The Plague of Free-Market Economics Ideology

E. Alan Meece (CA, USA, January 2010, only somewhat revised Oct. 2011, July 2015, November 2017)

There is a plague gripping this country; a spreading and potentially-fatal disease. It has always existed in this country, but a new virulent form appeared in 1980. It was called Reaganomics, and the man who brought the new virus was Ronald Reagan. Many people today are infected. They were hooked and hoodwincked, spellbound by the charming actor-president. Opponents are afraid to call him what he was: one of the worst presidents in history up to that time. The only reason this ideology persists has nothing to do with its value or truth. It is only because this charming and handsome actor won the election in 1980, and again in 1984. Ever since then, many people have hitched their star to him and his "revolution," which was actually a counter-revolution. The generation born in the 1960s grew up in his world, and many of them know nothing better. Our politics has been in stalemate or even wholesale reversal ever since, and government has accomplished next-to-nothing positive in all that time. Instead, under the rulership of free-market ideology, our country has declined relative to others in every conceivable way, and in 2008-2012 we suffered the worst recession since the 1930s.

Free-market ideology (aka libertarian economics) says: allow business to do what it wants. Reduce taxes and regulations on business, and the economy will prosper. Put up no government barriers to the free market, and not only will it succeed, but this success will lift all boats. The benefits of the unleashed free market will trickle down from the rich, who create the jobs, to the rest of us. Hence, free-market ideology is also called trickle-down economics, and another name applied to the ideology is supply-side economics. This means that lower taxes and fewer regulations will create greater economic activity, generating the revenue that will offset what is lost by lowering the taxes. Of course, in the 1980s and the 2000s this was tried, and it failed. The budget deficits created by this policy, for example, were astronomical. And only the rich saw any of the "trickle" that the free-marketeers promised.

Free market ideology has acquired other names in the past. It is called rugged individualism, because it grows among those who resent giving welfare and handouts to people who didn't earn them. It says: "I am self-sufficient; everybody else should be too. Why should I be forced to pay taxes to help those who are too lazy to earn their keep?" Also called "classical liberalism" or "neoliberalism," this ideology was derived from the work of economist Adam Smith in the 18th century. It says it is self-reliance that built the American economy and made the country great. Another name appeared in the late 19th century: Social Darwinism. It is the same idea; those who are fittest in human society survive, so if you wish to survive, look out for yourself. Life is a struggle, and victory goes to the swift person, group or race. Those who depend on others are weak, and should not survive; nor is there any reason why I as an individual, who needs to focus on my own survival and prosperity, should pay the government to help those who can't take care of themselves. Some of the other prophets of free-market ideology and libertarian economics include Ayn Rand, Milton Friedman, Ludwig von Mises and Friedrich A. Hayek, among others. It has become the core ideology of the Republican Party, notably of such politicians as Ronald Reagan, George W. Bush, Newt Gingrich, Paul Ryan, and Donald J. Trump.

In 2010, this ideology was trumpeted by the "Tea Party," who revolted against taxes and government spending, and still complain loudly about budget deficits and the national debt. As recently as 2008, their own ideology was still enshrined in the White House, and yet the highest budget deficits in history by far, and from which we still suffer, were created by their own man. Tea-baggers have very short memories. Nevertheless, they convinced even many people in Massachusetts to support them in January 2010, and all across middle America in November.

Free market ideology says that the free market is all we need, and all benefit flows from it. Specifically, we don't need the government to fix or interfere with our economy. But many free marketeers support government when it does other things. These could include fighting unnecessary wars, fighting wars on drugs, putting drug dealers in prison, curtailing abortion and gay marriage, locking up criminals for minor offenses and throwing away the key, taking away legal protections for those charged with crimes, enforcing the death penalty, censoring indecent or obscene speech, restricting what is taught in schools or said in public to what their religion approves of, keeping many people from voting, etc.. Many of them have no problem with the influence of huge corporations in government and politics; to interfere with this is to interfere with "freedom." They say, with Reagan, that government is not the solution; government is the problem.

So, in fact, the issue is not the size of government-- despite their slogans. The issue is what we want our government to do.

So, is it true that government is the problem, and that all benefit flows (or trickles down) from so-called free enterprise?

