The ‘No Such Thing as a Free Market’ Myth

Have you ever been in a debate with a socialist, and heard them say, “There is no such thing as a free market”?  I sure have, and there is no comment socialists make that bothers me more.  It’s a disingenuous argument that lacks intellectual integrity, and yet people say it all the time.  It’s an attempt to make libertarians choose from a false binary between socialism and anarchy, as if any admission that government has any role is an admission that government’s role is absolute.

The correct answer to the ‘no such thing as a free market’ myth is to point out that the statement ignores any concept of government having a defined, and limited role in the economy.  Bringing up the limited, defined role of government forces the conversation back on track, removing the false binary, and forcing the socialist to debate what, exactly, the correct role of government within an economy is.  The socialist may try to keep the argument about whether or not what you are defining constitutes a ‘free market’, but if they do they are playing semantics, and that’s nothing more than a deflection.  “Forget the names,” you can say.  “Let’s discuss what the correct role of the government in the economy is.”

Government, it turns out, has two legitimate roles in the economy:

  1. To promote and protect the efficiency of the markets, and
  2. To provide for those legitimate societal needs that run counter to market efficiencies.

That’s it.  Government has no third role.

If you read through Article 1, Section 8 of the US Constitution, you’ll see all of the powers our government is supposed to have (  Everything in there that relates to the economy (regulating commerce with foreign governments and between states, coining money, and patent law) relates to the first role – promoting the efficiency of the markets, with the possible exception of things like pollution that crosses state lines, which would be covered by the interstate commerce clause.  Everything else, including protecting the environment, should be controlled by the individual states, and if an individual state, like say California, wants to go full-bore socialism, let them.  The people can move out from underneath that by going to another state, which is as it should be.

As for what states should do, that’s pretty easy too.  Each state should have an environmental protection agency to keep it’s waters, land, and air clean, with the federal EPA having jurisdiction only over Washington DC, and over pollution that crosses state lines (rivers, the Great Lakes, most air pollution, etc.).  Each state should educate children in whatever way it thinks best.  Families have every incentive to move to those states who do the best job educating their children.  Each state should provide a social safety net for its populace.  The ability of workers to move out of states that are too generous will prevent state governments from creating excessive welfare programs.  Each state should have some kind of program to take care of its elderly.  Whatever works best (private systems with minimum guaranteed payments) will end up getting copied by other states.  Each state can decide how to handle healthcare.  We would find that the more free market healthcare stays, the better it works, and states would migrate to more rather than less of a free market role in healthcare.

The federal government would have a role in making sure that people can buy insurance across state lines, which would keep insurance companies honest.

Both the states and the Federal Government would have a role in creating and enforcing truth in advertising laws, making it very difficult for companies to lie or intentionally mislead consumers (informed consumers being important for market efficiencies).

Each state would take care of its own roads.  The federal government would only have a role in interstate highways, and in regulating air travel.

Tax rates would be much lower at the federal level, and higher at the state level.  Overall, taxes would be relatively low, as if a state taxes its people too heavily, people would move to other states.  If a particular state wanted to use its government to pick winners and losers (cronyism), it would find that its economy weakens compared to other states and would be forced to stop.

Contract law would be enforced at both the state and federal level, making contract law stronger than today.

Socialists want everything done by the federal government for a reason – deep down inside, they know that if an individual state tried to go socialist, people would move.  California cannot provide universal healthcare, as if they did, only sick people would want to live in California – all the healthy people would move out to pay less in taxes.  Socialists want their programs done at the federal level specifically to prevent people from moving out from underneath them.  Socialism will never happen if state and local governments have most of the control, as those state and local governments that become too corrupt, or too active, would see people leave.

The ultimate check on government power is, quite simply, the ability to move.  For socialism to even take root, socialists have to prevent people from walking away, and to win a debate against the ‘no such thing as a free market’ myth, all you have to do is to point that out: a free market being a natural byproduct of people being able to move out from under bad governance.

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