Downturn has free market in danger

Column by Tim Riley

Within the last week, one of the largest economic upheavals in our nation’s history began. Massive, seemingly stable businesses simply shut their doors or were swallowed up by the government. The effects of this event have been felt from the highest levels of the financial system, all the way down to the average citizen.

More disconcerting than anything that has happened recently though is the severe blow that was struck against the capitalist spirit of America. With the government spending billions to take ownership over key financial institutions such as AIG, another giant step back has been taken from the free market principles that have been the cornerstone of this nation’s economy.

Collins English Dictionary defines capitalism simply as, “an economic system based on the private ownership of industry.” With that in mind, the steps taken by the government in the last week are completely counter to this economic principle. In fact, it sounds vaguely reminiscent of “a political and economic theory or system in which the means of production, distribution, and exchange are owned by the community collectively, usually through the state.” That is the definition of socialism from the same dictionary.

This is by no means a new trend in the United States. Since the day the Constitution was signed, there has been a gradual growth in governmental control over the economy. However, inside of the last 50 years, the pace of such a change has morphed from a casual walk to a frenetic sprint.

As growth in technology and travel has made it easier to integrate the entire economy together, the risks of the free market have increased for the individual. A failure in one sector of the economy can now gravely impact every other. With that in mind, it is only natural for people to want controls placed on the system to prevent calamitous failures. When life savings are at risk, the ideals of free market principles do not seem nearly as appealing as the assurances government could provide. After all, who better to take care of our money than those who print it?

While the socialist merits are debatable, the fact that the financial market brought this change upon itself is not. When people are concerned about their financial well-being, whether they are Republican or Democrat, they tend to find a solution that keeps food on the table today. By undertaking practices which bankrupted not only their company, but also the public’s trust in the economy, the large financial organizations forced quick, bold decisions to be made by the government that will have dire consequences long after this crisis is over.

The free market is inherently more risky than one that is carefully controlled and monitored. This will naturally lead to more benefits, but also to corresponding larger downswings. This is usually acceptable to the average American because we feel that if played correctly, the turbulent market will reap better gains. But when the system is grossly mismanaged to the point where people are thrown out on the street during an economic tumble, it is only natural for them to turn to the relative safety of socialism.

The last week has seen billions of dollars lost and billions more spent to help patch up a sinking ship. In the process though, a great litany of future issues have been created. By grossly mismanaging the financial structure of the country, a slow socialistic creep took a leap forward in the U.S. this week. The risks of the free market were made too great and it finally hit the pocketbooks of Americans across the spectrum.

There must be a personal responsibility on the part of every person in a free market to be vigilant in protecting its security. When society’s trust in the free market is violated, it is only natural that they will withdraw the freedom they have afforded it. However, like in all situations, trust is lost much more quickly than it can ever be regained. The government’s actions in the last week are quickly sweeping us downstream away from the capitalistic ideal. Once this shortsightedness is realized, only a monumental effort over decades will ever be able to reverse these hasty decisions.