December 6, 2018
The Way the Market Ought to Work
While in downtown Denver recently, I needed to take a cab from the convention center to Union Station in order to catch the train to the airport. I could have walked, but it was cold, I had luggage, and I am out of shape. Since there was a line of cabs outside of the convention center, I had no trouble getting a cab. After I put my luggage into the trunk of the first cab in the line and got in the back seat, the cab driver asked me: “Where to?” I replied: “I need to get to Union Station.” He then said: “That will cost you ten dollars.” I agreed, and the cab driver took off. When we arrived at Union Station, the cab driver retrieved my luggage from the trunk of his cab and I handed him a ten dollar bill. He thanked me and then got back in his cab and drove away.
Before offering to take me to Union Station for ten dollars, the cab driver could have asked me about my religion, how much money I made, my political ideology, how much I gave to charity, or what I thought of Donald Trump. He could have asked, but chose not to since he deemed getting my money to be more important than any of these things.
Before agreeing to pay ten dollars for a ride to Union Station, I didn’t ask the cab driver his immigration status, whom he voted for in the recent election, what country he was from, what language he spoke at home, or what he thought of Donald Trump. I could have asked, but chose not to since I deemed getting to Union Station to be more important than any of these things.
This is the way the market ought to work.
For someone who wants a good or a service, there will always be someone else who has a good for sale or a service to provide. When the two parties get together, either the seller offers to the buyer his good or service in exchange for x amount of money or the buyer offers x amount of money to the seller in exchange for his good or service. If the buyer doesn’t like the price of the seller’s good or service, he can refuse to make the exchange or try to negotiate. If the seller doesn’t like the amount offered by the buyer for his good or service, he can refuse to make the exchange or try to negotiate. If the buyer and seller can’t agree on a price, then no transaction takes place and they each go their separate ways. If the buyer and seller do agree on a price, then the transaction takes place and they each go their separate ways.
In every exchange each party gives up something it values less for something it values more. Each party to a transaction values differently the goods or services being exchanged. Each party anticipates a gain from the exchange or it wouldn’t engage in a transaction with the other party. And each party will repeat the exchange again if its estimated gain has proved to be satisfactory. Transactions such as this don’t result in winners and losers.
Every act of commerce between two parties should work the same way, whether it is buying something at a garage sale or signing a contract with a Fortune 500 company. There is no need for government interference of any kind. No minimum wage laws. No price gouging laws. No government regulations. No red tape. No import or export licenses. No government occupational licensing requirements. No anti-discrimination laws. No anti-trust laws. No predatory pricing laws. No Department of Commerce. No anti-price discrimination laws. No Federal Trade Commission. No government permits. No ticket scalping laws. No Fair Labor Standards Act. No protectionism. No subsidies.
The buyer and seller either agree on the terms of sale or they don’t.
A truly free market is a market free from all government interference.