Free markets are not a fair system of resource allocation and were never intended to be such, they are about efficient resource allocation. Having eg. a government involved might lead to a fairer outcome but efficiency will take a hit
I would go further and define “efficient.” They are, in western society, efficient at accumulating private capital in the hands of capitalists. No claim is made by anyone to the contrary.
I guess you will have to give an explanation what you think constitutes a free market and what kind of fairness you have in mind.
It depends on the kind of property, as there might be very legitimate reasons for the government (representing the people in democratic nations) to have a direct say what you are allowed do with it. You might own a lake or a spring that's important for the population. You might own a factory where government dictates how clean the sewer runoff needs to be. Would that be unfair?
I stated below that it is all about balancing interests, as I view every kind of extremism (that includes free market maximalism) as at least counterproductive, if not outright harmful
> a government involved might lead to a fairer outcome
Fairer for the supporters of a government that is. Even in a modern democracy a government is really just supported by a small majority ruling over a large minority. That does not mean that democracy has failed but it heavily implies the government power needs to be limited to a minimum in order for a free society to thrive. _That's why_ the lesson learned and applied by "neoliberalism" has always been meddling with economic forces is a sure road to serfdom (to quote the young F.A. Hayek which Thatcher's politics was always inspired by). It's never been about suppressing the poor. To the contrary. (Even Hayek argued in favor of small social security net.)
> Fairer for the supporters of a government that is
Can’t see the logic here. Government policies by definition affect everyone regardless of affiliation. Unless you’re implying corruption, which is orthogonal to this discussion.
A government is not a single-celled entity. Parlament, city and state legislatures, etc, are setup so that representation of all parts of society (even the non-supporters) can be achieved.
Limiting government power to a minimum and let the market do its magic? I'm pretty sure that's a really bad idea, just thinking of leaded gasoline, tobacco advertising, chemical softeners in food packaging etc. one could get the impression that free market maximalism is an extreme that is as bad as communism, just like any extreme stance/opinion is.
In the end it is all about balancing interests of different groups with (hopefully) a bias towards the people, not toward capital
The free market should be thought of as an optimization algorithm. Ideally, the government's role should be to set up a constrained optimization problem, which attempts to align profitability with human well-being (e.g., "provide people with whatever material comforts they want to pay for, under the constraint of not poisoning them and not polluting the environment"). The market's role is to solve the constrained optimization problem, and if the incentives set up by the government are good, the optimal point of profitability should reasonably approximate an optimal point of human well-being.
The error of so-called free market proponents, is that they want the government to set up an unconstrained optimization problem. The market will find some kind of optimum, but without intelligently designed constraints (i.e., regulations), there's no guarantee that optimal profitability should correspond to optimal human well-being.
Very well put, I fully agree and might even borrow this explanation when talking to the subset of people who understand optimization algorithms/the analogy.
> Free markets will always remain the most fair system of resource allocation.
Based on what? Theoretical models are full of assumptions that doesn't hold in practice. Empirical evidence is limited too since free markets don't even exist in the real world. If anything, evidence show that they fail for a wide range of applications where there are inefficient and not fair.
> Any other system requires an uninvolved power, likely a govt, to decide.
Free markets also required a government. They need to be regulated and can't work in a vacuum.
A free market necessarily requires government involvement.
A free market is industry-specific. For it to work, a company in one industry may not influence the market in a different industry, or that market won’t be free anymore.
To prevent this, government involvement is required to ensure fair start conditions for all companies within of the free market
This is incoherent, industrial categories are a convenience, not a natural component of economic activity.
Is automation an industry? Because an automation innovator might be built on the assumption that it can influence another industry.
Can a manufacturer of one thing decide that they have the internal capacity to manufacture something at a lower cost than the existing competitors and then not share that methodology with the existing competitors?
While a free market economy requires government involvement, one must admit it requires less than an economy that tries to ensure equality. I also suspect the more you leave an economy to its own devices, the more unequal it becomes.
> Free markets will always remain the most fair system of resource allocation.
First, I think there's a lot of different angles from which you can challenge that claim. In a truly "free market", things like nepotism, bribery, and inherited wealth still exist (and by definition they'd exist in higher levels than in regulated markets). Does some random millionaire trust fund kid in a free market really create value? Is it fair that Bezos is a billionaire when low-paid workers are the ones actually creating value at Amazon? I would argue that without some restriction, free markets almost guarantee _unfair_ resource allocation. Like without antitrust regulation, for example, it would become a winner-take-all game where a single megacorporation could absorb all competitors and value labour however the hell they want.
That is all besides the point though. I would argue that the "most fair system of resource allocation" is not a desirable outcome at all. If a true meritocracy were possible, swaths of people would just starve to death.
It's "fair" only in a very tautological sense of the word, and in the sense that literally any wealth distribution system is "fair". Like yes, a hedonistic trust fund baby who spends their life buying luxury goods and going on vacations may "create value" merely through allocating wealth to goods and services which bring him pleasure. I think that's an extremely stupid way to look at the concept of value though.
> I think that's an extremely stupid way to look at the concept of value though.
You seem to have changed the topic to "value creation", which wasn't part of the previous poster's point.
The only question is: do you want to destroy one of the largest incentives for people to create value by removing their ability to pass wealth to their descendants?
It seems unlikely to me that a vast majority of people with enough wealth to create a scenario like this truly created that amount of value in the first place though. In other words, the existence of billionaires in the first place is indicative of inequality.
Replace an inefficient organization with a slightly less inefficient organization and you generate billions in value if it was large enough. Doesn't sound like an impossible outlier to me, there are plenty of huge inefficient organizations out there.
And you can't do that with politics. The huge entrenched organization will always have way more political power than your new efficient startup, so without capitalism they will never get replaced. With capitalism it is still hard to replace then, but it is possible since you have the power of capital investors to rely on and not just politics, and that can give you enough leverage to grow your organization until it can compete with the huge old one.
So the lesson is that basing all decisions in society using politics is bad. But also basing all decisions in society based on capital is also bad. You need a mix since they are good for different things.
Why are you talking about billionaires? And inequality isn't a bad thing by itself. For example, someone who chooses 120 hour weeks and stress and a heart attack at 50 will probably have an order of magnitude more money than someone who chooses a lifestyle job. That's not bad; that's a choice. Inequality is far too vague a term to be used in a debate.
> For example, someone who chooses 120 hour weeks and stress and a heart attack at 50 will probably have an order of magnitude more money than someone who chooses a lifestyle job.
You cannot have free markets without a government, sadly. It is either an utopia or a dystopia, depending on your point of view of private militia and consolidation of corporate power.
Also, free market ideology come from the idea that natural ressources are infinite (JB Say explained that clearly, JS Mill implied it). Later on, other free market economists corrected him (to make Say's law still relevant) and added that even if not infinite, ressources can be substitued easily once one is over-exploited.
2007-2008 put a question mark on the "easily", as the disruption from a conventional oil peak lasted until 2012 in Italy (and probably Greece, Spain and Portugal, the four EU countries that depend the most on oil to make their electricity). This year will put a bigger question mark on how well agricultural ressources substitution work.
Any other system requires an uninvolved power, likely a govt, to decide.
Who gets to live in the 56 Leonard PH?