Tuesday 27 April 2010

Of course markets work - especially free ones


As you all know I like markets – those grand municipal institutions like Kirkgate Market in Leeds (pictured above), little local covered markets like that at Keighley, great street markets in places like Walthamstow and Skipton. I like farmers markets, continental markets and pot markets. And it goes without saying that because of this I like free markets.

What I don’t understand – although I have tried – is why otherwise intelligent seeming folk like Susan Hinchcliffe can make sweeping statements saying that “free markets don’t work”. Especially when she works for a business organisation. Indeed, this sweeping ‘anti-market’ statement is really common – and hardly ever challenged.

Some folk seem only to like markets where everyone is small, where there are no large dominant organisations and no bad capitalists. Just friendly smiley folk talking to you over a market stall or serving you at their shop counter. And the way to do this is to tax big businesses and businesses doing or selling things we disapprove of (gas guzzling cars, premium lager in cans, cigarettes, imitation samurai swords and air travel). Or better still to ban them altogether.

This makes me cross. Firstly because banning things is a blunt – and mostly ineffective – weapon but mostly because really free markets would do just what these folk want if we stopped messing about with them! Why do you think large businesses support environmental auditing requirements, extensions of worker rights, tariff protections, the common agriculture policy, expensive city centre car parking, large regulatory quangos and an array of market controls too bewildering to describe?

Have you guessed? Big businesses like all this regulation because it keeps small businesses from competing! The big car manufacturers lobbied hard for OEM parts protection – and Nick Clegg’s euro-pals said yes and closed down the free market for car parts. All that banking regulation rather suits the banks and will continue to do so as it makes it really hard to set up a bank – keeps down the competition! And have you ever wondered why the newspaper industry is so keen on controlling the Internet and stopping new competition from self-generated news? It wouldn’t have anything to do with stopping competition would it now?

So next time you hear the terms “market failure” or “free markets don’t work” remember the small trader on your local market or the corner shop in your village. And note that they struggle because Government tries to control markets – through taxes, through regulation and through stupid laws. And remember that, despite all this, despite the efforts of government to do the bidding of big business, markets still thrive, still work and still deliver value for you and me.
Free markets do work - every time!
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