Who Should Have the Authority to Set Prices? The Free Market, Or the State? Also, Monopolies.

The free market should have the authority to set prices.

If the state sets the prices, there is no bartering for prices, and the state controls people. People will vote for candidates who promise low prices, however, the low prices never happen. That is the state controlling people with prices.

However, if the free market controlled prices, there would not be just one person (the candidate from above) benefitting. If the prices are too high for people to buy, the producer will lower the price, and then consumers will buy it. People will barter for services and products.

This also leads into the concept of monopolies. Monopolies, without government intervention, are actually a good thing for the economy.

Say there are two competing businesses. They each lower their prices, and more people go to the business with the lower prices. The other business lowers its prices, and the people go there. This would happen continually until one business just cannot keep it up. All the people would flock to the business with the lower prices, and the other place would go out of business. Many people say that now, since the second business has died, that the surviving business would raise its prices. In a ‘natural’ monopoly, that is not the case. For if the business raised its prices, other businesses could crop up with lower prices, and the consumers would go there instead of the supposed monopoly. Because of said reason, prices are kept low, and people are kept happy.

Sadly, ‘natural’ monopolies do not occur very often.

Government intervention ruins the entire thing.

Let’s look at the above example again. However, this time, one of the companies has government support. This could happen in different ways, but one of them is the company will support a candidate publicly, and if said candidate gets into office, he will pass a law protecting said company.  If this happens, the natural order of free market is disrupted, for the company has an unfair advantage, and can afford to keep its prices high, for it is backed either government funding or protected by a law. The company can keep raising its prices, and it takes a very powerful force to stop it.

This is all why the government should not interfere with prices or the free market. For if it does, it will (and already has) disrupt the entire system.