Capitalist free enterprise has created many good things. It has created huge industries that provide lots of goods for many people. It sponsors technological research. It built railroads, canals, cars and airplanes. It built newspapers, radios, TVs and computers. It gave us energy from oil and coal. Even Karl Marx lavishly celebrated the achievements of capitalism.

But many of the benefits we enjoy came from individuals not employed by capitalist free enterprise. Most inventions were created by individuals working in their own garage, for instance. Most of our food, at least in the good old days, came from family farms. Most professionals such as doctors and counselors work for themselves, not "free enterprise" corporations and industries. Many benefits come from non-profit organizations.

What has government done that helps the people?

Without government support and investment, the railroads and canals could not have been built. There would be no open highways, no airports, no air-traffic control, no lighthouses, no signs or lights to regulate the flow of automobile traffic. Radio and TV signals would interfere with each other and nothing could be broadcast. Without government, conflicting needs could not be resolved and commerce would stop.

Noted Stanford historian Gordon A. Craig writes: "A much-read spokesman for classical liberalism" (and Social Darwinism), "the English publicist Herbert Spencer (1820-1903), commenting on the relation of government to business, once wrote, "Perpetually governments have thwarted and deranged growth, but have in no way furthered it, save by partially discharging their proper function and maintaining social order." The most striking thing about this dogmatic utterance is its remoteness from the truth. As we have seen, economic growth is dependent in the first instance upon the creation of an efficient transportation system and other forms of social capital. During this phase, government is generally called upon to play a most important part, since projects that do not promise a quick return on investment often find it difficult to obtain financial support. Students of American history are well aware of the role of federal government subsidies during the construction of the transcontinental railway systems. The same sort of thing occured in many European countries..." (Europe 1815-1914, Dryden Press, p.265)

The government gave us regulations that allowed the benefits of capitalism and freedom to be enjoyed by more of the people. The government has provided minimum wage laws, anti child-labor laws, anti-discrimination and civil rights laws, consumer protection laws, the 8-hour day, laws guaranteeing the right to organize unions, the GI bill and housing assistance, public education that creates universal literacy, libraries, social security and medicare, unemployment insurance, our money and coinage, the post office, our court system, our police and fire departments, our coast guard and civil defense, disaster relief funds, anti-pollution laws, national and local parks and recreation areas, lighting and plumbing systems, the space program (which spurred the development of computers), and more.

Without government, the conditions of unregulated capitalism would still be in effect. In those days, if you lost your job, you lost your home and starved. If you were poor, you most-likely stayed poor. Most people were illiterate and uneducated. A few aristocrats of capitalism had most of the wealth, while the majority lived on substandard farms or crowded city tenements. There was little or no sanitation, sewage, lighting, electricity, or water supply. Disease was rampant and plagues frequent. If a natural disaster struck, there was no relief. If you spoke out against low wages and bad working conditions, you were fired, and any strike was busted by strike-breakers and thugs. If you were black and lived in the south, you were a slave or sharecropper and denied all rights. If you were gay, you stayed in the closet, or got beaten up. If you were female, you could not own property and could not vote. If you got sick, unless you had some good "home remedies" you had no medical care except from the local quack. If you got injured on the job, you lost it. If you tried to go into business, you faced competition from monopolies who drove you into bankruptcy-- for which there was no protection. The capitalists and aristocrats had all the cards; the people had none. Sure, some people could pull themselves up by their bootstraps and succeed through hard work, courage and inspiration. But most people who work for a living see their wages and living conditions decline under free-market capitalism.

The free-marketeers want to return to this world. They believe in it with all their heart and soul. They yearn for it, pine for it, long for it. They will stoop to any means to attain or maintain it. They will use any tactic, any lie, any deception to bring back this world. In many respects, they have already succeeded. They desparately, above all things, want their taxes lowered, and their free-market religion upheld. Anyone who disagrees is a "socialist" and "un-American." They claim this is a world of freedom.

But does the free-market really have anything to do with freedom? In reality, the free market creates freedom for a few people to oppress the rest of us. Among human beings today, it is not true that everyone wants everybody to share the wealth. Some are more greedy and powerful than others, and they dominate the "free" market.

