LIBERTARIANplace

 

 

 

The answer is simple. It is the same answer to the same question, fill in the blank for your particular "mess"  of the day/week/year/decade. Big government, centralized power, meddling in the markets. The over-reaching of government is a domino effect. It is an evolutionary process. And it is fed by the citizenry who know not what they do, when the outcry comes for guarantees and bail outs and "one time interventions."

 

Lets start with the relationship between free markets and Liberty. Free markets are the infrastructure of Liberty. Free markets allow the complete free and unfettered exchange of goods and services to flow between buyer and seller, provider and recipient. When markets are completely free of interference, regulation, or manipulation, the real price of virtually any good or service emerges very quickly in the dynamics of commerce. One could define the dynamics of commerce as the constant interaction of supply, demand, quality, and capital. These four dynamics are in constant interplay making prices rise or fall or stabilize. If Company A provides a service of great quality for which there is low demand, the service is still very inexpensive. If the price goes low enough to interest those who would not otherwise consider purchasing it, suddenly the quality and value of the service or product is discovred by those who have purchased it, word spreads and the price adjusts higher. Eventually the product or service is so well known and appreciated that demand exceeds supply and the price adjusts dramatically higher. The markets have done their job.

 

The markets have done their job because the product really is of high quality and high value. Its value was not recognized when it was introduced to the market, but downward pressure on price due to low demand eventually made the value of the product apparent and sales began to pick up. At some point, however, the price for the product or service becomes so expensive that price exceeds quality and the real value relative to price begins to decrease. In most cases the markets would again do their job sales would begin to fall until there is an over-supply, causing prices to adjust downward. Once the product, no much better known and appreciated by the public, is reasonably priced again, sales would increase again, supplies would tighten and at least for a moment, the sweet spot in which supply, demand, quality and price are all in alignment and the true value, the correct price, of the product or service would occur. 

 

Such a sweet spot may be more theoretical than real and may exist in real time on rare occasions, however the sweet spot is the economic center of gravity that moves markets. It is gravity that makes high prices fall, and bouyancy that makes low prices rise. As we know all too well there are other forces that influence markets besides these four dynamics, that skew prices and cause bubbles. Trends create artificial demand for products and services that is not sustainable long term, but due to herd mentality and fashion hysteria, bubbles can demonstrate more elasticity that anyone could have predicted for longer than anyone could have imagined, but eventually all bubbles burst, and then markets adjust.

 

There is more trauma in a bursting bubble than a normal market adjustment, but if left to themselves, markets always adjust. Markets are living beings, not in the physical sense, but in every other sense. Like physical bodies, they heal themselves. When ruptured, they scab over. When dealt a blow, they stagger, faint, fall, but eventually rise up again. They are like rivers. Sometimes they overflow their banks, sometimes they hit obstacles and change course, sometimes they run dry, but with the next rain comes a new stream, its current accelerating, gaining momentum, and its browning banks green-up again. 

 

Such is the natural life of free markets. But what happens when dynamics are manipulated or constrained? Well, what happens when rivers are dammed? What happens when physical bodies are bound, or pushed beyond their capacity to keep up? The same thing happens to markets and thus to economies.

 

What is the economy? One could say the economy is the state of the markets. If markets are healthy and free, the economy is also healthy. There will be booms and busts in markets but without interference some aspects of the markets will be in boom mode while others are in bust. There will be bubbles and corrections concurrently and continuously. A healthy economy doesn't mean everything is rosey but it does mean everything is working as it shoud and everything willwork out in the long run. The problem comes when people confuse booms and bubbles with a good economy and therefore panic when bubbles burst and booms go bust as they should and as they will.

 

Returning to the stream or river analogy,what would happen if people became obsessed with keeping rivers at the same level all the time. If the river gets too low, an entire infrastructure would have to be built to pump water into the river. If the river gets too high, another  elaborate infrastructure would have to be created to pump excess water out. The more water sought, the further away its source, the more costly it would become, the more taxing on every aspect of the community to maintain the status quo, and the more precarious a society would be, depending on this artificial system. A society would become so obsessed with keeping the river level constant, that little else would get done. More and more resources would be drained from the economy to manage water, more and more time and expertise would be sucked up by the requirements of the water management infrastructure, and over time, such a system would be increasingly unsustainable. 

 

Hopefully the analogies are transparent. Government involvement in loan guarantees, price stabilization, the flow of currency, become increasingly costly, unwieldy, risky, and difficult to maintain, meanwhile drawing more and more vitality from the markets and thus, also, the economy. And that is exactly the situation we find ourselves in now.

 

In addition to meddling in markets, over-centralization of power, over-concentration of capital is  dangerous and unnatural. In fact just as the human body can be too fat to be healthy and efficient, so can any government, organization, corporation, or monetary system. The old addage about eggs and baskets continues to ring true, and we ignore it at our peril. Just as an individual's investment allocations are best managed by diversification, a company, a society, a nation, a government-- u name it, always functions better, safer, and more efficiently when risk is spread out, when capital is widely distributed and when control is shared broadly. Another old addage about the correlation between size and impact on the occasion of a fall says everything we need to know about what has brought us to this intersection between the rock and the hard place.
 

But now that we're here, how do we fix it? For that answer, a lesson from the addictions treatment protocol. Cold turkey. Abrupt change. Ride out the withdrawal symptoms. Endure the convulsions. Prepare to live free of your drug of choice. Emphasis on the word free. 

 

That is why most Libertarians favor some or all of the following policies, positions, programs and structures to foster healthy free markets, a healthy economy, and decentralization of power:

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