty by introducing more markets.