Why the United States Has NEVER BEEN a Free Market Society

In reality? No. In theory? Not even close. As the upcoming financial bailout vote reaches the House of Representatives (again) it will face and pressure the conservative base and force them to question their "free market ideals." Let me tell you a little secret about our economic system...

IT IS NOT A FREE MARKET! And here are the reasons why:

1. The principles of a true free market:
- Limited to no government intervention whatsoever. Meaning that any regulation of the economy or the market would be done through the market (the consumers and the businesses).
-Perfect Competition exists. Meaning that the many buyers and the many sellers would have complete information, no barriers to entry or exit, and price is set based on consumer perception.
-If the business cannot compete, it leaves the market.

2. The principles of monopolistic competition (what the U.S. resembles):
-Many buyer, sellers, and industries.
-No real difference amongst the products/services within each industry.
- Close to perfect information for the buyers and sellers.
-Competition is based mainly on the differentiation of products and services within each industry. Convincing the consumer that they should buy product X instead of product Y because the management of product X is invaluable.

The United States is not a free market because:

1. Major barriers to entry exist; regardless of consumer demand.

Remember Cuban cigars? Economic sanctions go against any kind of free market ideal. If the United States wanted American consumers to cease buying cigars, the correct economic principle would have been to enter the cigar market and produce better, high-quality cigars that the consumers would appreciate. Also, the government has restricted domestic flight to only those companies that have headquarters in the United States. Where is the competition? Let all of the world airlines compete and let the consumer choose the victor. Allowing Delta, US Airways and the like poison our airways with terrible services and products is only doing harm to the U.S. economy. If British airways came in and did a better job than all the other airlines, what would happen? British Airways would open more hubs in the United States and create more jobs for the American people. Also, it would mean that Delta, US Airways and others would invest more in creating better services and technology to be able to compete against the foreign airlines; also creating more jobs and bringing in more investment and money to the United States economy.

2.Major barriers to exit abound; regardless of economic health.

Here is where economics and politics collide. One wants to create a free market system, but also wants to ensure those people who try their luck at something to be successful. I understand it, but if the United States strives to be a free market, I cannot agree with the practice. For decades the small, independent agribusinesses have been receiving massive subsidies of the United States government so they do not go out of business, and they can keep their farms and have an income. Wrong? By no means; it show that the United States government cares for the small farmers. However, in a free market system, those unfortunate farmers would be out of business since the typical U.S. consumer would rather go to a supermarket and buy Tyson, Perdue and other huge agribusiness product. The market is not very kind to the small business, and if it wasn't for federal intervention, many of those people would be out of a job.

Also, we are in the midst of the biggest financial bailout series the world has ever seen. The excuse of the government? "These companies are too big to fail." That statement needs context; for anything is never to big or small to fail. But the consequences of those large companies failing-not because they're simply too big- would be difficult to handle. Then again, who said that having a free market system would be easy? Sometimes a building has to collapse in order for something better to be put in its place; not to say that the people who worked in that building would feel some tough times in the interval.

3. A party is a consumer, a seller, and a regulator.

The United States Government is the largest employer, seller, buyer and regulator in the country. In a free market system, a party that has that much control over the system would simply not be allowed. Imagine an owner of a shoe store employs every one of his customers, and then tells his peers how to run the shoe selling business. Fair? No. Free? Obviously not if it's not fair.

I could go on and on but the basics are clear: the United States is not the free market system Adam Smith, Alan Greenspan, and many others dreamed about. In a representative republic like ours(not a pure democracy, another touchy subject) the minority is protected by the majority. Therefore, any kind of phasing out a business per the market's wish will almost never happen.