Free market economies

Free Market Economy

In a previous post I had a small swipe at the concept of the free market. Well, not really the whole concept but in particular it's inability to make big decisions. I was referring to the inability of the free market to determine how this country would produce it's projected needs for power generation. There are voices in the UK that are warning us of impending power cuts in the years to come due to some of our largest power stations closing down and their not being replaced. Places like Didcot power station. My comment was that 30 years of free market electricity had not found a way of replacing this lost output. 

To be fair a large part of that reason is that the market is not being allowed to choose how to produce electricity, it is having an artificial strain put on it by the need to reduce our national carbon footprint. Regulation is forcing the industry to not build coal fired power stations and renewable versions are not cheap or cost effective. 

So balance has been restored.

I am middle of the road when it comes to free markets. Generally they are a good thing but there are limits.

So there you have it. 

Alright I will expand on that a bit :-

1. The market promotes competition, which can lead to lower pricing, prevents cartels and rigging
2. Gives power to the consumer, with all these companies falling over themselves for your money.
3. competition means companies and services must innovate, in terms of their services and products but also in a ways to provide them at lower cost

All good so far? Of course it is

But what if there is no money in that market. There is no value to it. If the consumer can't pay the market won't provide, because there is no market. There may still be a need but no provider because there is no market.

An example of each. For the market. Telephone and Internet providers. The cost of both has dropped and yet the speed we expect of our Internet has increased and providers are falling over themselves laying cables etc. 

What if you suffer from mental health issues? In it's mildest forms many sufferers will visit their doctor and be prescribed suitable medicines/treatment and they continue working (and paying). But in it's severest forms the victim is unable to live any kind of normal life. Where is the market now?

The last is a bit extreme but I wanted to illustrate a situation where a free market would have trouble fulfilling a consumers needs. 

The issue I have with the worst aspects of the free market is that it will only be altered if a consumers preferences alter. In a situation where the  consumer doesn't perceive a benefit they may never alter their consumption even though the need is quite compelling. 

I point the finger at myself here. I buy clothes from a high street vendor whom I know to have their products manufactured in factories that are unsafe. The "factory" that collapsed in Bangladesh, which incidentally was operating without planning permission, reportedly contained companies that had contracts with the same high street vendor. Has it prevented me from buying my gear there? No I admit it hasn't because I wilt at the thought of the prices in other shops. So my wallet is more important than worker safety. It is the same for just about all the other shoppers too.

In conclusion, Free markets are good because they make providers chase our money. The downside is that only those with money to spend benefit and markets can be blind to the realities of life