Wednesday, January 17, 2007

Free Markets (5) - Force Destroys

The more common way for a market to be overcome by evil is for a seller or buyer to force someone into a transaction that they do not want to make. Someone may be forced to buy something they do not want by someone who threatens to beat them up. Someone may be threatened into selling something at a price less than they were wanted. A buyer might be forced to pay a price greater than they wanted to pay. Once someone is forced into a transaction against their will, the benefit of the market disappears because one party to the transaction is make worse off.

Forced transactions take place when bullying tactics enter the market. This can happen at various levels. An adult might intimidate a child. An armed man may force someone to buy something they do not want. A gang may threaten a seller with violence. A country might invade another to establish trading privileges. In these situations the market is not evil. The evil is the perpetrated by the person or organisation that is forcing people to buy or sell against their will.
However, we should get our words right. These situations no longer be fit the word market. A better word would be organised extortion. There is no doubt that organised extortion is evil.

The most common way for force to enter a market is when the government enters the process. It may start setting the price or place limitations on who can buy and sell. When this happens the market is partly destroyed as some of the participants in the market will be made worse off. Some will be forced to take pay price higher or lower than they wanted. Others may be forced to sell against their will or at a lower price than they wanted. However, the result is no different from the organised extortion described in the previous paragraphs.


Ted Gossard said...

Ron, Here in the United States, I think people end up miserable and worse off, because they buy into the American way of life. Borrowing by credit cards, and accumulating signficant debt, they can harldy climb out of, later.

And the advertising here, the money spent on that, is testimony to its usefulness. Products terribly overpriced (so, at times, some can line their pockets and far more than that). Advertising that can manipulate people. All part of the glorious free market system.

RonMcK said...

People can make themselves miserable by their choices and spending. The market does not force them to make these choices. No one is forced to go into debt.

I have purchased things and later realised that I made a mistake, but I would not blame the market for my stupidity. Blaming the market is just a cop out.

People can make themselves miserable sinning. They have been doing that since Adam. God could have taken away so choice, so that we would not sin, but he chose to leave us free. Taking away the market freedom to buy and sell is not the answer either.

Advertising works, but only because it latches onto a hook in peoples heart that got their through the effect of sin. Banning advertising would only deal with the symptom. The gospel can deal with the hooks, which is far better. We could ban lying and dishonest, but I think the gospel is a better way.

I suspect that the American debt and consumerism is leading you nations towards a wake call, that will help people see the hooks and open their hearts to the gospel.

You need to be careful about the expresseion "terribly over priced". What does that mean. If people freely choose to pay the price because they think they are getting value, then who can say they are paying to much. The church has always got itself into trouble by when trying to set a "just price" for goods or services.

I am not sure what you mean by "glorious free market system". Markets cannot be glorius, because they are just people offering to buy or sell at a particular price. They are just exercising their God given freedom to interact with each other, so I would not knock it, but I would not call that glorious either. You can only get rid of markets by getting rid of people or turning them into automatons, so that is not the answer.


Ted Gossard said...

Ron, I say glorious free market system, not to ban free market, but to decry the confidence placed in our economic system. It is misplaced not because it is evil in itself. But because it is too easily an idol or venue for our idolatry.

I stand by "terribly overpriced", on some items, anyhow. This is based on perception in regard to actual cost of furniture made here compared to the huge mark up, put off as a sale.

I just can't be happy with a nation that has so many people on its streets. Yet has more wealth than any other in the world.

RonMcK said...

If furniture is "terribly overpriced", the solution is simple. Someone in your church could start a furniture store. In America, you can borrow the money and buy the expertise. You will do a service to the poorer people by providing them with cheaper funiture. You could help some of those people on the street, by employing them. A win win for everyone.

Instead of grumbling about high prices, Christians should do something about it :-)


Steve Scott said...

Ron, there are other types of "force" that destroy. Here in the US, zoning laws place minimum sizes on residential lots, effectively mandating economic status of those who would live in any given community. Dividing lots into smaller sizes for the benefit of the poor or allowing multiple families to live in one house are against many zoning laws. Zoning laws in each community also dictate types of housing by location, as well as business and commerce. We as a nation are segregated according to class, all by law. The relatively poor cannot afford to live in richer communities where all the jobs are, so we have to commute long distances which creates all our traffic nightmares, which create calls for more government regulation, ad infinitum.

So, we really don't live in a "free" market because literally everything is regulated. The perceived "evil" inherent to the free market is, as you say, really the evil of those who abuse the system. I do think many people are right in their perception of evil in the market, they simply don't know where to point fingers, even if in the mirror.