Ask IOP: Mixed Economy
by Jeff Landauer
Minnie sent the following to Questions@ImportanceOfPhilosophy.com:
What are some of the advantages of a mixed economy?
Dear Minnie,
There are no advantages of a mixed economy to the people in general, but there are advantages to special interests.
There are many ways that an economy can be "mixed". For example, the steel tariffs that are in the news right now is one way. It's good for American steel producers because they can sell steal at inflated prices to consumers, but bad for American consumers because they have to pay more for cars, more for Airplane tickets, and more for anything using steel. It's also good for politicians because they get money from the steel producers in order to campaign and get elected.
Another example of an element in a "mixed economy" would be the new prescription drug bill the congress just passed. It will be good for seniors at first, because they will get cheaper medicine, but it will be bad for everyone else because they will have to pay for other peoples medicine. And because the government is paying for most of the medicine, the prices will go up for everyone. Eventually, because the prices are going up, the government will try to implement some form of price controls (like they've already done with the existing Medicare system.) The price controls will drive the quality of medicine down and make it no longer profitable for drug companies to invent new drugs. So while old people get free medicine now, in 50 years, the quality of the medicine will be lower, and the prices will be much higher (due to lack of innovation) than they would otherwise be. And, oh yes, the politicians benefit hugely from this mixture of socialism into the economy because they get to say how much they care and get re-elected.
Every aspect of a mixed economy -- every departure from Laissez-faire capitalism results in a short-term gain for some people and short-term losses for others followed by long-term losses for everybody.
For more information, please see Laissez Faire Capitalism, A "Mixed" Economy, and Government Regulation.
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