No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Five: Supply & Demand: Markets at Work 110 The clear point from these two examples in Scripture is that markets are like most things in life; they can be used to honor God or for us to use in rebellion—acting in our own autonomy. Criticisms of the market process are really criticizing the freedom God has given us to do both right or wrong. As with most problems, it is not the system that is the problem; it’s the sin inherent in all of us! Comments made by theologian Abraham Kuyper concerning immoral choices in art could just as easily apply to markets: “But let it be said that in no case can this abuse of freedom be advanced as proof that art has no right to its independent existence. In our human life there is nothing, absolutely nothing, that eventually does not misuse for sinful purposes the freedom it acquires. Observe how time and again freedom of conscience is abused for blasphemy.” The gains from specialization and division of labor make trading and markets beneficial to all mankind. Biblical criticisms of the market process usually arise when fraud is taking place (false weights and balances, Proverbs 20:10 ) or when market participants refuse to honor their agreements (such as the refusal to pay agreed wages, Jeremiah 22:13) . In other words, God does condemn how we sometimes act in free markets, but that doesn’t mean He is against markets per se . Another issue, obviously never raised by unions, is the “exploitation” that goes the other way. What if I (and other buyers) was only allowed to buy on eBay, from only one possible seller? Could the seller exploit me? The same situation prevails in reverse: when companies are forced to bargain only with the unions, and cannot legally hire replacement workers, then they also can be “exploited.” Our fundamental economic reality that buyers only compete against buyers and sellers only compete against sellers only works when there is freedom for other competitors to enter the market . If there are limitations against competition, then there is the possibility of exploitation. To the extent we are against exploitation, we should oppose limits on competition, whether that limitation is via union or management violence or government restrictions. Freedom to buy or sell to others is the best protection from exploitation. BUYERS VS. BUYERS; SELLERS VS. SELLERS Lobbying to Restrict Competition During the late 1800s, some companies and labor groups employed restrictions on competition with violence; people were killed by both sides. When competition isn’t allowed, buyers do compete against sellers and the attempt to get the upper hand has led to tragic results in the past. In modern times, physical violence has significantly reduced (a notable exception being the 1990 Greyhound strike in the U.S. when snipers shot at buses with replacement drivers), but limits on competition are significantly increased by government restrictions. Lobbyists for all sides appeal to Congress in the interest of the consumer. Congress is asked to protect consumers from shoddy and unsafe products, to protect middle-class wages from rapacious businesses, or to mandate increasing safety and environmental standards on businesses. Can you think of why big businesses often (surprisingly) lobby in favor of more stringent safety or environmental standards? Why might they want higher standards imposed on everybody? Hint: consider how difficult it might be for them to meet the standard vs. other potential competitors. If there are limitations against competition, then there is the possibility of exploitation.