I hate to complain on a blog but...
It is commonly held that in America we operate under a mostly free economy. Free meaning the consumer can choose which good to buy based on her criterion and the producer is free to produce what she likes. Our economy is held to be "mostly" free because we the people also hold certain products to be more important than others, so we subsidize them to achieve greater economies of scale ensuring that those goods will always be found in ready supply
I posit however that America does not have such a free economy. I posit 3 points as evidence.
- Recently it slipped my mind that I had a credit card bill due. We don't use it very often so it wasn't on my priority list. And since this credit card had no "auto pay" feature I was late by 3 days. Thus I triggered an automatic "rate increase" from my previous 3.25% APR to the kindly rate of 29.65% ! What?! Seriously?! My 5 year loyal customership meant nothing? My only option was to pay the ridiculous interest rate or cancel the card. Cancel I did. If it was a free economy then the amount of pressure to keep me as a customer would be great enough that Capital One could not survive as a business without offering me more than the given two options of pay up or get out. Instead they would be forced to assess a one time "late-fee" and only when my credit score changes could they move my interest rates upwards.
- The cellular phone industry is another good example of why our markets are not free. The cellular phone industry has figured out how to 1.) lock people in to their service by assigning them huge penalties for leaving prior to the end of 2 year contracts 2.) sell "plans" which either provide excessive usage capacity (1400 minutes) or under capacity plans (700). If you happen to have the misfortune of exceeding your minute usage then the cost per minute of usage goes up by a factor of 10 to 20. Under a free market, prices must remain fairly liquid and transparent. A free market economy would provide the ability for 1.) free transferance between services and 2.) more liquid pricing (i.e. 700, 800, 900, 1000.... etc.) minute plans.
- But perhaps the biggest example is that producers are not free to produce what they like and what they are best at. How many producers and workers are employed at something they are both good at and enjoy? How many workers have the freedom to take the day off to go look for another job? How many folks have the freedom to change jobs and not worry about their health care benefits while they change jobs? How many folks could balk at unreasonably low pay or poor working conditions in a serious enough way to affect a significant change in their working condition? How many companies are producing top quality goods to meet an unmet demand...how many are producing goods simply to survive?
This is why I beleive that 1.) Credit card regulation 2.) Public option health care will provide a freer and more robust economy. When the average consumer has choices then everybody prospers.