Let the Free Market Work, Please!
The following article has been submitted to The Wall Street Journal for publication.
In these pages recently, political activist Jesse Jackson, Sr. and Presidential candidate Barack Obama laid out their pleas for government action they feel is necessary to stem the crisis in the housing and financial arenas. Rev. Jackson wants a complete government bailout of housing; a 'Marshall Plan' for the mortgage market. Going much further than housing, Mr. Obama laid out a litany of other ills he sees in the country in regard to college affordability, medical care costs and stagnant incomes. At the same time, he laid out a list of government actions to address these concerns; tax rebates, regulatory expansion, 'direct relief' to victims of mortgage fraud and government provided financial counseling.
Allow me to offer a response to Messrs. Jackson and Obama: let the free markets work.
As Obama himself notes, this is the wealthiest nation in history. It didn't get that way because the government created and ran everything. The government didn't create the industrial revolution; the government didn't create the information age; the government didn't create the revolution in medicine and science that we export around the world.
People created the systems, inventions and procedures that have advanced our standard of living over the past 230 years. People operating within a free market, driven by the profit motive and competition, made the investments of time and resources necessary to do what no country before has been able to do; marshal the organizational and technological resources to produce services and products that have generated the greatest growth in living standards the world has ever known.
The last thing we need now is more government. What we need now is the power of the free market. America is indeed at a defining moment and it is absolutely essential that we tip in the direction of more freedom, more individual initiative, more entrepreneurship, and more incentives for the free market to address our problems.
How do we do this? We recognize the enduring power of the law of supply and demand. No matter how charismatic Mr. Obama is; no matter how strident or eloquent Rev. Jackson is; they cannot overrule the overriding principles of economics. The law of supply and demand is what rules the free market. It also dictates the price and availability of all products and services.
Do we want college education to cost less? Costs have been soaring because there is huge demand (just about every parent wants their child to go to college) and not enough supply. The answer is more supply to meet the demand. The answer is not a new government program to supply more debt or tax dollars; that will only inflate demand and drive costs up further. Let's foster the creation of more alternatives to college; let's do what we can to encourage the deployment of capital into the creation of more colleges.
Want more affordable and available health care? Again, the last we thing we need is a government run system that injects more demand into a system that lacks supply and free market competition. Health care is rising so much in price because there is huge demand and not enough competition or supply. Tort lawyers drive doctors, insurance companies and hospitals out of business or into the practice of defensive medicine. Doctors tell nurses they can't compete in certain procedures or services; hospitals tell clinics and other hospitals they cannot compete in certain areas; states tell insurance companies and other providers of insurance they cannot compete across state lines or in certain markets.
What we need to do is break down the barriers that prevent competition in health care and for that matter, all areas of the economy. What we need now is the free flow of capital and regulatory, tax and legal systems that encourage investment and risk taking. Yes, there will be excesses and yes, we need enforcement mechanisms that require following the law and prevention of fraud and abuse. That requires an honest judiciary and integrity in our political systems that promote justice and enforcement of the law without regard to political prejudices. Our current immigration crisis is a remarkable example of not only the failure to enforce the law but also the failure of the bureaucracy to break down the barriers that prevent legal immigration.
The current housing and financial crisis is another example of a failure of enforcement. The solution is to enforce standards of credit, standards of investment review and the prosecution of fraud. What are not necessary are government bailouts of imprudent investors, consumers or banks. The markets have already self-corrected; most of the executives responsible for supervising these markets have lost their jobs; many imprudent loan processors and originators are out of business or merged out of a job.
The administration currently in office hasn't at all been dedicated to free markets or less government; in fact it has gone in the opposite direction, creating even more government than many liberal administrations. We have created trillions of debt doing this that just pushes the problem onto future generations and doesn't solve the problem today. The last thing we need now is another president who believes in government first and free markets second. Let's not pour gasoline on this fire and create even more government. Let's recognize that the principles of free markets, competition and the laws of supply and demand have gotten us this far as the wealthiest nation in history. Let's not abandon these principles now for the sake of political expediency or electoral success.
John Cox
Candidate for the Republican nomination for President
Chicago, Illinois
