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Thursday, May 28, 2009

THE FREE MARKET: UP TO A POINT

Steve Cole reports:

I am a free market guy. I believe that "the marketplace" will take care of a lot of things all by itself. This economic crisis, for example, will be over and done with in a year, and it will be the free market (not President Obama) that fixed it.

In theory, the Free Market is evolution in action. The company that can build a better mousetrap will thrive. The company that still makes spare parts for catapults is probably near bankruptcy. New ideas are proven to be good or bad ideas based on whether or not they attracted investors and produced profits.

But I have come to doubt my beliefs in the Free Market.

The Free Market invented those insane financial instruments that caused this mess, and nobody from the government stopped them. Anybody could have said "Do not make loans without documenting the borrower's income" and this would never have happened, but the government wouldn't do that, as the lobbyists and the money men and the power brokers were all getting rich off of the ridiculous schemes, and politicians bought votes by creating the chance for people who could not afford houses to buy them.

The life insurance industry is an example of the failure of the Free Market. Anybody can tell you that cash value insurance (combining death benefits and investments) is the dumbest thing you can buy (except maybe for variable annuities) but these things are sold by the tens of thousands every day by commission-inspired salesmen who don't care if it's a good deal; they care if they get paid to sell it to you.

There is no reason we cannot have health insurance for everyone, and by that I do not mean the government paying for it. If everybody were REQUIRED to spend some of their income on health insurance, and most bought the cheapest possible kind (buying into Medicaid, which you cannot do but you could if Congress could ignore the lobbyists for five minutes), the cost would come down. (Yes, yes, those truly poor would get it on the government dime, just as they now get reverse income taxes.) People use the Free Market to decide for themselves that they would rather have a second car, Tivo, and premium cable than health insurance. Then, when they go to the hospital for an emergency and get abrupt treatment and sloppy care by cost-managed medical staff, they complain that somehow it's the fault of somebody other than themselves and somebody other than themselves needs to cough up the money so they can have health insurance without having to give up anything to get it.

If there is a theme -- a point -- to this, it's that the Free Market works if Congress does its job.