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Friday, December 28, 2012

Business 360 2: Free market means free individuals

* This is the paper that I submitted to Business 360 for its second issue, published early this month in Kathmandu, Nepal. The publisher, Ms. Charu Chadha, is a good friend of mine.
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Free market means free individuals

Nothing in the world would attract people’s passion and attention more than individual freedom. The freedom to explore their surroundings, communities and countries; the freedom to read and express their ideas and observations. The freedom to raise a family and interact peacefully with friends and strangers. The freedom to pursue an artistic or sports or entrepreneurial activity. Or even the freedom to bum around and be lazy.

So there is great misconception when people would object to free market, fearing that markets are ruled only by giant players and corporations, of monopolists and oligopolists who have connivance with government regulators and bureaucracies. Far from it.

All markets are made of people, rich and poor, young and old, men and women, sellers and buyers, producers and consumers. Whether we talk of the labor market, capital market, housing and education market, food and healthcare market, there are producers and consumers. So when we say free market, it simply means free individuals.

The pursuit of individual freedom is an end in itself. People have the freedom to be industrious and responsible, or the freedom to be lazy and irresponsible. The freedom to be efficient and excel, or the freedom to be lousy and mediocre. Hence, people should be allowed to do what they want, including what to do with their own body, provided that they do not prevent other people from pursuing their own liberty by inflicting or threatening physical harm and violence.

The imposition of external coercion and prohibition should be kept to the minimum.  People cannot avoid coercion as it is a matter of degree. Parents coercing their children to turn off the tv and do their school assignment may look undesirable for the kids, but it is within the rights and power of parents exercising their parental freedom and responsibility for their family.

When government prohibits killing and murder, shooting and stabbing, stealing and land grabbing, rape and kidnapping, and uses its armed and coercive powers to implement this type of prohibitions, then it is expanding individual freedom as the productive and efficient people can do their work in peace.

It is the imposition of various other regulations, restrictions and prohibitions by government that ultimately limits if not kills individual freedom. If people are prohibited from starting a food or bakery shop, a beauty parlor or computer shop, unless they get various permits and certificates from different government bureaucracies first, pay various taxes and fees first, then such coercion is limiting individual freedom. Or if people are scared of honestly speaking their minds about the affairs of government and society, otherwise they might land in jails or be executed, then such coercion is limiting or killing individual freedom.

The main function, the raison d’ etre, the reason for existence, of government is to promulgate  the rule of law, the law against various crimes and aggression, and to protect private property rights and the citizens’ right to self expression. All other functions like running banks and hotels, casino and lottery, tertiary hospitals and universities, are either secondary or unnecessary.  Of what use to a person that he gets free or highly subsidized education, healthcare, housing and other services for his family, if the fruits of his labor and hard work can easily be stolen and taken away by bullies, either from the private or government sector? Or his kids can be abducted or murdered easily and justice is too far out to be rendered?

People should assume more responsibility in running their own lives, their households and their communities. Having solidarity and compassion with the less fortunate people, the victims of calamities and accidents, does not need legislation and coercion. It is within human nature and rationality, directly or indirectly, that such solidarity and charity can happen naturally and spontaneously.

By assuming more personal, parental and civil society responsibility in running their own lives, people can rightly assert that their income and savings are theirs and theirs alone. Taxation will be retained to finance a limited and lean government that is focused on doing its basic function as outlined above. One or two consumption-based taxation should be sufficient to finance government.

Where there is more responsibility, there is more freedom. The great Austrian economist and legal philosopher Friedrich Hayek advised that “Freedom and responsibility are inseparable. People who are afraid of responsibility are afraid of freedom itself.”
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See also:
Busiiness 360 1: Nepal and the Philippines, November 26, 2012
Fat-Free Econ 33: Institutions and Why Governments Fail, December 09, 2012
Lion Rock 4: Leftism and Populism by Intellectuals, November 05, 2012
Pol. Ideology 38: Central Planning vs. Free Market, October 30, 2012

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