View Full Version : Liberal policies and the Free Market

12-02-2008, 04:11 PM
I'm taking my first economics class ever next semester, but I'd like to get some insight on this issue before then, because I don't really understand it. I've been visiting a right wing message board lately, where many claim that liberal policies are destroying the free market economy. One guy said:

"Broadly speaking the major flaws of capitalism are government induced. The government has two purposes. Protect it’s citizens and enforce the laws. It has no business messing with the free market, or you end up with disaster. Look at the current financial meltdown. Entirely caused by government intervention."

They also claim that government aid or intervention has never fostered a positive long term change.

Can anyone explain to me the basics of liberal and conservative viewpoints on this issue, and maybe provide some historical examples?

Hypno Toad
12-02-2008, 04:35 PM
My mother has a masters degree in economics. I never liked it personally, but it gives me a bit of insight.

A lot of economics can be based on opinion and can sometimes route down to a simple understanding of human nature, because human activity makes up the economy.

Though a free market system may recover, it has never had the opportunity to be proven, because government interference fixes it much faster. Personally I think not interfering would destroy the free market system. Because greedy corporation CEOs begin hording money, often through cheap, dirty business practices, and backstabbing. If a market system was truly free, after 20 years or so, there would be a couple of major corporations controlling much of the economy, simply for the fact that the bigger a company gets, the more companies it can absorb and destroy. if there are 2 companies, one will eventually dominate, and absorb the other, and continue on into other consumer areas. Its just not good to have a totally free market in the first place, it needs regulation. If you think the government violates your freedom by regulating the economy, just wait till the corporations get ahold of everything and begin wiping out your freedoms, such as your freedom to make a decent wage, to have a union, and have fair prices for goods. For instance now, the US government is trying to bail out the car company monopolies, because they have so much money the government relies on them to stabilize the economy. Just the thought of that, relying on a corporation, that exists solely to drag in a profit, is what holds up a great portion of the US economy. Regulations should just be thought of as fail safes, a bailout is a last minute fail safe, though this one in particular is useless, because the money the US government is throwing at these banks and car companies, is money that they do not have.

A "liberal viewpoint" on the subject is a contradictory name, because liberal means free. So rather than referring to people of the left wing as liberals, just call them the previous (not sure if you are using it in the right context, but many people don't). Conservatism is like moderate right wing, so obviously they believe in laissez faire policies. Wheras people of the left, prefer to regulate the economy, in hopes for a safer, more stable economy.

It's funny, because the neocon bush administration was backing the bailout, and alot of this conservative supporters are pissed about it, because it is more of a left wing move. I suppose the taste of despair it has though gives it the essence of conservatism in the end, because that is usually what ends up happening.

if you want proof that regulation works, take a look at the fact that the soviet union never suffered a great depression, because of economy regulation. whereas the US, under president Hoover was suffering until Roosevelt came to save the day.

The current economic situation is happening because the dominant US economy was on an overinflated high, and when people realised that it was deflating, there was a sudden loss of confidence. As Roosevelt said: "You have nothing to fear but fear itself." The current economic situation is resulting because a loss of confidence in the US economy, from a few things:

- Oil prices rising.
- Bush's incredibly stupid regime that lasted 8 years, and put the US 11 trillion dollars in debt.
- The car industry is failing.
- Banks loaned out money they did not have during the "credit high" to people who would not be able to pay it back.
- Constant stock market crashes. No country or person wants anything to do with the tanking US economy.

People, so to speak are simply "bailing out" out of US economy affairs. It's like the prisoners dilemma, if one person bails, everybody bails. If nobody bails, everything will be fine. < But that will never happen.

That's kind of the gist of how most economies function, and why we are in a crappy economic situation right now. To sum up your question, the Free market is simply one method of having an economy. Anything else is just opinion. It works in good context, but like any other economic system, it has it's major faults. The right and Left wing usually have different opinions about how to run a free market effectively.

12-03-2008, 09:05 AM
The entire concept of the free market is laissez-faire, or that the market will regulate itself, and that the government has no place in regulation or setting limits/barriers.

It assumes that competition and supply and demand will always push towards an equilibrium, due to scarcity.

However, Monopolies, Oligopolies, and Trusts are ways that corporations can undermine the free-market, and push overly high prices on consumers and require the government interference. So the only reason why the free-market doesn't work flawlessly is because large corporations don't allow it.

This proves that the man, is indeed, bringing you down.

12-03-2008, 06:05 PM
Thanks guys. Very insightful.