Monday, November 24, 2008

If Wealth Could be Free

and from --Thomas Sowell “It’s Priceless” Nov. 18, 2008

Wouldn't it be wonderful to live in a world where there were no prices? If you happened to want a Rolex or a Rolls-Royce, [or gasoline] you could just go get one-- or two if you wanted-- and not have to worry about ugly little things like price tags.

There is such a world. It is the world of political rhetoric. No wonder so many people are attracted to that world. It would be a great place to live.

Or would it?

Costs are not like that. You can ignore them all you want and they still won't go away. While you are enjoying all the goodies that politicians are sending your way, you may notice that your taxes are going up or that the money you earn or the money you have saved won't buy as much as it used to.

Costs that are passed on to businesses can get passed on again to their customers in higher prices. Money that the government prints to spend itself reduces the value of the money in your wallet or in your bank account.

And the costs he doesn't mention: the subversive effects of a growing sense of entitlement, the emergence of a "right" to live at the expense of others, the breeding of envy between producer and consumer, and the nurturing of resentment of those who have more by those who have less. When you disconnect the owning of wealth from the necessity of first earning or producing it, competition shifts away from the voluntary exchange of the market place into the realm of political coercion, thus destoying the means by which other people are a benefit instead of a threat to our lives.

Free trade brings peace and prospeity. "Free goods" require coercion which brings the opposite.

1 comment:

poor boomer said...

Re: Costs that are passed on to businesses can get passed on again to their customers in higher prices.

Depends on things like demand elasticity.

A few years ago, the price of double cheeseburgers went from $1.00 to $1.20 at a McDonald's where I used to work. (I would eat there when I had to work a double shift because my relief called in sick.)

This lasted approx six months, and the price was returned to $1.00 - not all costs can be successfully passed from business to consumer.