The Power of the Market

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Throughout the chapter it is clear to the reader that Friedman has taken some inspiration from Adam Smith and the ideologies of the Invisible Hand, that become to come into play when he directly mentions the purchase of goods and services with currency. He makes the point that communication plays an integral role in society and how people are able to build off of one another. All societies seem to develop the same way through voluntary exchange, which can cause uniformity in some places and differences in others. It is just an easier way of bettering self-interest.

Government has been a common topic throughout the entirety of the chapter but Friedman expands on the subject more. He makes a slight analogy comparing the government itself to a market because the people choose what they feel is the most efficient path. Nobody is really free to choose unless there is protection. Many commercial disputes are solved through private mediation but there is still a judicial system that runs off of the government. The government has come up with a ‘common law’ that dictates the plays of social and economic games. Friedman also says that local governments is where the most change can occur because citizens have the option to pack their bags and move. Additionally, government is made up of the voluntary cooperation of individuals. The government has a job to protect citizens that are not fit to take care of themselves and the freedoms of this country are only given to responsible and all over deserving individuals.

The participation of government in free market affairs also tends to make the situation worse. Members of the government may impose large costs onto third parties and delay already poorly managed projects. Furthermore, when one party holds a large amount of power it increases the risks of people taking advantage of others, and people being taken advantage of. This is found on both low income and high income scales. Less government involvement has been proven to strengthen and assist economics. Take Hong Kong for example, they do not have any type of tariff on trade, no minimum wage and most importantly not an ounce of government direction. The city has a low fraction of income and they are able to give shelter to refugees.

In conclusion, there is a clear burden on the government before the implementation of any type of plan. Most projects are taken over or terminated when the government becomes involved. It creates a hierarchy that ends up expanding the size of federal and state governments. Their involvement essentially ruins the basis of the free market.