Defending the Free Market
July 9, 2003
Raghuram G. Rajan, of the University of Chicago, is the new chief economist of the International Monetary Fund. He is the co-author (with Luigi Zingales) of a very interesting new book, Saving Capitalism from the Capitalists (Crown Business, 2003). It is one of the most powerful defenses of the free market ever written. Not only does he defend the market from anti-globalists and socialists, but against capitalists who manipulate markets and government policies for their own benefit, says Bruce Bartlett.
A good example of how businesses manipulate government for their own benefit is the prescription drug subsidy bill now before Congress, explains Bartlett.
- Although marketed as a benefit for seniors, the true beneficiaries are big businesses that would be able to greatly reduce the cost of their retiree health programs.
- According to a July 2 report in the New York Times, Ford Motor Company alone would save $50 million per year.
- The Times notes that the biggest companies are mainly those that still offer drug benefits to their retired workers and would save the most.
In the aggregate, they would save billions of dollars per year if the federal government takes over a big chunk of their retiree health expenses by paying for prescription drugs; that is why they are lobbying very heavily for passage of the legislation.
Raghuram Rajan understands that this is not the free market, but crony capitalism. True believers in the free market must therefore fight it as strenuously as they fight socialism and other misguided government interventions. In fact, they should fight them more strenuously, because capitalism itself often ends up getting the blame for the inevitable consequences: high prices, high taxes, high unemployment and slow growth, says Bartlett.
Source: Bruce Bartlett, "Defending the Free Market," National Center for Policy Analysis, July 9, 2003.
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