What are free markets and voluntary exchange?

Last updated on February 20th, 2018  

Free markets **are** voluntary exchange.

Free markets are the voluntary exchange of good and services between individuals.

Some people prefer to see this sentence written as:

Free markets are the voluntary exchange of goods and services between individuals on their own terms.

Would it not be interesting to exchange your labor or goods with others without the taxes, regulations, reporting, the IRS, and the other endless array of bureaucrats involved in the process?

Generally speaking considering all taxes the various governments take about 30 to 50% of the income of the productive people in the United States. The amount  varies from about 10% to 100% in other countries.

Taxes and regulations are only the most obvious ways in which the government interfere with our freedoms.  There are much more insidious ways in which the government interferes.

One such example is that  I might choose to offer my farm produce (say wheat) for sale in exchange for an amount of gold.

Did you know that if you created such an agreement with another person that the US government steps in and says “no, the other party can pay in US dollars, even if they agreed in writing to pay you in gold”.

In fact, the US government steps into all agreements and makes all agreements payable in US dollars regardless of what terms may be.

And the US government will also tell you this is not the case. That I am lying. The only way you could determine who is telling the truth is to test the situation yourself.

Why the US government does this is a subject for another chapter.

The US government, state governments, counties, cities and towns all step into all agreements and charge their fees, make their regulations, and otherwise eliminate the possibility that you ever might freely exchange goods and services with another person.

And here is what is particularly bad. Mostly when we create governments we create monopolies.

These days people think that by definition government is a monopoly. But this need not be the case.

The 50 states were meant to be 50 sovereign states among a very limited federal government.

The 50 states would then compete for citizens. People would leave states with bad policies and go to states with good policies. State governments are not a monopoly.

Since monopolies in any form are bad the founders tried to make the federal government as small as possible.

The United States was originally a non-monopolistic system also called a federated system.

The Swiss are still today a fully non-monopolistic system. The Swiss actually have a system that is slightly better than the system the founders developed for the United States.

In the US the government authority over you is defined by your location. That is what state, county, city and/or town you live in. To change the government that is in charge you must move locations.

In Switzerland you do not have to move. The Swiss have what is called multiple overlapping authorities.

You can select among 2 or 3 governing organizations without having to move.

Thus competition exists at these more local levels of government.

Think about your garbage.

In most places in the United States the collection of garbage is handled by a monopoly. Why is this?

Why can’t there be 2 or 3 garbage companies collecting the trash?

The real reason there cannot be 2 or 3 is because the government wants to sell the privilege of being the monopoly provider of garbage service in exchange for perks such as campaign contributions, payments to relatives, and future employment.

There is no valid reason whatsoever for monopoly control of the garbage service.

And this same reasoning goes for other levels of government.

You might find this one hard to accept, but there is no reason for monopoly control of policing.

There could be 2 or 3 police services and you could select from among the services the one you feel is doing the best job.

You might, for example, choose a police service that minimizing the shooting of unarmed black people.

Would this not have a better outcome then all the endless marches and burning down of city blocks?

Governments sell you the idea that they are going to make things better. But that is not what happens. Government monopolies always make things worse in the long term.  How much worse? Way worse.  It is so truly horrifying that I am not going to describe exactly how much worse here.

Monopolies are actually quite hard to create and maintain in a free society.

It takes a governments monopoly on the use of force to create an ever increasing number of monopolies throughout a society.

Take the monopoly away from the government and all the other monopolies will disappear.

And that is another key point.

States cannot create abusive monopolies because the people will simply move to another state.

But monopolies that exist at the federal level cannot be escaped. That is why federal level monopolies are much worse than state level monopolies. There is no fix for federal level monopolies. Well there is a fix. We must return the federal government to its original small set of limited powers and small size.

Monopolies only get worse with time. They never get better. They will only stop getting worse when **we** eliminate them.

And this is a rather key point.  The bad behavior of governments will continue to get worse **unless** we stop them.  If **you** do nothing government gets worse, takes more, oppresses more, kills more.  The only way it will stop this behavior is if you force it to stop.

It is in fact a general axiom that bad behavior will grow unless it is stopped. And the only person that can stop it is you.  In a society in which everyone is hoping everyone else will deal with the problem, no one deals with the problems, and worse the problems are exploited by and made worse by evil people.

In the absence of competition all governments grow to consume the entire society turning them from free markets to police states.

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