Why Do the Philosophies of the Mixed Economy Matter to You? Part 2
Author: Anvil Smith
A Realistic Response to the Mixed Economy: Be Productive, Know the Rules
Ardent supporters of the free-market might have good arguments for abolishing most government regulations because they believe the same effects (fair business practices, safety, etc.) can be accomplished through competitive incentives. On the flip side, there are many economic thinkers who believe that better regulation and centralized control over the economy can yield the same levels of prosperity that the free-market generates - without the risks. It’s a great topic for discussion, but the reality is we operate in a mixed economy. And that reality requires a mixed response.
If you are truly interested in accumulating significant wealth, you must consider free-market opportunities - and you must structure your financial decisions accordingly. For example, most free-market endeavors will require capital at various stages - there will be start-up costs, down payments etc. This knowledge should affect your decisions on where and how you will save, and what assets you will choose to protect. In this context, you might find that a highly-regulated, tax-favored retirement account like a 401(k) is not well-suited for your financial objectives.
On the other hand, you cannot simply plan to make a lot of money and ignore the possible impacts of the “controlled” parts of the mixed economy. Investors, lenders and builders who over-committed their resources to government-sponsored home ownership incentives have been whip-sawed by the declining property values and mortgage defaults. And most people know of someone who lost much of their wealth because of legal or tax issues - in the real world, higher productivity doesn’t resolve all financial problems.