Free-market economies are necessary for an ethical and productive society.
Entrepreneurs do incredible things.
The list is too long to name them all. But entrepreneurs are the ones at the forefront of efforts to improve our world through wildlife conservation, environmental cleanup and protection, poverty alleviation, and even breakthrough medical treatments like 3D bioprinting and rapid COVID-19 testing that can help save human lives.
Successful entrepreneurs know that the best way to enrich themselves is to servethe needs of others. The more entrepreneurs we have working to more efficiently and innovatively solve the problems of our world, the better off we’ll all be.
Unfortunately, many people equate “entrepreneurship” with “business” and “business” with “cronyism.” And cronyism, with its entailing corruption and unequal playing field, is what always happens when government gets too involved in markets.
For entrepreneurs to be able to do the most good for the most people, they need to be able to operate in a free market. Two of the hallmarks of a free-market economy are the rule of law (the same rules apply to everyone equally with no special favorites or protections) and voluntary exchange (no trade happens unless all parties agree to the terms without coercion). And all of it relies on, and encourages, a high degree of trust and cooperation.
But when governments get involved in the market to any extent larger than simply making sure no one is being hurt or coerced, things start to deteriorate. As writer P.J. O’Rourke quipped, “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.”
Some businesses spend millions of dollars every year on lobbying efforts in order to get special tax breaks, protection from foreign competition, regulations to restrict domestic competition, loan guarantees, and bailouts. These shady dealings get an excellent return on investment for businesses that can afford it.
But this involvement in the market not only picks winners and losers before the game even begins, it picks who can play in the first place. It isn’t a level playing field. It stifles competition and the innovation it breeds.
Perhaps most importantly right now, it prevents those who want to respond quickly to sudden needs and special circumstances in society from being able to do so. During this current COVID-19 emergency, we’ve seen how burdensome regulations and restrictions that were justified with “public safety” reasons crippled the implementation of testing in the United States. As soon as some of them were lifted, entrepreneurs stepped in with astonishing and rapid results. Unfortunately, some obstacles like the prohibition of at-home testing are still in the way.
All of these things lead to a situation that has eroded the rule of law and brought coercion into our exchanges. The sense of trust and cooperation that’s needed for a healthy economy and a thriving society crumbles. Our quality of life suffers as a result.
Some people see businesses asking for, and receiving, these favors from government and place all the blame on the businesses. They believe that only a big government can keep big businesses from taking advantage of the population.
The fact is, the more government gets involved in business, the more business gets involved in government. It creates a cycle of ever-increasing government involvement that keeps the already-powerful in power and prevents entrepreneurs from being able to solve society’s problems.
So if you’re passionate about any of the world’s most pressing needs that the ethics-driven entrepreneurs of the world are trying to solve, free-market economies are a necessary part of those solutions. Without the framework of the rule of law and voluntary exchange, corruption and red tape at the very least slows down the improvements to our world we all want to see.