Friday, November 16, 2007

Spontaneous Market 5: Limits to Free Market?

A friend, Geronimo "Indian" Sy, wrote in his column in Manila Times last week, a paper entitled “Face control”. He noted that
In the land of equality, liberty and fraternity, I find the strangest thing—face control. In certain places in Paris, notably in bars and party places, there are gatekeepers—bouncers in our parlance—who allow people in or exclude them not based on anything except how they look…. The face control is not based on science. Neither is it based on logic. My friends tell me the ones who are turned away are usually Middle Eastern-looking…. To top it all, the queues are long, snake­long. The crowds continue to jostle in and be counted. In a democracy, can one really do that?
I wrote him and argued that in a free society, or where there is a "rule of law" (unfree society only have "rule of dictators and bureaucrats"), people are free to set their own limited rules, so long as such rules do not result in harming other people's lives and property.

For instance, if I put up a pizza house, the food are soooo great at a good price, then I attract hundreds of customers everyday, I can make my own rules whom I can allow entry or whom I can refuse. This attitude might turn off other people, so they also put up a rival pizza house nearby, they also attract plenty of customers, and they make their own rules that are different from mine. Fine, that is free market and competition. Nothing wrong, right?

Problem would arise if my pizza house is a government corporation, funded by tax money, and I am just an appointed bureaucrat, a crony in short, and I make rules that exclude other taxpayers while allow entry to other taxpayers. This is wrong. But if my pizza house owes nothing from tax money, then I have the freedom to set my own rules.

Indian replied that while I got some good points, he believes that there is “inherent limit to free markets”.

Yes, there is a limit to free markets -- competition. Competition makes sure that players behave well in dealing with their customers, with the public in general. Because if they don't take care of their customers, others will, and that can be the end of their business, the end of their job creation capacity.That is why policies that limit competition, like government-created monopolies and oligopolies (through franchise, whether by congress or by certain national government agencies or local government units), in the name of "protecting the public", actually works against the public.

Another friend, Rica, wrote that “there is an inherent limit to private enterprise being free, that point is where you infringe upon human dignity or human rights. This face control is similar to someone’s policy of physically banning a caddy from the private compound which is indirectly managed by him, and he does not even own the property. Although they are "free" to do this because it is private property, there is a point of human dignity.”

Yes, there will be some abuses or disrespect of human dignity elsewhere, somewhere, but such incidents don't invalidate the freedom that humanity enjoy under a free market system.

A father spanks his son for saying words the father does not like, the mother fights her husband. One can call this abuse of human dignity of the son by the father, or a mother consenting with the bad attitude of her son who abuse the dignity of his father.

Micro cases, household level cases, firm or company level cases, school or church level cases, you will find millions of different cases like these. But they do not invalidate the freedom that individuals enjoy under a free market system. That is why there are rules and laws that apply to individuals, even rules that apply to members of a household or family (like no wife or husband battering), to preserve order in society.

In the case of that guy who bans a caddy, if that golf course is owned by the state, and that guy is a cabinet minister or big-gun Party official of a dictatorial government, not only that he can ban the presence of that ordinary caddy, he can even kick and punch the caddy for no reason at all, and that caddy nor civil rights groups will have no power to punish any bureaucrat for his abusive behavior. And the caddy may not be able to find other golf courses to work for because all golf courses are owned by the state and all are managed by cronies and state bureaucrats.

My two related papers in recent weeks:

(1) Beelzebub and Government DNA

October 30, 2007

Last October 24, 2007, the International Policy Network ( announced the winners of the 6th Annual Bastiat Prize for Journalism. There were 5 finalists -- Mr. Clive Crook of Atlantic Monthlymagazine, Mr. Jonah Goldberg of National Review, Mr. A. Barton Hinkle ofRichmond Times Dispatch, Mr. Dominic Lawson of The Independent, Mr. Patrick Mcllheran of Milwaukee Journal Sentinel, and Mr. Amit Varma of Mintnewspaper in India.

First prize winner got $10,000, wow! Second prize got $4,000 and third prize winner got $1,000. The winner, Mr. Varma, has a witty writing style. The 3 papers he submitted were, "Where's the Freedom Party?", "A beast called government", and "The devil's compassion". The latter is about a speech given by the devil Beelzebub at the convention of demonic beings.

Remember The Queen's song, "Bohemian rhapsody"? There's a part there where Freddie Mercury sang,

"Mama mia, mama mia
(mama mia, let me go)
Beelzebub has the devil put aside for me,
for me, for me..."

In "A beast called government", Mr. Varma argued that wastes in government is not an aberration, but it is written in its DNA, because government bureaucrats (a) want to multiply subordinates, not rivals, and (b) officials make work for each other.

Second prize winner, Mr. Crook, has a more formal writing style. His 3 articles were: "The fruitful lie"(about lies that trade protectionism benefits the poor), "MiltonFriedman's unfinished work" and the "The Ten Cent solution" (aboutprivate schools that educate the poor).

For 6 straight years, IPN has attracted more journalists and columnists from around the world who write about the principles of a free society -- including free market, rule of law and property rights -- to join the competition.

(2) Advancing Property Rights and Liberty

November 07, 2007

A friend from Singapore, Pin-quan Ng, wrote an essay on market solutions to developing world health care access issues. His paper has been published in the 'Young Voices in Research forHealth 2007' compilation for the 11th Global Forum for Health Research in Beijing.
Compilation pdf can be found here:

Yes, we need to assert more market solutions, not more government solutions, to health care -- and pension, housing, education, infrastructure, food production, etc. -- issues. Markets are driven by real service; you don't serve well your clients and consumers, others will, and you lose your business and your shirt. No forced revenues (aka taxes) that will subsidize or bail you out.

Another friend from Sri Lanka, Atty. Mala Gunasekera, got a new website --
It's the site of Women's Chamber of Industry and Commerce, empowering women in business (not in bureaucracies) . The site is cool and easy to navigate.

Mala is also busy doing research and legal work on forgery of title deeds in Sri Lanka, other Asian countries. In short, she is busy making private property rights work in her country.

Meanwhile, Asia is really a place of irony. Our continent has the fastest growing economies in the world. Three of the 4 largest economies in the world (size of GDP expressed in PPP values) are Asians -- China, Japan, India. The tallest buildings in the world, the longest buildings, etc. are in Asia. Yet in our midst are also some of the notorious dictators in the world. People like Gen. Tan Swe of Myanmar, Gen. Musharaff of Pakistan, and Kim Jong il of North Korea. Less notorious but also prince and princess of treachery and public deception are also with us, including the Philippine President.

Advocating collective freedom is already hard. Advocating individual freedom and liberty is much harder. But we're in the midst of this fight already, we need to persist.

* See also Spontaneous Market 4: Entrepreneurship, Community and Property Rights, October 23, 2007

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