Sunday, May 11, 2008

The Free Market Works

The weakening dollar has had the desired effects, the American trade deficit has narrowed greater than expected. The weakening dollar has meant that American goods are more attractive as they become cheaper. The market is being allowed to do its job, the market works.

Economics is a simple affair made complicated by ideologists. At the heart of economics is the simple logical reality that people prefer to purchase cheaper goods for the same quality. One would rather pay $30 000 dollars for say the latest middle sized Mercedes Benz than pay $35 000 for the same model car. The more of something there is, the price falls, the less of something the price rises, one does not need an education for this, farmers have known this fact for ever. When tomatoes are in season there are more of them the price falls, when tomatoes are out of season there are less of them the price rises, these are simple facts of life.

For ideological reasons people will deny this simple fact, though tomatoes are cheaper when they are in season and more expensive when they are out of season, people will actually say that is not the fact, or worse they will say that is besides the point because they are looking for some esoteric reasons for why the price of tomatoes changes from season to season rather than the simple fact that there are more tomatoes in season.

People and societies have been trading for thousands of years, prices have risen and fallen for thousands of years. Economics trade was not brought about by colonizers and imperialists, this is one of the reasons for people being against the free market, they say it was brought by the imperialists. Not true, people have understood economics long before meeting with the white men, people have always understood that the price of grains rises in a drought, the value of cattle rises with droughts as they become fewer and therefore more precious, people have understood this fact for thousands of years, this fact was not brought about by an imperialist. The market has always worked. It existed long before Adam Smith discussed it, Lao Tzu the Chinese philosopher, a man whose desire was that humans exist naturally, understood the concepts of the free market 2 000 years before Adam Smith and the European economists, though the peasants of Europe already understood that when there is plenty of grain the price of grain falls, when there is less grain the price of rises.

Lao Tzu’s understanding of the world can be summed in two quotes “Governing a great nation is like cooking a small fish, too much handling will spoil it”, and “A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say “we did it ourselves.”” The less interference from government the better, let the people be, truthful people who believed in freedom have understood this forever. What is the invisible hand, the invisible hand is the people, the people will set the prices, that is all the invisible hand is, the actions of the people.

The falling dollar has made American goods more attractive, the market is doing its job. A global free market will benefit mankind, the best of mankind will be available for all. The corrupt in spirit of course will be against such an idea because it will mean no payoffs. Strange that tariffs were brought by the imperialists all over the world, and the free world is fighting to keep tariffs. There were no barriers to trade before colonialism, people forget that simple fact. They are now been taught to remove the barriers by the same institutions that set up the barriers in the first place. Look at Africa, little trade between each other, falling heads over heals to trade with the outside world but can not get over the barriers that were introduced by colonialism between each other.

The freer the market the greater the over all prosperity of mankind, the comparative advantage will always be the mind, the freer the market the easier for knowledge to flow, knowledge that creates all goods and services. But ideologically the free market underlies a very important mind set, only those who believe in the equality of mankind can ever believe in the free market, only the confident can believe in the free market, a racist, black, white, brown, or yellow can never believe in the free market.

Only somebody who is confident enough to give credit were it is due can believe in the free market, a racist can not accept for example that Ghana can make chocolate better than Switzerland, but he knows he is lying so the best thing is to say is we can not import processed chocolate from Ghana, that way Ghana can not prove in the market that they can make better chocolate, it is robbing the mind and claiming somebody else’s mind as one’s own. It is like stealing a movie script and claiming it as ones own because one can not accept the fact that this other person can do better usually has to do with racial issues, this other race has no business in for example writing movie scripts, or worse as one Ghanaian professor said thinking original thought, those against the free market do it because they fear their minds might not match up. And those who say the comparative advantage is something other than the mind want to keep the eyes of what they consider enemies closed. Hence when somebody says the comparative advantage of Africa is to produce minerals and that of say Canada is to utilize those minerals to make products, rest assured that is an extremely evil being. That person will never believe in the free market, that person exists in fear that somehow if everybody understood it was knowledge they will not be able to continue to fool humanity.

The idea of a free market came long before Europeans started colonizing the world, in most instances before colonialism there were no barriers to trade the barriers were brought along with the colonization process, to reject the free market on the premise it was introduced by colonizers is not to understand history. For the benefit of the future barriers must be brought down.

Bhekuzulu Khumalo

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Bhekuzulu Khumalo

I write about knowledge economics, information, liberty, and freedom