First of all, I think that the notion of freedom, as many Americans value it, is virtuous, but can also lead to some economic issues. It is important that people enjoy autonomy and the ability to choose for their personal development, growth and sense of well being. All this, however, needs to be balanced with the common good and the respect of other people’s freedoms. Hence, personal rights need to be balanced with personal responsibility towards the well being and development of others.
Additionally, I find that when the idea of libertarianism is applied to economics, it falls somewhat short. In fact, libertarianism has produced such a monetary gap between someone with little to medium economic means and the media tycoon mentioned in the book, that the former would unquestionably have a critically more restricted financial freedom and, therefore, choice than the latter.
Furthermore, this economic inequality could actually backfire. People will trade so long as they have something to gain from the transaction. When “no one can improve without someone else being worse off,” (Olin Wright and Rogers 42) then Pareto Optimality has been reached.
When people from the working poor have exhausted their tradable assets, they have only their skills and labor left to trade. These people may be forced to accept two or more jobs to survive financially, but they will be worse off in terms of their well-being or prosperity, as the book puts it. They will have less time to relax and recharge after a hard day, to spend with family, and to follow their personal interests.
Consequently, what stunned me was the amount of financial disparity there is reported between the richest people in this society and the poorest ones. I was especially surprised by empirical data and ratios of American CEO to average worker salaries.
Something I definitely agree with is that the free market economy drives much innovation and growth. For example, ever since the iPad became popular in 2010, many other brands started making tablets. To compete with each other, all these brands had the incentive to innovate their products with newer and better features. Yet, there is at least one drawback. If the leading firm in an oligopoly is well ahead of the others and perceives no threat, it will have less of an incentive to invest in innovation. It would only do so if it had to reassert itself as the leading company after another had drawn near.
Although I do agree with this point, I do not agree with the arguments against state interference in the market. It was helpful for me to read this segment, because I did not always understand why certain people do not wish the government to engage in the economy. I can understand the points of the state incompetence thesis and the state malevolence thesis, but I believe that if the government is offering to make life financially easier for lower classes then its concrete proposals should be taken into consideration and given some weight.
Olin Wright, Erick, and Joel Rogers. American Society: How it Really Works. New York: Norton, 2011. Print.