Monday, September 26, 2011

American Free Market

It's interesting how backward and anti freedom/capitalism the mind set in Washington is. The thought process I'm about to explain is prevalent among a great deal of our legislators, and explains why our job market and economy are tanking. They don't have a clue how or why this whole system works.

Let's suppose Washington decided it would be best for the nation for us all to save energy and replace our outdated appliances with new and energy efficient ones. Now as attractive and appealing it might be to have a new set of washer and drier, a new dishwasher, refrigerator, and stove might be to the consumer, financially it isn't a practical move. Despite the savings when the electric bill comes, the savings realized would take forever to pay off the new investment. Most household will opt to replace old worn out appliances as needed through attrition. That doesn't fit in with Washington's timetable so their first move is to interfere with free market principles and encourage consumers to take that leap by enticing them with some sort of tax incentive, or rebate. Effectively they take everyone's money and redistribute it to those who perform as the government wishes. You are paying for someone else to purchase an appliance so that Washington's agenda can hurry up and be realized. In return government collects a sales tax on the item purchased, loses the tax revenue on the extra electricity need to operate the old appliance and leaves you wondering, "what the heck?" Now that program only has short term appeal for both the consumer and the government. They can only allow so much money to bribe you to invest in new appliances you don't immediately need, and there are only so many people who'll jump on this program. So what is the government's next move? They increase the user's tax on the energy required to operate inefficient appliances. They punish you through the power of taxation whether you comply to their wishes or not. The more you comply, the less the punishment.

Now without government interference, the free market principle would demand companies to bring innovations to market that a consumer would find beneficial to their life. Not only would it add value, it would have to be at an affordable price driven by competition. In other words, they would create a demand. The price of the appliances would drop and they would become attractive because of price and diminished energy consumption. Contrary to the method above that artificially holds prices higher because the demand is incentivized by the government. The free market method also encourages product development because demand creates competition and the need to add the most value for the lowest cost drives the seller.

But then the government would have to understand free market principles, capitalism, and delayed gratification.

God Bless!
Capt. Bill

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