Bryce Benefield
It’s incredible to me when I’m in a political discussion and the individual I’m conversing with argues for the U.S. to turn to socialist or even Marxist policies as a viable option to allow for economic growth. I argue that the current problems with our economy lie in the absence of economic liberty, not the inequality of our system (which is the problem socialist and Marxist policies attempt to correct). I consider the inequality of our economic system a symptom of overregulation by redistributive policies. More regulation equates to higher start-up costs, and more overhead. What I argue for lies in the principles of free markets and economic liberty endorsed by the likes of James Madison or Alexander Hamilton. Let’s use the stock market as an example of this overregulation and invasive government involvement.
In 1929 on Black Tuesday, our relatively young and newly industrialized stock market crashed. This crash wasn’t the first, and shouldn’t have been a surprise given the fact that when it happened the stock exchange was one of the few around. In addition, it was beginning to adapt to changes in the market, i.e. industrialization, and the creation of the Federal Reserve in 1914 under Woodrow Wilson’s oversight. After the 1929 crash, the public realized that the market had been manipulated by individuals and organizations not held accountable by law for their actions, as well as their monetary policy. We began a process of regulating our markets in an attempt to keep the sharks of the stock exchange from devouring smalltime investors. It can be argued that a lack of regulation was the cause of Black Tuesday, but our market is no longer an unregulated beast adjusting to a new monetary structure. Our modern stock market is a mess because it’s now overburdened by a multitude of various public subsidies such as the mortgage banking system and the auto-industry, trade restrictions such as the restriction of health insurance companies selling their services across state lines, and the continuously growing, and therefore diluted, dollar.
The resulting problem with our stock markets is that with all of this red tape, inconsistency and restriction, other nations have a huge advantage in our markets. Tariff-free doorways into our markets through free trade agreements with countries like Mexico and Canada leave us at a disadvantage. By handicapping our domestic businesses and opening the doors to free trade we have increased the amount of competition within our markets. The increased competition drops prices, but puts our home-team businesses at a disadvantage unless we tax our foreign competitors in a similar way. The American stock markets are comprised of our domestic businesses, so when the stock market isn’t even keeping up with population growth, the problem isn’t the stock market, big business or even our foreign competitors; it’s the rules we force our businesses to abide by and the absence of rules we ask our competition to follow.
The reason I argue for more Madison and less Marx is because since the 1930s we’ve been wrapping our entire economy with socialist red tape. We’ve never had this many restrictions, extraneously complicated taxes, penalties, subsidies, permits and inconsistencies before. Socialist ideals, not economic liberty, are putting us at such a disadvantage. The stock market won’t be worth anything more than it is now until the businesses that it’s comprised of are allowed to operate within a set of rules and regulations that ensure no one gets hurt, but until it allows our home-team companies a competitive edge.