Intervention in Free Markets
Market Intervention disrupts three main factors and, therefore, the balance of the market:
- Government Spending (a.k.a. redistribution) amounts to involuntary consumption. You pay for the road, bridge, or government building whether you need it or not.
- Government Regulation consists of dictating individual preferences. The state mandates that you wear a mask whether you want to or not. The state requires you to come to a full stop at a stop sign even when you have a clear view of an empty street.
- The Banking System manipulates the money supply, creating false market price signals. Buyers and sellers make rational decisions based on flawed information causing poor investment and spending activity.
The end result of market intervention consists of a market always out of balance. Producers and consumers, buyers and sellers, take actions they wouldn’t otherwise take, resulting in the ineffective, inefficient allocation of resources.
I have defined free markets, the primary subject of this blog, as markets free of intervention. Thus, I plan to post permanent articles about the role of intervention in disrupting otherwise free markets.
Since most intervention comes through government force, I find it impossible to avoid the topic of government intervention. As I may have stated elsewhere on this blog site, I plan to keep my political comments to a minimum. I want to focus primarily on the economic influence of intervention of all sorts — primarily government intervention.
Conclusion
Intervention creates the only distinction between free markets and non-free markets.
In the briefest of summaries, I can say that intervention disrupts the effective and efficient operation of markets.
In a market subject to intervention, transactions no longer occur as a result of voluntary interaction. All transactions are subject to either force or significant influence.