Changes

Can you improve on our definition of the "free market"?  The homework assignment gives you an opportunity to do so.  For example, the concept of the "free market" could be defined in terms of opportunity:  "the free market is one that provides full opportunity for the poor buy and sell and pursue careers on the same terms as the rich."  Indeed, the poor may be the biggest beneficiaries of the free market, as the following example illustrates.

Can you improve on our definition of the "free market"?  The homework assignment gives you an opportunity to do so.  For example, the concept of the "free market" could be defined in terms of opportunity:  "the free market is one that provides full opportunity for the poor buy and sell and pursue careers on the same terms as the rich."  Indeed, the poor may be the biggest beneficiaries of the free market, as the following example illustrates.

<Airline deregulation>

In the 1960s and 1970s, government determined what the price of tickets on airplanes would be, and only the wealthy could afford to travel by plane.  Then, in 1978, Congress "deregulated" the airplane industry and allowed the free market rather than government to set the prices, based on supply and demand.  The benefits were tremendous in enabling far more Americans to be able to afford air travel:<ref>http://www.econlib.org/library/Enc/AirlineDeregulation.html</ref>

 

:Airfares, when adjusted for inflation, have fallen 25 percent since 1991, and ... are 22 percent lower than they would have been had regulation continued (Morrison and Winston 2000). Since passenger deregulation in 1978, airline prices have fallen 44.9 percent in real terms according to the Air Transport Association. ...  [W]hen figures are adjusted for changes in quality and amenities, '''passengers save $19.4 billion dollars per year from airline deregulation. These savings have been passed on to 80 percent of passengers accounting for 85 percent of passenger miles'''.

As the above example illustrates, the free market has the effect of giving great wealth to the poor.  Someone can have no money, or lose all his money, and yet if he tries then he can live nearly as well as the wealthiest man in the nation -- '''''if''''' the free market exists to drive down prices and provide equal opportunity.  The poor can enjoy the public parks and cheap land in rural areas rather than be confined in the traffic-congested and polluted cities where most of the rich are.  The poor can benefit from the low prices for food and travel caused by the free market.  But if the free market does not exist -- as in many countries of the world -- then the poor may go hungry and otherwise suffer, because prices are too high and opportunities are too limited for him to do as well.  One of the best ways to help the poor is to provide them with the free market in order to lower prices and increase opportunities for them.

As the above example illustrates, the free market has the effect of giving great wealth to the poor.  Someone can have no money, or lose all his money, and yet if he tries then he can live nearly as well as the wealthiest man in the nation -- '''''if''''' the free market exists to drive down prices and provide equal opportunity.  The poor can enjoy the public parks and cheap land in rural areas rather than be confined in the traffic-congested and polluted cities where most of the rich are.  The poor can benefit from the low prices for food and travel caused by the free market.  But if the free market does not exist -- as in many countries of the world -- then the poor may go hungry and otherwise suffer, because prices are too high and opportunities are too limited for him to do as well.  One of the best ways to help the poor is to provide them with the free market in order to lower prices and increase opportunities for them.