Why Do the Philosophies of the Mixed Economy Matter to You? Part 1
Author: Anvil Smith
Wealth Creation through free-market opportunity, Wealth Preservation through regulation
This is perhaps an oversimplification, but free-market competition favors both the creation and destruction of wealth, while regulation often tends to stifle new wealth creation in order to preserve existing prosperity. For both individuals and businesses, there is a tendency to change philosophical horses depending on where one is the race.
When you’re just starting out, you want as much economic freedom and opportunity as possible. Taxes and regulations are a drag on your efforts to get going. But when you’ve reached an acceptable level of financial prosperity, you want as much financial security as possible, even if that means more regulation.
The American automobile industry provides great illustrations of these shifting perspectives. In the early part of the 20th century, scores of entrepreneurs made and lost fortunes building automobiles. In the middle of the century, unionization and government regulation (safety devices, pollution standards) injected a high level of regulatory control. By the end of the period, when some companies faltered in competitive market because of foreign competition, automakers sought controlled-economy assistance; they asked for tariff protection on imports, and finally, direct financial assistance.