A True Free Market

Conversations on Gaining Liberty and Justice through Economics
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About the Book

Two old friends seek answers to poverty, inequality, loss of personal freedom, and government debt as they talk during a weekend together. They find the merit of simple laws governing access to land, the ability to say no, and the role of government, which together protect the nature of economic freedom. These are laws that allow capitalism to embrace and reward the demands of the entrepreneur, while also offering dignified alternatives for the less talented or uninspired —all without taxing a nickel of anyone’s income. Our economy has the potential to eliminate financial insecurity for every citizen and still be the strongest economic engine in the world. Find out how by joining the conversation in A True Free Market.

About the Author

Stephen Taft graduated from Washington University in Saint Louis in 1980. His adult life has mostly been spent in New York City behind some of the glass walls that line Wall Street, working for major firms such as Lehman Brothers, Morgan Stanley, Paine Webber, and UBS.


We have erred in our practice of economics. The most prevalent symptom of it, although mostly unrecognized as such, is our ongoing political battling between capitalism and democracy. Many among us find each doctrine to be threatened by perfections of the other. Rampant capitalism is feared as a threat to democracy, and unbridled democracy is feared as a threat to capitalism. Good citizens have splintered across a deepening divide where politicos toss legislative bombs designed to undermine and recast their enemy’s preferred ideal. Unfortunately, this is not a case of “Whatever doesn’t kill you will make you stronger.” Either ideal’s failing will leave our nation weaker. It is deeply mistaken policy that has created fuel for this destructive debate. Free markets and free elections are two of our nation’s founding liberties, yet they are at odds, because we have blindly structured our economy to put us at odds about them. We can’t collectively decide whether a parent enduring financial hardship represents a failure of the economy or a failure of the parent. We can’t agree on how much access to the voting booth is enough. And underlying this harsh political division are hopes for bringing incompatible partisan visions of what a fair opportunity is to economic life. This maddening, enduring conflict will rage until we start practicing economics with aplomb. Free-market supporters see equality of opportunity growing as the role of government shrinks. Their dream is for people to act on their entrepreneurial ideas, to trade and hire with as little interference from government as possible. The mechanics of capitalism, as they see it, are uniquely able to bring discipline and efficiency to the use of society’s resources.

It logically follows that any government spending, beyond what’s needed for our most basic requirements, is allocating resources less effectively than the free market would and is hindering our collective quest to maximize the nation’s strength, productivity, and wealth. However, this philosophy is vulnerable to its inevitable results. A competitive system is going to yield more losers than winners. If victory in economics is defined as the attainment of financial freedom, relatively few can win at our game of capitalism, for the poor and middle classes will always comprise the bulk of us. But, to the free marketers’ chagrin, democracy is also being played here, and majorities can dominate in games of politics. When the practice of economics spurs a community to see its own as winners or losers, defined by income and assets, a tart politics is enabled. Parties divide over rightfully pursuing the preservation of or the distribution of individual wealth. We side between those two choices—sometimes bickering, sometimes enraged—while the argument affects the entire population of a nation. Here is where the conflict becomes palpable. Many of us are using one government program or another for day-to-day living.

According to capitalism’s champions, aid-dependent people and their supporters represent a threat to our economic strength simply by acting as a voting majority. They demand from government expansive programs for food, welfare, health care, education, and retirement—the very existence of which drain our capitalist energy and add to our national debt. These confident capitalists believe that if the economy were only left alone, without such government interference, the unchained brilliance of a free market would find cures for our economic ills, including sufficient charity for the needy. Therefore, free-market idealists require citizens to take care of themselves, to be responsible for themselves, so that government can be as small as possible. These wealthy free marketers and their supporters, being a natural minority, have only their accumulated capital to drive politicians to protect the system that works so well for them and to counter the greater number of nonwealthy voters. While they encourage our representatives to vocally support the unhindered accumulation of wealth, they support both bold and surreptitious efforts to suppress the vote of those who would redistribute it.

Their political journeymen will rarely hesitate to twist democracy’s technical operations: gerrymandering, limiting voting hours, creating inefficiencies to make select voting lines unbearably long, intimidating those uncertain of their rights with bogus legalities, or demographically challenging the validity of names to shrink voter registration lists, all in attempts to guide the outcome of elections. Free marketers will also buy vast quantities of advertising across all effective outlets to make their point known or to drown out the points of their opposition, and they will defend that spending with the right and glory of free speech. Their motivating good intention is to achieve greater purity in capitalism in order to maximize our economic freedom. But then there are those who see moral injustices in the cold machinations of capitalism. Such folk demand a leveling of market outcomes, for they believe the uneducated, unskilled, or unemployed are more unlucky than undeserving. They see most financial need arising from unfairness in our system, like short straws given for circumstance, and feel that our community, through government, has an obligation to address such misfortune. These outcome levelers see government programs as critical to bringing economic justice to the nation, righteousness rising as government defines and addresses people’s needs. They, too, will gerrymander and advertise to fight their opponents’ fire with fire, but they will generally support the unhindered voting rights of their natural majority.

Such doubting capitalists believe that the free market, if left alone, would run roughshod over all but the wealthy. So they tender most responsibility for compassion to the state, supporting a calculated fairness by having government offer what a coldhearted free market is incapable of delivering. The purity of capitalism is their fear. A robust democracy is their cudgel against it. Thus, the battle lines for the betterment of the nation are drawn. One side is willing to sacrifice the purity of democracy; the other side is willing to sacrifice the purity of capitalism. Yet both claim to be acting for the sake of economic justice. There’s no agreement on what economic justice means, even though both sides define it with opportunity, nor on how it should be achieved. War for the political upper hand rages ominously, with the two sides striving for seemingly incompatible goals. Successes for one side become diminishments for the other.

This conflict is not a passing fad. It will not be a mere footnote to our age; it will become our contribution to history. We have unwittingly programmed it into our society. So it will remain with us until we choose to upgrade the code to what a better economics offers. Whatever flaws the two sides see in our capitalistic practices, the ironic truth is that this war between free marketers and outcome levelers is not over our fundamental problem. All the time, conversation, and expense of it, will one day be seen as a fool’s errand. While the drama of politics is what’s most visible through popular media, the roots of our current two-party tensions are found in economics. Most of our domestic issues boil down to debates over taxes or spending. And most of us feel drawn to one camp or the other by our relative confidence in the free market to address the relevant issue. Whether it’s poverty, education, or health care, we either trust the free market to solve it or we don’t. This book argues that both our confidences and our doubts are misplaced.