To Top

Ryan Arranz – the Voice of Young Republicans

My age group (I’m currently attending Vanderbilt University) has a more favorable view of Socialism than Capitalism.

While many will find this concerning, the fault is not actually on them. The education system has failed my entire generation, so people my age simply don’t understand what Capitalism is and how the free market works.

Despite the number of self-proclaimed “Socialists” of my generation, most of them are actually Capitalists who simply have no idea how Capitalism actually works. When people hear “Free Market,” they assume it means total deregulation and corporate takeover.

This is a lie propagated by the media and the education system. Free Market is simply an economic concept whereby corporations and competing interests are constantly vying for market share and fighting over consumers.

[tweet ” ‘Free’ doesn’t mean that corporations are free to do whatever they want, as many of my age have been led to believe”]

It actually refers to the free exchange of ideas and goods in an open marketplace with an informed public.

Consumers’ resources are finite, so with a hypothetically infinite number of ideas, corporations, and products for sale, in a free market system, these companies are constantly in competition for the limited resources of consumers. In economics, this is defined as scarcity. Scarcity is when you have to make decisions and satisfy all of your needs and wants as best as possible with limited resources available.

In the case of American consumers, the limiting resource is money. With a free market economy, the burden falls on private companies to satisfy the demand of consumers. When a company can’t satisfy demand, they go out of business. No competitive company sets out to fail, so they must bow to the public’s demand in order to stay afloat. With every company constantly trying to outcompete the other, they race to create better or cheaper products. This is why the standard of living in the US is constantly increasing.

If everyone had infinite money, we would all go and buy whatever we want. As great as that sounds, it would actually collapse the economy. With infinite money, every good would have an infinite demand that simply couldn’t be satisfied, which would create massive shortages and price inflation. This is exactly why Socialism always fails. A prime example of this is Venezuela. By redistributing money, Venezuela artificially inflated the demand for all goods purchased by the poor and middle class.

While at first, this seems to be a good thing (when Venezuela first implemented Socialism under Hugo Chavez, they experienced huge consumption increases and an economic boom), eventually, resources run out. Once all the money has been taken from the wealthy and spent by the less fortunate, there’s no longer any resources left to fund corporations. Production decreases, innovation ceases, and goods are now in massive shortage. Since demand for the goods can’t go back down on its own, prices are set high as corporations sell away what little goods they have left. This is how Venezuela can have an inflation rate of almost 2,000,000%.

When people no longer need to make decisions about how to spend limited resources, companies lose their incentive to compete, so in the long run, prices will go up, products will not get any better, and massive shortages will ensue. The main argument for Socialism is an emotional one, not a logical one. American companies have been given a bad reputation for taking advantage of the poor and less fortunate.

Even though this is untrue, it makes no sense from a logical standpoint. The beauty of the free market is that people are allowed to make informed decisions with lots of options available to them. No one is forced to buy from one particular company; they have the freedom to choose what they buy, when they buy it, and who they buy it from. Without a competitive free market, monopolies form and people are robbed of their freedom of choice.

Socialism accelerates this process by taking away companies’ incentive to compete and improve. The job of the government is merely to make sure companies are competing. The free market functions on its own because of the push/pull of demand, so all the government needs to do is ensure that process is occurring, but doesn’t need to alter it.

Poor people in the US have the highest standard of living anywhere in the world because of the free market. Companies also have a reputation for pandering to the rich and powerful, but in a free market, most companies that did this would go out of business. Companies want to make as much money as possible. In order to do that, they need to satisfy as many customers as possible, so it wouldn’t be in a company’s best interest to only target a small demographic. For certain niche companies that do use this strategy, other companies will pop up to satisfy the demographics left out.

For example, a luxury goods company that exclusively sells very expensive products will target a rich audience. Obviously, poor people need goods too, and even though they have less to spend, they still have a demand for products, which means a market is still there. Since a company’s ultimate goal is to make as much money as possible, it is in a company’s best interest to enter this market and create goods for poor people, thereby satisfying their demand. The overall “Free Market” is made up of many subsections. When one section of the overall market is left unsatisfied, companies will enter that market because there is a demand to be satisfied, meaning there is profit to be earned.

The free market is a truly beautiful thing. By everyone acting in their own self-interest, everyone is actually as well-off as possible. Consumers act in their own self interest when they choose what products to buy and what not to buy. This choice comes to them courtesy of the free market. Companies want to earn the most profits that they can. In a free market, the only way to earn more profit is to satisfy more people. Companies cannot force people to buy their products in a free market, so their only option is to satisfy more demand.

When a market’s demand is not being satisfied, companies will enter that market seeking profit, and companies will continue to enter the market or new companies will form in that market until the demand is satisfied. It’s an upward spiral of a cycle that constantly feeds into itself. In the end, companies compete, the most successful ones survive, and the ones that fail to satisfy consumers will go out of business. Successful companies make profit and can use that profit to create better products so that they can sell to more people and hopefully earn more money.

The only way to be successful is to satisfy consumers in the free market, so the consumer is always best off in a free market system.

You must be logged in to post a comment Login

More in Life

Ryan Arranz – the Voice of Young Republicans

by Ryan Arranz time to read: 5 min