Too frequently I find myself in debates with the typical Democratic voter and they will repeat the same rhetoric they get from peers and the 6 pm news.. Five minutes into the conversation they have the doe in the headlight look. Once I begin explaining basic finance and use words like Quantitative Easing and Rehypothification, they run away.
If they do stick around past that point, the moment I mention the free market they point to what they believe are faults in capitalism. They tell me how it was capitalism that caused the crash of 2007, and how the greedy bankers are taking people's homes. They tell me how companies like Monsanto are poisoning everyone. I could go on, but you get the message. Everyone knows all the arguments.
I must then explain to these people we have not had a free market in modern history. Not since Wikard versus Filburn have we come close to a free market. This opened the door for federal regulation of almost everything produced in America. All the problems mentioned above, and then some, are done with cooperation from the overseer government.
The average person believes the solution to all market problems is more regulation. This is despite there was already regulation in place that is suppose to protect the employee or consumer. I find it almost impossible to explain how government is often a part of the problem and rarely the solution.
Let's drift back to 2007 once more when the housing bubble began deflating. Many people who consider themselves the educated and informed will point to the weakening of Glass-Steagall as the root cause. In a sense they are correct. If Glass-Steagall had remained intact that would have kept the banks more stable. This thinking is the same as a doctor treating only the symptoms of a terminal illness.
Preventing the problems that caused the 2007 decline would have been the better solution. The root cause of the 2007 economic collapse was government interfering in the housing market. Since the 70's government has been forcing lending institutions to give mortgages to people who were higher risk. In 1998 Clinton increased the number of people who qualified for mortgages. Then came the normal downturn in economy.
Because mortgage holders were living on the edge and then had working hours cut back, or they were laid off, they could no longer make payments. The banks then began foreclosing. Then came a government created problem. The government had allowed, and in some cases forced lending institutions to sell those mortgages to securities companies. They bundled those high risk mortgages and sold them at premium prices. As home owners defaulted the securities that held their mortgages began to drastically lose value. This sent economic ripples around the world.
It's clear to those of us that looked deeply into the crisis that the free market wasn't at fault, but its manipulation by government. The economic cycle is a sine wave, a line that curves up and down. Progressives believe they can make the economic line straight, removing the ups and downs. The Great Depression is a perfect example of their attempts at controlling the economy.
Life won't be perfect under a true free market economy, but it's not under the current system. All I, and many like me, ask only that a true free market economy be given a chance. One cannot say that a free market doesn't work because it hasn't been tried in this country, or any other that comes to mind. This doesn't mean removing all regulations from the market, at least on the state and local level. Almost all federal regulation will have to be dismissed. The free market always fights for survival. In the USA and around the world we find the the underground market being the freest.