The free market is freedom for the wealthy and powerful capitalists. Under the free market, the boss can fire you for no reason. He can keep your wages low, and you can do nothing about it. He will force you to work in unsanitary and unsafe conditions. You are not allowed to join a union, but the boss can join as many chambers of commerce and rotary clubs as he wishes. He will close your factory and ship your job overseas, which benefits him thanks to "free trade." The boss can pollute the air, water and land around you, and you have no recourse except to move to another place that is also polluted. You can't buy safe or quality products at the store, but have to buy what the big box offers. Unless you can afford it, you can't go to school. The real estate and mortgage speculators can raise the price of housing and interest as high as they want, and if you don't pay your mortgage you lose your home. The credit card companies can do the same, and they do. (see The Card Game by Frontline, PBS.)

The bosses force you to fend for yourself. Meanwhile, once the market has been freed, there is no restraint on what the boss can do. The guy who charges the lowest prices, by giving his employees low wages and poor working conditions, gets the most customers. Or maybe one boss has inherited wealth, and can just buy out his competitors. In any case, pretty soon the most ruthless and the richest bosses drive their competitors out of business. They join in associations and leagues to set prices and control the market. A few men (and it is mostly men) own the economy and make the rules. Having all this wealth and power, it is not hard to influence the local politicians, or even those in Washington. Their lobbyists can say, "do what I say, or my boss will spend millions on TV ads to defeat you." Nervous politicians cave in. In the old days, the bosses were more blatant; they just bought the politicians outright. In any case, pretty soon the politicians they own are appointing the members of the courts. The judge is quick to issue restraining orders against strikes, and they are busted as fast as you can say, "restraint of trade." Many laws that protect the people are thrown out. The politicians appoint the police chief that the bosses like, so that no rebellion against them is allowed. Our government is bought and paid for. It is true that many of the biggest companies go public, and are owned by stockholders instead of by one or two rich people. But the bosses own most of the stock. Just try to defy them at a meeting and see how far you get.

George Lakoff puts it this way, "Conservatives... don't believe that government should serve public needs, that instead government should be privatized and shrunk to fit in a bathtub, as if governing would disappear with government. But governing doesn't disappear when government shrinks; instead corporations come to govern your life - like HMO's, oil companies, drug companies, agribusiness, and so on, with accountability only to maximizing profit, not to public needs." (from "Where's the Movement" Jan.25, 2010, published by Common

Free marketeers ignore the fact that they are not really self-sufficient. They may think so now, because things are going well for them. But what if, Mr or Ms Free Marketeer, you lose YOUR job? What then? What if you can't find another one? What if there's no market for your business? What if all your savings run out? What if you, your spouse or your child gets sick or injured, and the cost of treatment takes away all your money? What if the bank takes away your home? What if you are not a straight white male, but civil rights laws are repealed? What if your boss decides to lower your wages, and forces you to work in unsafe conditions? What if your union has been busted, if it ever existed? What if you can't sue, because the free-market government has appointed business-friendly judges or carried out "tort reform?" In any case, your boss can probably afford a good lawyer, and you can't. What if a natural or man-made disaster destroys your town or your land, but there's no government to help? In a free-market society, you are on your own. You must depend on the kindness of strangers that may never come. You are subject to the whims of the bosses, who now control everything-- even the courts and the police. What if these bosses decide you are a threat and a nuisance for speaking out against these things? What if the government that was "the problem" no longer protects your rights, because you are not one of the bosses, or don't submit to them?

This is what the free-marketeers call "freedom." Sure; freedom for the bosses; slavery for the rest of us.

But the call for "free enterprise" resonates with many people, as we have seen. They resent government "handouts" to people who didn't earn them. They think people who are rich have earned their money. They say taxes are theft, and income taxes are forced labor. They say everyone's taxes should be reduced, regardless of how much money they make. They say "taxing the rich" is "class warfare" and won't pay the government's bills anyway. What's wrong with this picture?

First of all, as I suggested above, the free marketeers refuse to put themselves in the shoes of those who are receiving government "handouts." But in fact, if you pay for welfare programs, you are not giving your tax money to others; you are paying for insurance for yourself, just in case the same thing happens to you some day. In helping others who are down, you are raising the economy up, because they patronize local businesses, and then everyone has more money to spend. Unlike rich people, poor people spend money on things they actually need, so the money goes right back into the economy.

