Many believe that the free market will work things out. In the most ideal scenario this is a market that is free from outside influence. The free market is supposed to use incentives to spur innovation and allocate resources. The concept of a free market is a core tenet of the American experiment and has been so since the founding of the country.
However this notion of a market unencumbered by forces other than the ‘invisible hand’ isn’t reality. The idea of a totally free market is the major stalwart for those opposing any extension of state services. The argument being that the market should be left alone and it will be the arbiter of what has value and what doesn’t. Any product or service is equally at the whims of the market and those that are a benefit to society will succeed and those that don’t have utility in the society will fail.
This is a very idealistic and romantic perspective of the free market. In reality there is very little in the market that isn’t at some point touched by the state. The US government has had a vested interest in ensuring certain industries thrive. With government subsidies being their major tool. This isn’t an argument against subsidies, but rather an examination of where that money goes, why it goes there, whether it should still go there, and a realistic perspective on a market that is anything but free.
First a subsidy is a government payment to a private entity to ensure they stay in business with the reason usually pointing towards keeping jobs. A good resource for the companies receiving government subsidies is from goodjobsfirst.org. There you’ll find a comprehensive list of the companies receiving subsidies and the amounts they receive. If you look at the list you’ll recognize almost every company on it. These are the most wealthy and powerful companies on the planet receiving billions from the US taxpayers coffers.
We live in a very complicated and complex world. We need systems in place to ensure that a certain level of control can be wielded to keep order. An example that is currently in the news is the Federal Reserve. This is the US central bank that can manipulate interest rates and use other monetary tools to direct the US markets. It is currently increasing interest rates in an attempt to combat rising inflation.
The government subsidies programs are set-up to play a similar role. They are there to keep order in systems that when left on their own can go array. Now the argument for subsidies is that they are for the workers. They are awarded to companies so those companies can continue to operate and keep people working. The subsidies program started in the US with the New Deal in 1933 by FDR to subsidize the agriculture industry. Essentially to ensure that family farms didn’t start going belly-up due to competition with one another. Seemed pretty reasonable at that time.
As I said above, the biggest collectors of the subsidies now are some of the most powerful and wealthy companies on the planet – companies that regularly have record-setting profits. I’m not going to name any of them, but think of 5 American companies that you think shouldn’t need government help. Then look at that list and I’ll bet all 5 are on there.
Now, when we look at this we see that the ‘invisible hand’ or the ‘free market’ isn’t real. This being the notion usually pushed by those touting some fantasy of American meritocracy. In reality the market is anything but free. We can see the pattern of the powerful few taking advantage of systems originally put in place to keep the working class from falling through the cracks. A system designed to keep a social floor under the feet of the most vulnerable citizens being co-opted by entities that have the resources to manipulate public policy. It is similar to how large corporations use their resources to hide money and avoid taxation.
Seems that the ‘free market’ is insufficient in allocating resources without the intervention of the state. The economy and the state are not separate entities, but rather intertwined and co-dependent. One cannot exist without the other. The state uses its laws and authority to protect whatever the chosen economic system may be, and the economic system is supposed to allocate resources. I see no major issue with that as I’m not sure how else large societies can be organized otherwise.
Where I do have an issue is where that state influence starts and ends. The pandemic has shown that the market is inadequate when we are considering things such as healthcare and childcare. We can take that a bit further and put housing and education into that category. Though it seems any state or government involvement in those comes with major resistance.
The Affordable Care Act is an example of this as it has been resisted at every step. With little regard for it providing relief to millions of Americans that weren’t able to afford quality healthcare before. The point being that we seem to be fine giving large amounts of taxpayer dollars to private corporations – corporations that have a primary interest in profit and little interest in the public good – but when it comes to subsidizing public necessities we run into strong resistance.
So this market isn’t free of outside influence. It is not a competition on an even playing field where only the best ideas win-out. There is much that we could do as a society to re-prioritize where we put our values – and collective dollars. The first step is recognizing that there are many public necessities that the ‘free market’ cannot property manage. Those being the ones mentioned earlier, but there are many more.
It seems that we have the resources and it is within our capabilities to create a social floor. A society where necessities are considered a human right and prioritized without giving up the entire market system. A shift in values and perspective is necessary, and hopefully this has shined at least a bit of light on where and how that is possible.
I appreciate your attention and hope you’ve found value in this.
Thanks for reading and take care of each other.
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