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March 27, 2015

Inequality and free markets

Inequality has risen for three major reasons.  First we the people have accepted the redefining of what a free market is. Free markets as defined by conservative economists, such as Milton Friedman, were industries where there were many producers offering a variety of products to meet certain needs of the consumer. The government's role was to police each market/industry assuring that one entity, or a small number of entities, was not in a position to independently set price or quality of that which they were producing. If a particular industry was such that only one producer could be  supported then it was government's role to police that industry so it did not abuse its power.

Friedman said, "But we cannot rely on custom or conscious alone to interpret and enforce the rules; we need an umpire. These then are the basic roles of government in a free society; to provide a means where we can modify rules, to mediate differences among us on the meaning of rules, and to enforce compliance with the rules on the part of those few who otherwise would not play the game."

Today, somehow someway, the definition of a free market has been altered as one that is free of all government regulation. It is not clear how this change in definition came about but it became widely accepted as a result of such popular talk shows as Rush Limbaugh, Mark Levin and Sean Hannity. Many who listen to these programs look at the host of each show as a member of the news media instead of the entertainment industry. They advocate government should get out of the way of private industries rather than watch over them to assure their control does not end up in the hands of a few.

As a result of this control the companies have more freedom to not only set the price of their product but also the cost that they need to pay their workers. In many cases government has stepped aside and allowed this to happen. This government inaction leads to a second reason for the inequality we are experiencing, Citizen's United.  This Supreme Court ruling has changed the voting dynamics in this country to be one that was based on one man, one vote to one of one dollar, one vote. The wealthy entrepreneurs have bought the government and its regulators. This in turn has contributed to the unfair distribution of wealth between the oligarchs and those working for the oligarchs.  Until this is changed, inequality will continue to get worse. The Supreme Court should not be blamed for this. The constitution needs amending and as Justice Scalia has pointed out this is not an easy task.

The final reason for the inequality we presently are experiencing is public education of our citizens has not kept pace with the present needs of society. In 1827 Massachusetts was the first state to make public education free through the twelfth grade. This is still where free public education stops. This is the case even though our economy has shifted from being agrarian to industrial and now to highly technological. We must not only provide a higher quality of education to our citizens but we must make it more affordable.  President Obama is correct. We must make the first two years of college free if we are to reduce the inequality in this country. This is not just for the sake of those who are not in a position to afford the cost of two years of college. It is for the well being of the country. The minds of our citizens is not something we should be willing to waste.  We do not know where the next Einstein or Ben Carson lives. Like Dr. Carson, it may be in inner-city Detroit.

This is not 1945 where the United States is the last country standing. If we want to remain a world leader we must work for it. The rest of the world has recovered. China is challenging our leadership position. By the year 2023 it is expected that China will have more college graduates in its workforce than the total of everyone working in the United States. We are wasting minds.

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