When I hear pundits use the expression “free market capitalism,” I shake my head in disbelief.
During the credit crisis of 2008, strong proponents of free market capitalism were calling on the Federal Reserve to do something, anything, and everything.
Give us “shock and awe” the experts said,
“We just can’t stand what’s happening.”
Well, the Fed did do something, and they’ve been doing it ever since. From quantitative easing to artificial rates, from press conference briefings to outright market manipulation, the Fed has been anything but the defender of free market capitalism.
To compound the problem, the administration has also tried its hand at free market capitalism…cash-for-clunkers, mortgage relief, and industry takeover, to name a few.
However, all they’ve accomplished is rising unemployment, a falling housing market, and an economy in crisis. To understand why the pundits, the Fed, and the administration have gotten it wrong, just define the three words:
Free – not to block or be obstructed by ANYTHING (Bing Dictionary)
Market – to buy or sell or a “place for buying or selling” (Encarta World Dictionary)
Capitalism – an economic system characterized by private or corporate ownership of capital goods by investments that are determined by private decisions and by prices, production, and the distribution of goods that are determined mainly by competition in a FREE MARKET (Webster’s Dictionary)
Unfortunately, almost everything the Fed and the administration have done is contrary to these definitions.
Selecting the winner and loser.
The great bottom line of free market capitalism is there will always be winners and losers, and it’s that cycle which is the strength of capitalism. As people fail, others learn what went wrong and proceed to build upon those mistakes.
Since the founding of this country, the principal of winners and losers has been the cornerstone of national success. In fact, The Declaration of Independence states “life, liberty, and the pursuit of happiness.”
It does not guarantee happiness or success, only one’s ability to pursue it. Nonetheless, this administration has chosen who wins and who loses. Whether it was personal relationships, campaign contributions, or just philosophical differences, those left standing for the next round were already predetermined.
As I hear those same self-proclaimed free market capitalists declare “the stock market must be defended,” it really makes me wonder.
With the dismal lack of employment and the miserable failure in housing sector, how much destruction will the markets ultimately suffer given this brand of free market capitalism?
Only time will tell, but I don’t think we’ll have to wait too much longer for an answer.
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