Tuesday, August 21, 2012

The Consumer Rules

"The best guarantee against all exploitation is the market."

Henri Lepage
French Economist

This is a simple statement.  It is also a bold statement.

Any time you use the word all, or never, you are probably in trouble.

But think about this.  ALL exploitation?

Exploitation is taking advantage of another in a more vulnerable state.  If someone is willing to do anything, or take any job, to make money, one would suspect that exploitation could be the natural result.  

Vulnerabilities make it possible that exploitation can happen between individuals, businesses and even markets.

Can people take advantage of others really?  When freedom exists exchange is voluntary.  People deal one with another through mutual benefit.  If something is taken involuntarily the law would rectify that.  Free market capitalism depends on the rule of law.

Can an employer take advantage really?  Doesn't an employer have to pay a competitive wage or salary?  Would not competition in a free enterprise market require competition?  Can an employer force employment at a lower wage?

Can a market take advantage really?  Exchange in a free enterprise market is voluntary.  Business to business, person to person - it is all voluntary.  Exchange is freely done because both parties perceive benefit.  "The market" cannot take advantage of anyone operating voluntarily.

How is free market capitalism not exploitative?  How does it guarantee against exploitation?

When property (any property, including money) is acquired through honest and peaceful effort, the property owner is free to sell it, give it away, trade it, leverage it - whatever!  All that is voluntary.  By definition this is free, and such freedom certainly trumps exploitation.

But let's look further:
  • No other economic system, besides free market capitalism, has done so much to lift entire societies toward better standards of living and more prosperity.  Ludwig von Mises said that in such a system entrepreneurs are only benefitted to the degree that they supply the wants and needs of the consumer.  So who benefits the most?  THE CONSUMER!
  • Monopoly cannot exist in free market capitalism.  Why?  Because power cannot be concentrated as the consumer is benefitted.  Power is therefore quite decentralized over the broadest spectrum of society - the consumer with money and the consumer without so much money.  All are benefitted with something.  If there was no discretionary income so many junk products would never see the light of day!  So who benefits the most?  THE CONSUMER!
  • In free market capitalism the consumer is always looking to take advantage of what the market provides.  The consumer participates to the point they can - they can shop at a second-hand store or at an expensive one.  The consumer drives the market - the market does NOT take advantage of the consumer.  So who benefits the most?  THE CONSUMER!
  • Free market capitalism is indiscriminate.  It feeds the good and the bad of society.  The people choose!  As more choice becomes available, and varying products are produced and distributed, people pick and choose according to their desires.  When prosperity reigns the consumer acquires, even what it might not need, and become more obese in more ways than one.  The objective of free market capitalism is not to restrict, but provide.  So who benefits the most?  THE CONSUMER!
All the talk about "leveling the playing field," or "taking care of the least able," is just that - talk.  Left alone, in a free market, free enterprise system, the power of the consumer is the greatest force in leveling and taking care. 

Disrupting market forces to artificially apply this or that outside force to make things more "fair" creates inefficiencies, reduces motivation, stultifies growth, creates waste and THE CONSUMER benefits the least.


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