A Free-Market View of Economy

By Ted Hensley
Special to the Herald Courier

Everyone seems confused by what is happening to the economy. As a free-market capitalist and one who has paid close attention to business affairs for many years, I wish to provide my explanation of what I believe is going on.

First, it is important to understand what money is. Think of money as a resource, like water. And like water, understand that it can be neither created nor destroyed, merely changed from one form to another. It can be in large pools, locked up in stores underground, evaporated into the atmosphere or can fall like rain. Typically it flows downhill where it can be absorbed or consumed or dammed up for future use. To force it to go where it normally would not takes energy, which has a cost. That would be a pump for this analogy. The difference between water and money, in this description, is that while water is a free-flowing, God-given resource, money must be earned, gifted or given in exchange for something of value that one has either provided or produced that another person would want.

Another fact we need to understand is that there is no such thing as a “free lunch.” In order for someone to receive a free lunch, it is necessary that someone else actually produce that free lunch, for which they do not get paid.

Understanding my points above, here is my definition of what is normal in a free-market, capitalist system: Money goes where money thinks it can make more money. It is that simple. Imagine you have a CD that is maturing that has been paying 2 percent. You hear that an institution across town is paying 3 percent for its CD, so you move your money so it can earn more. Take this simple understanding and multiply that times millions of investors, most with small amounts, some with huge amounts. Now understand that this country of ours has been the safest and best place to invest for growth, no matter where in the world you are, as America has for decades been the citadel of monetary growth. Money has flowed to our country like water, as this was where one could make more money with his or her money. Now realize that our form of government is in upheaval, change of a most dramatic sort – that of moving farther away from a free-market capitalist system (which has been the envy of the world) and towards a more socialist type of government – one where those in control see it as their responsibility to “help even things out” by pumping funds from larger pools and into the smaller pools in the hopes that the greater good will be served by the “sharing of the wealth.” As a result of these changes, money is nervous and confused and does not have a clear understanding of what the future holds.

What do you think is the effect on our system? By taking away from those who have labored (sometimes for a lifetime) in order to build up their own wealth, and giving freely to those who have not, the first effect is to instill fear of loss of money by those who have it and historically have invested it into our system. The second effect is to take away the incentive to invest in our system. The third effect is to lose all confidence in the system. The fourth effect is to cause a crash of the system by those with wealth (however small or large) by removing money from the markets. This is where we are presently. The process began last summer when the current president’s poll numbers gave evidence that he might win the election. It accelerated once he did win and basically has been in a free fall since his inauguration. Free-market capitalism does not mix well with full-blown socialism and the nationalization of our institutions.

To take a bucket and dip out of one pond and pour into another is not the answer. The answer is to produce new sources. This is only possible by severing a resource – such as oil, lumber, coal, etc., from the earth, which can be sold to other countries thereby bringing more flow into the country, rather than out. It is also possible to create a new “gadget” or “service” which could be produced here and purchased by those outside our country, thus increasing our share of the wealth.

As the world’s largest debtor nation, it is also important to remember the “businessman’s golden rule” (which is not the same as the one from the Bible). It is: He who has the gold makes the rules. In my 55 years on Earth, we have fought the “godless Russians” and their communism, “the Red Communists” in China, the dictators, socialism, Marxism, and in my dad’s and earlier generations, Nazis, fascists, potentates, kings and other forms of total government control. Having been established as a republic with liberty of the people through limited government, our country has flourished. Now is not the time to go down the road of total control, as that road invariably leads to the destruction of life, liberty and the pursuit of happiness.

We have been here before and we know what to do. We plant a bigger garden. We get up earlier and work later. We watch our frivolous spending and don’t take on new debt. We work harder and smarter than ever, realizing that with the right kinds of efforts, we will pull ourselves up, just as we have so many times before.

I urge everyone to “keep the faith,” voice your opinion, pay attention to what elected officials are up to, put your own shoulder to whatever wheel comes available to you, and remember that there are no “givens” in this country – there are only opportunities. It is up to each one of us to seize those opportunities that come our way, make the most of them and pray for a better day.

Ted Hensley is a Realtor and real estate broker who lives in Chuckey, Tenn.