A topic that's really soapbox-y, but whatever. It's been something I've been wanted to write since Ignatius and I got into a small debate over the "disenfranchised" and such.
For those of you still in college, I highly urge you to take a few economics classes - pick up a BA in economics if you're able to. It's one of the few classes that really teaches you something that you can apply in your life, although in general I feel the macro part of it is more of a pseudoscience (you know how hard it is to actually measure the result of one fiscal or monetary action in a whole economy?).
A few days ago, I was watching the Discovery Channel with some friends, and a special on ants was running. It's completely fascinating how the ants organize themselves for one purpose - whether it be to go on a food raid, or to move colonies. We wonder how millions of ants can do so much in so little time. But take a look at human society (on a macro scale) and realize how much we accomplish as a society on a daily basis!
With free markets, we can effectively allocate resources to the best possible location - every day somebody writes a new piece of software that helps improve somebody's life. Every day, millions of people commute over long distances in an organized manner to work, where we fulfill an activity that provides some value to society. We ARE the worker ants.
I think history has proven that the free markets are the best form of market control - anytime somebody tries to impose restrictions or limitations on economic output, our society runs at sub-optimal levels (historical: China shifts away from centralized planning; communism in general collapses when it doesn't support free-market principles [an aside I'd like to someday discuss: can communism survive if it supports free market principles? China is sure making a strong case for it; perhaps communism and free markets aren't so conflicting, after all]) and waste is created.
What's amusing to me is that free-market is a very weak form of socialism. Under a true free market system, in theory (remember I think macro is a bit of a pseudoscience), the price of everything goes to the actual cost. In the long run, margins are squeezed out by the millions of small businesses entering the same market (assuming low barrier to entry, meaning a low cost in entering a new market), and the consumer wins.
The reality is much different. Any time a new market forms, the first person (since corporations are people, right?) in usually has a huge profit margin on goods, since they in effect have a monopoly. Of course, this profit margin should decrease over time as more competitors join in on the fun.
This has happened in the computer industry; look at how Dell came in and used volume to effectively cut the price of computers down to nearly rock-bottom. Wal-mart did this for the retail industry. The only place this isn't happening is with software, which I think deserves its own post (but Microsoft did *not* operate as a monopoly and does not continue to do so - if anything, some of the recent troubles they've had clearly demonstrate the downfall of their strategy in the mid '90s).
We're blessed in America to have a system of laws that promotes free markets - if you've given a read of The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (a MUST read!), De Soto makes a strong case that the system of organized laws in the US has been the main driving factor behind the success of markets in the US.
As much as I love the free markets and totally believe in them, there's still a glaring problem that socialists tend to attack: the discrepency of wealth between the upper and lower classes, and the Westernized nations and Third World countries.
In economics, there's a term for the transitional period when a person is laid off and finds a new job - since in a free market, labor is completely mobile, which means people can go anywhere to find any job. It's called frictional unemployment. Take this general concept and apply it to whole classes and nations.
I strongly believe that the US is still not providing a level playing field for all socio-economic groups. I think part of this can be traced to the cultural values of a specific socio-economic group - Asians tend to be viewed as a successful minority because of the values taught, but this isn't the only reason.
In this sense, there's a moral commitment from those who have it good (us) to help those who aren't as needy. I do not mean a redistribution of wealth, but those of us who are wealthy (if you're making ~$50,000 by yourself, you are wealthy) need to be proactive in levelling the playing field for those who are less fortunate).
This doesn't mean mindlessly give to charities - this is the worst possible thing we could do.
Although I'm not entirely sure about the merits of this argument, I've heard that food subsidies actually do more long-term damage to African nations. The reasoning (simplified) goes like this: citizens of African nations tend to be undereducated - their only real export is labor-intensive items; all countries tend to follow the economic route of agriculturally-based to manufacturing-based to service-based; by giving food to these nations for free, we are undermining the ability for Africans to base an economy on agriculture. Obviously this is a gross simplification that doesn't factor in the geopolitics of the area, but it's still a point that has some validity.
The most important thing that can be done is to promote NGO and charities that provide self-sustaining development. Any type of organization that directly empowers the people who are being helped by the organization - those are the ones who can most benefit from our wealth (a plug for Carolina for Kibera here).
Economics is great, but it sure doesn't provide much of a comfort to those who are affected by frictional unemployment, frictional governments, and frictional societies.
I know the big intellectual fad is the promotion of the individual (Ayn Rand), but we have to remember that this is all within the context of society. The ants are all acting in their self-interest, but they (might be) aware of the colony and act in such manner.
You cannot simply ignore everybody else in this world and act in your own interests - do so such that you aren't creating inefficiencies in the market, but realize you share this world with 6 billion other people and almost all of them are less fortunate than the people living in Western countries.
(gets off soapbox)
