Free Markets Are Passé? Only if You Forget About Entrepreneurs

Housing and energy crises cause some to question markets, but what about small businesses and entrepreneurs?

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News flash from the Los Angeles Times: Free markets are sooo yesterday!

Well, that's not exactly what it says. But L.A. Times staff writer Peter Gosselin sums up his point at the end of this piece as essentially this: The best thing we can hope for to deal with high gas prices, financial turmoil, and other current calamities is "New Deal Lite." He also writes that "the nation and its political leaders have begun to sour on the notion that the current market system is the key to a fair, stable, and efficient society."

Putting aside the enormous issue of how the government, and not the market, actually created many of these crises, I just don't understand this dichotomy between uncontrolled, chaotic, bubble-inducing free markets on the one hand and big, progressive, new New Deals on the other. Those are really our options?

It has never been the case that when problems crop up in the economy, and the government doesn't launch a massive, ostensibly benevolent program to fix things, that everyone else stands still. When people have economic problems, like being squeezed by high gas prices, there is demand for solutions to those problems, like alternative sources of energy. Entrepreneurs will try to meet this demand.

I'm not saying that there is no role for government to play or that entrepreneurship is the panacea to our problems. It isn't. But Gosselin seems to think that it's totally appropriate to immediately jump to the conclusion that the free market has failed as soon as anything in the economy goes wrong. That's completely ignoring the role that entrepreneurs play in our society and economy. The fact that he can point only to very vague polling data (84 percent of Americans think the country is "on the wrong track") tells me that the country isn't buying that thesis, either.


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