Second, most rich people did not earn their money. They earned some of it, to be sure. But most salaries of business executives and financial traders are way too high. They get 100 or 1000 times as much money as the workers who actually make the products they sell, just for making decisions or speculating with people's money. They get these outlandish salaries and bonuses because they can, not because they deserve them.

Third, if we don't tax high incomes, people who get them can use their money to dominate us by buying the market and the government. Wealth is power; pure and simple. I have described some of this power above.

Fourth, trickle-down doesn't trickle. The "job creators" (or as I call them, "job creaters" to match George W. Bush's accent), who own and run big business, do not create jobs. Some of them may create some jobs; sure. But most of the benefits given to the rich in tax breaks, subsidies and lower regulations do not reach the people. Instead, the bosses use their benefits to buy out other companies, buy back stock in their own company, and speculate on the stock market and in other financial gambling arenas-- which helps cause recessions that hurt the people. They also use that money to build factories abroad and send jobs overseas, or replace them with robots and other machines. They raise their own salaries and keep wages low. They stow away their money, or buy luxuries for themselves. They buy lobbyists and political campaigns to maintain free-market government policies. Without regulations, they poison and pollute the environment, abuse workers, and put out poor or unsafe products. The people suffer and have no recourse. Concentration of corporate wealth and power grows under deregulated, trickle-down economics, and market competition declines. Free market ideology was never anything more than a policy to benefit the wealthy, make the rich richer, and protect their authority over us. How can anyone ever again be fooled by trickle-down economics? The promised "trickle" never arrives.

Fifth, welfare scapegoating is false. Resentment is not a basis for sound economic policy. Welfare is a much smaller portion of government budgets than the free marketeers say, and the meager benefits people get are no incentive not to work. Some people look at a few people who are cheating the system, and then on that basis decide they are against using government to meet anyone's needs. But most people on welfare or social security are not cheaters. Anti-welfare and anti-tax slogans are also called "racist dog whistles," because they appeal to those who resent paying taxes to help blacks and other different ethnic groups. I have nothing against reasonable welfare-to-work programs, such as those that Clinton proposed, but were not adopted (The overly-restrictive Gingrich plan was passed instead). But not everyone on welfare can work.

Sixth, the ideology that taxes are theft is wrong. It is just as true to say that private property is theft. Plus, private property and money are government institutions, protected by law and the police. We need the benefits provided by government in order to do good business, including infrastructure, education and social welfare programs; so that's why people might vote for taxes. This system does not work if some people opt out just because they don't want to pay. We all need to be required to contribute something. Private charities have never been enough to meet all the public needs; that's why government programs are needed. Those who don't think so should read up on what happened in the 1920s and 30s.

Seventh, if taxing the rich does not work, then why did the very modest tax increase on the wealthy passed by Clinton in 1993 end our budget deficit and create $200 billion surpluses? Why did such taxes help create the American middle class in the 1940s, 50s and 60s? Why does reducing taxes on the rich always produce huge deficits? We can't depend on taxing the rich for all of the government's income, nor to finance any government scheme somebody might want. But taxes certainly help balance the budget and keep our economy working for everyone.

It is time to grow up. Ronald Reagan was wrong. Don't get fooled again by the right-wing slogans of "freedom!" We need to dump the free market ideology of libertarian economics, and create a genuine mixed economy like other countries have. We need to wake up and cure this plague. When will we in America get back to moving forward again? I hope it's soon; other nations are not waiting for us, and are moving ahead of us. It's past time.

Rachel Maddow on trickle-down economics
Neo-liberalism, the root of all our problems, by George Monbiot
Henry Giroux defines neo-liberalism aka free market economics
Big Economic Theory Underpinning Libertarian Economics Is Total Baloney
Evidence Is In -- Again -- GOP 'Trickledown' Economics a Failure by Robert Creamer
Fred Block on Free Market Utopian Ideology
Bruce Bartlett on Where the Right Went Wrong with full text
The failures of neoliberalism
Failure of neoliberal theory by George Monbiot
After I Lived in Norway, America felt backward by Ann Jones
George Carlin on the American Dream It's a big club, and you and I are not in it!
Bill Maher on Reagan
Activism page by E. Alan Meece