The term, “free market” is defined as, “an economic system in which prices and wages are determined by unrestricted competition between businesses, without government regulation or fear of monopolies.” The American economy is not strictly a free market. There’s a lot of regulation that goes on, but by and large the general population determines what’s sold and how much it’s sold for via supply and demand. If we don’t want something that’s offered, we won’t buy it, and then business offering it will cease to exist. If we want something, we’ll buy it, and the more we want it, the more we’ll pay for it.
The more money we spend on a certain product or service the more money that business will make. Thus, the more money that business will have to reinvest into making that product or service better. As investors see us spending our money in certain places they’ll start more business to fill that need. That drives up competition and forces each business in that field to make even better products for potentially lower, more competitive prices.
There’s no ballot box where we deposit our voting slips and determine what we want businesses to sell us, but there are cash registers and dollars. A free market is a democracy where we vote with our dollars, and we suck at voting. If we took all the money we spent on sports over the past 30 years and invested all of that money into energy we’d all be riding around in flying cars right now. If we took all the money we spent on designer clothes in the past 30 years and invested it in public transportation there’d be no traffic. If we took all the money we spent on movies and invested it in housing there’d be no homelessness. We’ve done a good job of voting on computers at least. For every other bad decision, there’s Master Card.
As we watch banks collapse and the economy go to shit we hear a lot of talk about the role regulation and deregulation of business practices has played, and it’s all very confusing. We’re all looking for someone to point the finger at. We need a scapegoat, and I have no doubt that one will be found for us. It won’t solve our problems, but it’ll make us feel better, because we won’t have to point the fingers at ourselves. We won’t have to admit that gas prices are so high because we voted for it by buying Hummers. We won’t have to admit that the reason so many mortgages have defaulted is because we voted on mass-produced houses we couldn’t afford in unsustainable suburbs. The reason we’re worrying about whether or not we’ll have the basic necessities of life when we retire is because we didn’t vote on them. We voted on Pepsi, Prada, Persian rugs, IPods, Hollywood, Harley Davidson, Marlboro, Ikea, and Viagra.
There are a lot of corporate villains and incompetent politicians out there who have done a lot of unethical things to bankrupt the economy, but we shouldn’t forget that we voted in all of these mistakes with our dollars, and we should take responsibility for it and feel ashamed. However, that won’t do us any good unless we use that shame to vote wiser in the future. Don’t waste your money. Spend responsibly on the things that matter, and the things that matter will improve. Not wasting your money on things you don’t need will also allow you to save money to give you a cushion when things go bad. Then, the shit will never hit the fan.
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