The strengths of the free market… and weaknesses

I am a proponent of the free market in many areas of the economy. Free market economies encourage healthy competition and eliminate ineffective and wasteful components of businesses. For many types of business, this form of interaction is not only good, but an optimal method of economic transaction. Examples of great free market businesses are the construction industry, the restaurant industry (and many other types of small service industry businesses), and entrepreneurialism in general. In industries like these, the free market spurs growth for the entire economy by rewarding those with good ideas and hard work.


However, unlike some free market fan-boys, I do not think that the free market is 100% applicable across the board. There are many types of business which require some form of regulation since the free market almost always encourages short-cuts and shoddy work (see my last post). Examples, in my opinion of these types of economies, are the health care industry, the financial industry and industries which are intertwined with the environment. Since I have more or less addressed the environmental issues in my last post, I’ll tackle the other too issues for now and will most likely elaborate in the future.

I know I have mentioned many things about the health care industry and the reforms in the past, but I want to again touch on the importance of early and preventative health care. To procure an example of a free market health care system, one needs to look no further than the United States. We have some of the best medical technologies in the world and we pay exorbitant amounts of money for access to this technology and science. However, even with this advanced technologies, many countries with far less have citizens that live considerably longer with less health defects. Rather than focusing on the “flat of the curve” technologies, we should avoid free market health care, and focus on preventative care. Preventative care does not have nearly the profit of free market care, but the results for the health of the nation would be drastic.


Another area in which I feel that the free market does not perform adequately is the financial industry. I don’t believe that we should completely remove the market aspect of finances, but too often the careless gambles of some investors are rewarded and cause large pains for many others. The stock market itself is a free market gem, meant for corporations for sell stock to investors for capital for growth. This free market ideal has crumbled into a buy/sell orgy of derivatives trading and hedging which defeat many of the original ideals of the markets. I’ll probably agree with many and say that many of these issues across with the passage of the Glass-Stegall act which allowed financial and investment banks to combine. Banks where people take business loans could now invest in mortgages and stocks, increasing the risk for everyone. Until these bank shrink in size, the free-market in the financial industry deals with too much of too many people’s money.