When I was in college, I was a bit of an idealist. In fact, I remember making a case for socialism to my parents in the car on the way to college. Mercifully, I attended Liberty University, where, as a government major, I was steeped in our constitutional history and free-market economics. I grew to appreciate the role of the free market in society.
I learned that government must be limited in order to allow the private sector the room that it needs to grow. In hindsight, I am not surprised that I returned to Liberty a decade after I graduated to teach in the School of Business. After all, business drives the economy.
Government is necessary to enforce the rules, but the private sector is responsible for economic growth. This, in turn, raises our standard of living. No mandate of any politician of any political party can mandate economic growth. Just imagine if the government tried to develop the iPhone.
Politicians can redistribute resources and they can create regulations that promote one industry at the expense of others, but they have yet to devise the law that mandates growth. They cannot expand the pie. They can only change the size of the pieces and who they choose to serve.
Set all of the rhetoric of the politicians aside. The only way politicians can create growth is indirectly—through policies that provide a conducive climate for business to take place. Set the theories of the Keynesian economists aside. Government spending does not create growth; it creates debt and you cannot spend your way out of debt.
Growth comes from productive activity in the market. Our standard of living is due to the millions of people that work hard every day to produce the goods and services that we need. As they compete, they innovate, and this innovation makes us smarter, better, and faster.
Think about how you watch television. It is a metaphor for business. In the 1980s, you had a handful of channels to choose from. Government gave us PBS, but private businesses gave us more channels than we have time to watch. They gave us cable, satellite, and high-speed internet TV. If you’re old enough, you remember a time when you had to be home at the right time to watch your favorite TV show. Businessmen fixed the problem first with the VCR, and then with the DVR. They did it because they listen to their customers and they did it for profit.
That is the power of the free Market.
-Darin Gerdes
______________
Dr. Darin Gerdes is an Associate Professor and Director of Graduate Programs in the School of Business at Charleston Southern University. All ideas expressed on www.daringerdes.com are his own.