The first million dollars in real estate could seem like a distant dream. However, the process of getting there requires much more than working for hours and making a lot of money. It is ...
21Nov
Privilege hunters against the free market
It is accused that the free market favors the richest in society – hence, harming the poorest – and that it encourages the formation of monopolies, but nothing could be further from the truth than this accusation.
It is accused that the free market favors the richest in society – hence, harming the poorest – and that it encourages the formation of monopolies, but nothing could be further from the truth than this accusation.
The market is a natural institution that coordinates thousands of contractual arrangements between participants. As thinkers of the stature of John Stossel have well described, for a kilogram of meat to reach your table, thousands of processes are necessary that are guided through prices. The meat is in the gondola thanks to the surveyors, the real estate companies, the fences, the laborers who travel the field on horseback, the horse breeders, the producers of saddles and reins, the fertilizers and pesticides, the tractors, the combines, the refrigerators and a long etcetera. At every moment of this whole process, each of the participants is using their very particular knowledge without paying attention to the piece of meat or the supermarket. Adam Smith called this process the invisible hand and Friedrich Von Hayek called it the spontaneous order.
In the same way that he defends the free market, Adam Smith asked legislators not to put the interests of wealthy monopolists before the public welfare. Whenever businessmen propose a new law, Smith recommends that the government study the proposal “not only in the most scrupulous manner, but with the utmost suspicion.”
The state aid to the rich that Smith complains about in The Wealth of Nations has never completely disappeared anywhere in the world, in fact it has increased. Just observe how in the last 30 years the subsidies are increasing for pharmaceutical companies, tax advantages for companies that are friends of the power of the day and the policies of monetary expansion, the money helicopter, which injects liquidity into groups connected to power, while that the poor see the purchasing power of their income corrode. But none of that is capitalism, but a system known as mercantilism, in academic terms, and privilege hunters, in more colloquial language.
Therefore, when Professor Jesús Huerta de Soto, in his book Money, banking and business cycles, states that: “Economic crises are the result of not respecting ethics” he is quite right. And it is that the deontological, legal and economic sciences are an inseparable tripod. Sadly, ignoring this principle is the central cause of poverty and disorder in all of Latin America in general and in Bolivia in particular.
For this reason, the agroindustrial economic reactivation plan proposed by President Jeanine Añez is the continuity of the same old policy of the prebend – since it will be the CAINO businessmen who will receive the monopoly -, of the squandering of capital – because Being projects that respond to political whim and not to a real demand in the market are unsustainable – and the repetition of the Keynesian error of putting job creation as the central objective of the economy.
For their part, Carlos Mesa and Luis Arce do not offer anything different either. In fact, their economic plans are based on the same misdiagnosis (lack of public investment) and propose the same wrong solutions (injecting liquidity and a spending state to shield the national economy and protect “strategic” sectors).
For this reason, it is important to remember that it is not the State that defines which are the “strategic” sectors, in fact, in the economy there is no such difference, but that it is the market that must reward with profits those who produce quality goods and punish to those who do otherwise. Hence, the government plans that put the State as the central agent of the economy are destined, always and everywhere, to fail -although there will always be groups that make profits of such immorality-.
Finally, remember something, the economy, health and education are very important subjects to leave them in the hands of the State. Therefore, taking into account the advice of the great Adam Smith, when a politician offers you free things, be very suspicious.
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