This is Ligonier's friendly neighborhood blog and an attempt to recapture our lively opinionated debates in a free speech zone.

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Saturday, October 26, 2013

free market chat

5) The free market discourages charity and sympathy. Strange that some would think that voluntarism wouldn’t thrive in a social order that is all about voluntary action and non-aggression. Perhaps that’s because many, including too many libertarians, believe the libertarian credo is, “Don’t tread on me!” Instead, I think it comes closer to the truth to say, “Don’t tread on others!” In an unfree society beneficence is typically limited to those you know well; the free market broadens our contacts. As Dierdre McCloskey has explained, the “bourgeois virtues” go well beyond what she terms “prudence alone.” And as a practical matter, wealth makes charity possible, and there is no better system for creating wealth than the free market, which decades of research has confirmed again and again
6) The free market means profit comes at the expense of others. This falsehood conflates profit-seeking with rent-seeking, or the free market with crony capitalism. In a free market, a person will voluntarily trade only if she expects to profit—that is, if she thinks the value of the house she gives up is less than than the value of the cash she gets in return. If the trade takes place it means both sides expect to gain. (Whether they do depends on their alertness and the unavoidable uncertainty of the world.) But in crony capitalism people use political power for privileges and benefits paid for by taxes, regulation, and inflation. Here, one person’s gain is indeed another person’s loss—truly “dog eat dog”—which characterizes our current “mixed economy.” That means, unfortunately, that today it’s very hard to tell whether the “profits” and “losses” we see are due to profit-seeking or rent-seeking.

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