A Capitalist Economy

Public Goods and the Free Market

“The government must provide public goods because the free market is incapable of producing them, at least for a long period of time. Why is this? Well, because public goods are ones that every citizen can enjoy without being excluded from them. In simpler terms, you don’t have to pay for them and they can never be privatized. Therefore, if we place such a task on the market’s shoulders, they would be inefficient and we would end up lacking public goods. Because, let’s be honest, most people don’t like to work for nothing. In order for people to have enough well-built roads, highways, security, communications, bridges to cross rivers, broadcasting, etc., the government must provide them to the people. Those goods, if they were to be produced by the market, one person might buy them and another will free ride on them.” At least all this is what they say.

However, we cannot always base our philosophies, theories, beliefs, and ideals always in what they say. As a matter of fact, we should never do that, but instead search deep for the truth. The truth is that the government can never know the exact amount of goods the people may need and if the market can be inefficient in providing them, so also, can the government.

In the past, our forefathers worked hard and accumulated capital that we now can enjoy costless because of inheritance. Therefore, those goods can have a characteristic of goods that are free ridden by all of us. Also, the public goods provided by government agencies, in case you were wondering, are paid for with the taxes taken from some people, including you. In this we know that not all people paid tax to enjoy a public good, and those, too, are free riders.

There are also public goods that can become private goods, such as streets, railroads, telephone services, postal service, etc. Certain private goods also have the characteristics of public goods. Examples of this can be as simple as your personal qualities you worked hard to achieve or were born with, but people can enjoy pricelessly, just as they can enjoy the view of your rose garden, the smell of the cologne or perfume you sprayed on yourself, and even a street musician’s music can be heard and enjoyed for hours without a charge.

Imagine you had the opportunity to choose from paying to buy and use the highways of your nation or saving that money, instead, to buy a helicopter. Because, in case you haven’t come to the conclusion, the government takes a whole lot of your money (taxing) to proportion a public good, in this case, to obtain the material, machines, and workers to build the highway and maintain it. Now, let’s pretend you could choose and not be forced by the government to pay, but be allowed to keep the money free willingly and save it for a vehicle that doesn’t use roads, but the skies, and with it you can travel faster, a helicopter. Would you prefer the helicopter, instead of the public good? I guess that most people would prefer the helicopter than the highway, unless they are afraid of heights. However, that is the good of the free market; it can give you the choice. Anyway, how can the government know that the citizens do not prefer something else and use their money for that, instead for a public good?

Don’t you think that the great majority of people are more likely to move about their own interests, than in the general public’s? The answer, without a doubt, is yes. Well, guess what? Government officials are people and they are more probable to act in their own interests than in the general public’s.

Let’s use the highway example again. The government is building a highway. They discover a really fast route that will benefit the public in reducing the time of travel by 75% and wil cost very little time and money to build. However, the government officials will not be benefitted economically by picking that route (if you know what I mean). Therefore, they search for a new longer way, find it, and choose the one that will take longer time and greater money to build. With this choice, the government will crack a small pot of gold, but the general public will have to pay taxes and the time of travel will only be reduced by a 22%. Government officials are people. It is interesting, though, a real leader is characterized by giving himself for the benefit of his followers.

The government encourages democracy because in it, it can only do whatever they want with the ignorant or implied approval of the people. In other words, they legitimize everything they do, including plunder, because they make us believe that we, the people, are the government. I encourage you to read these two essays called Solving the Problem, and Greater Responsibility where I speak of the falseness in the majority of votes.

Improving the Standard of Living through Capitalism

The free market is perfectly capable of producing all sorts of goods and can create a better and richer future that has a greatly increased standard of living.

As I mentioned before, our ancestors accumulated capital goods that were inherited to us and with them we grew in riches that allowed our own selves to obtain more capital goods and quicken our means of production. This caused us to increase in wealth and give people more free time to be creative and form more machinery, gadgets, or things that benefit society that we couldn’t have before because everyone was busy working all the time.

The average poor person of today’s American society is much richer than the wealthiest people that lived a century or two ago, in the mere reality that they owned no television, refrigerator, cell phone, or computers. However, I do know that those people are still counted as poor in society, but I propose a solution for their poverty.

Think of all the things you have and those that you do not need to invest money in, sell, like in the electricity for the television to function, and start saving the money you used for that to invest it in something else and form your own capital, don’t borrow from the bank in times were there exists government intervention. He that saves little by little becomes rich. Maybe you will improve the standard of living of your future generations.

Now this is what a capitalist does, he saves money and invests. He can produce, let’s say gum, using 300 people to produce millions of pieces of bubble gum and in a time frame of 12 hours. Before, without capitalism, he needed 1,000 people to produce about 100,000 pieces of bubble gum and in a time frame of 16 hours. In a capitalist economy, which is only available in the free market, he produces more than 200% of bubble gum and with 700 people less! In addition, the price of bubble gum used to be $1.00 and now it is reduced by 75%, costing only $00.25. This increases the economy and allows those that couldn’t afford a piece of bubble gum to buy at least one piece of that candy. The 700 laborers that were freed, do not stay without a job, but actually, are able to create or enter other jobs and produce things that society couldn’t or didn’t have before. In other simpler terms, everyone benefits.

Before the capitalist economy, were people poor because of greedy rich people that exploit them? No, they were actually poor because of the undeniable reality of scarcity. There were fewer consumer goods to go around and things took a lot more human effort to be produced, therefore, everything was expensive. This is how the market economy improves the standard of living: greater production with less effort, this reduces prices dramatically, the currency of the country is worth more, there is enough to go around, and people are given the chance to be creative and are given the freedom to do what they please with their wealth, without government intervention.


Tags: , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: