When you hear a politician blather about preserving our "dynamic free-market" economy, what exactly do you think he is blustering about? Do you imagine that he is talking about eliminating "government regulations" that prevent businesses from growing? Indeed, in today's political discourse, a "free-market" means little more than an unregulated market. In that case, would Somalia and cartel dominated northern Mexico pass for free-market economies?
Modern American politicians generally shy away from serious discussions of macro-economic topics and when confronted with this question, they'd find a way to provide a well-polished, but an intellectually vacuous answer. To be sure, Adam Smith's original conception of the free-market sharply differs from anything an average voter understands it to mean.
It is impossible to provide a full account of Smith's comprehensive definition of the free-market in such a short post, but perfect competition was its essential component. Part of his definition of the free-market held that no merchant should be able to coerce his competitors or customers by withdrawing from the market. That is, in a true free-market economy, when a merchant leaves the market, his customers would be free to purchase goods or services from his competitors.
By the same token, he would not be in the position to raise prices far beyond what the consumers are willing to pay because they would have the option of buying from his competitors. However, the forces of the market are disrupted when one enterprise becomes sufficiently powerful to eliminate adversaries and coerce consumers into paying higher prices: it is here where the government must intervene to preserve the free-market economy.
In stark contrast to Adam Smith's prescriptions, far from preserving the freedom of the market, the government colludes with the most powerful industries in this country. Recently, Congress passed a bill at three in the morning that prevented the Federal government from negotiating prices of prescribed medications with the pharmaceutical companies. As evidenced in the report that was originally aired on the 60 Minutes show, this event took place at that hour because the pharmaceutical lobbyists did not want the average viewer to see this odious event on C-Span in broad daylight. Congresspeople who opposed the bill have been coerced into subordination and its leading supporters shortly obtained jobs with the pharmaceutical companies.
Other proponents of the legislation were pharmaceutical lobbyists and those who would shortly join their ranks. For example, Republican Congressman Billy Tauzin was commended by George W. Bush for the "great work" he has done in passing the bill. In the 60 minutes interview, Tauzin asserted that the pharmaceutical lobbyists always get what they want in the political arena because they "stand for the right things". He clarified his point by insisting that the recent bill that dramatically increased the prices of pharmaceutical drugs was good for the patients whom the pharmaceutical companies represented.
The reality of the situation is that pharmaceutical products are already much more expensive than they are in all other developed capitalist economies such as Canada, Denmark, Australia, New Zealand, the United Kingdom and Germany. It is very likely that as the drug prices continue to soar, they'll become even less accessible to the general public and the quality of health-care in this country will decline even further.
Predictably, Tauzin left his congressional post to become the chief lobbyist for these companies. He was followed by his cronies who also played an instrumental role in legislating the infamous bill such as John McManus, Linda Fishman, Calving Weldon and at least 12 others. Far from being an act of a free-market economy, this legislation is a clear example of a trend that has been undermining economic freedom in the United States for the last two decades. According to the Index of Economic Freedom, the U.S is only the 10th freest economy in the world and continues to decline.
The analysts of this international agency cited the "trend toward cronyism that erodes the rule of law" as one of the salient reasons why the U.S economy is becoming less free every year. Most Americans tend to think that the United States is a bastion of economic freedom and countries such Canada and Denmark are socialistic by comparison. The reality is that the economies of both countries are freer than that of the United States, most notably, the Index of Economic Freedom places Canada four positions ahead of the United States. Rule of law is an essential component of a free economy and the corporate lobbyists' ability to heavily influence government policies with impunity is one of the greatest threats to economic freedom in this country.