Free Market or Communism?

It has been a while since I've posted here because I am in school full-time, which is taking just about all my time. I'm nearly finished with my bachelor degree in business. I just finished writing a response to an article for my international economics class. I felt that it was perfect to post here too.

The article that I was to read and respond to is found here (among other places):
http://www.theadvertiser.com/story/opinion/2014/07/02/economic-freedom-key-prosperity/12119417/

My response:

This article seems pretty one-sided. The author makes some good points in support of economic freedom, but at the same time he seems to blur distinctions between free-market causes and other causes for our prosperity.

I understand Mr. Williams' desire to counter President Obama's statement: "'The market will take care of everything,' they tell us. ... But here's the problem: It doesn't work. It has never worked. ... I mean, understand, it's not as if we haven't tried this theory."

The president apparently attempts to justify socialism (or communism?) by refuting free-markets. The problem here is that we have also tried the Marxist-Communist theory and it didn't work either. The US and free-market West countries have been more successful than Communist nations because they were able to more effectively correct defects in the free-market system. The Communists didn't correct their system defects as effectively, partly because they were probably too set in following the Marxist theory to the letter, and partly because they had fewer minds to draw on (for the most part the people couldn't give much input).

Examples of defects resulting from too-free markets, that we eventually corrected:
- Excessive work hours, even for children
- Monopolistic entrepreneurism
- Minimal value seen in employees--they were paid low wages, and were replaced if they were not happy with employment conditions.
- Slavery

The author says, "The key features of a free market system are private property rights and private ownership of the means of production. In addition, there's a large measure of peaceable voluntary exchange."

Voluntary exchange isn't present because the free-market created it. It allowed it, but individuals with a moral sense of helping others created those exchanges. (I'm thinking here that we are talking about volunteerism.)

Mr. Williams goes on to give some evidence of our economic advantage.

"People who live in countries closer to the free market end of the economic spectrum not only have far greater income than people who live in countries toward the communist end but also enjoy far greater human rights protections."

"In the freest nations, the average income of the poorest 10 percent of their populations was $11,382. In the least free nations, it was $1,209."

"Life expectancy is 79.5 years in the freest nations and 61.6 years in the least free. Political and civil liberties are considerably greater in the economically free nations than in un-free nations."

We do have greater incomes, but he doesn't say anything about the cost of living among the various countries. Most lower-income countries also have a lower cost of living than we do.

As for civil liberties, that's not a result of free-markets. That is a sociopolitical result. For the U.S. it started with our Constitution and the bill of rights. Socially and morally conscientious people worked to further expand our civil liberties since then.

As for life expectancy, perhaps there are some significant contributions due to the free market. There could be some health benefit from the free market system for some people (especially the most successful). Also, the free market surely encouraged medical research and development that has lead to better healthcare (and high prices).

Mr. Williams continues, "The average poor American has more living space than the typical non-poor person in Sweden, France and the U.K."

Could it be that we have larger living spaces because we have a lot more land to build on? The countries mentioned are geographically small. Could it also be that because our nation is younger, we were able to build from a different mindset than those much older nations that are building amidst hundreds of years of construction and population history? Our lifestyles and our level of individualism are also different, leading to different desires in our residences.

He also says, "Our having a free market and limited government more than anything else explains our wealth. Most of our major problems are a result of government. We Americans should recognize that unfettered government and crony capitalism, not unfettered markets, are the cause of our current economic problems and why the U.S. has sunk to the rank of 17th in the 2013 "Economic Freedom of the World" report."

While surely it is true that much of our economic trouble right now may be a result of inappropriate government actions, it is also likely that the current size of government partly resulted from unfettered markets. Much of the growth of government came as a result of problems created by industry and free markets. (FTC, EPA, and OSHA are obvious examples.)

Free market and limited government surely made the conditions possible to build our wealth, but where did that wealth come from? To a large extent it came from other nations, in various ways. Through our trade with other countries, we were able to accumulate financial rewards from them, trading US resources for financial wealth. This suggests that another reason we became wealthy is because we had vast natural resources to trade.

Also, from other nations we received large numbers of emigrants. Of course that means more manpower, more ingenuity, and so on. They contributed to our wealth (and now we can't stand the thought of "those Mexican immigrants.")

So free trade, along with other various conditions, made us wealthy, to some degree at the expense of other nations. Now since a free market is so great, let's say all the nations of the world started participating in a single free market. Over time, the lower-income nations would start to increase their wealth, their income, their standard of living. That sounds great. But are we prepared for the effects that this will necessarily bring to the wealthier nations such as the U.S.? As incomes rise in the less-well-off nations, cheap labor in those nations will disappear, leading to higher labor costs for our products and higher prices. Our standard of living will likely decrease as the world equalizes to a common standard of living. For some nations this will be a benefit, for some it may be a loss.

If wealth and economic prosperity are the only measure we use to determine the merit of a system, then free markets likely win the prize. But what are some of the associated non-economic costs of the free market?

- To start off, many nations are hostile toward the U.S. for various reasons, largely because of our business operations that we pursue for our economic welfare as well as government actions that get noticed because of our economic status. Because of our economic strength, we have the power to bully other countries for our further economic benefit. It sort of reminds me of Wal-Mart, a very prosperous company that everyone complains about.
- We are losing our faith in God, who created us, because we now believe we understand so much that we don't need him. Partly, it's a consequence of pride associated with our prosperity. As this happens, expect some blessings of our nation to be lost.
- The moral standards of our people decline as the masses follow after the latest decadence in entertainment and pursue the gluttony and disregard that marketers encourage, which are results of free markets.

Others surely could be named.

A free-market republic or a communist nation? Is one really better than the other? They both have advantages and disadvantages. They each have problems because of the nature of people. Either form of government/economy could be pleasant, but only when benevolence is widespread throughout the nation.

As the founding fathers understood, we must be a sufficiently moral people for our free system to function properly.

Rather than economic prosperity, I believe the highest success is to achieve the most good in the world while causing the least harm.