Reading my economics textbook the other day, I was saddened to be reminded of the fact that America is not the most economically free nation in the world. I thought surly there are a couple countries with more economic freedom. Looking into it, I was surprised to see that many estimates have America outside the top ten of economically free countries in the world. That is tragic, and unfortunately many are looking to continue this trend and send America further down these lists. Lately it seems as if public opinion has been shifted to one that considers capitalism a bad word. It is as if capitalism is a word that does not test well with focus groups, so politicians avoid the term altogether. Many sincerely believe that every dollar made by a big corporation is a dollar stolen. I feel just the opposite. I consider the free market a huge part of America’s success as a nation. We should not only give the free market the credit it deserves, but also recognize that the free market works best when it is not being restricted by the government. In fact, whenever government interferes, it is often that small business and consumers suffer the most. Business licenses, excessive regulation, and government subsidies to businesses constrict and distort the market in a way that ends up hurting both business and consumers.

Free market competition lowers prices for consumers and fuels innovation and prosperity. Many people will focus on competition and point out that, to encourage competition, the government must work to break up monopolies if they form. To some extent I agree, in rare cases perhaps the government should step in. However government does just the opposite, too often decreasing competition when they get involved. An increased barrier to entry is a side effect of requiring people to have businesses licenses to start a business. Obtaining the proper licensing can take a long time and in some states it can be very difficult. Not to mention some required licenses are plain ridiculous. For example, a woman in Utah who supported herself by braiding hair was shut down because she didn’t have the proper cosmetology license. In this particular example, obtaining the necessary license required two thousand hours of classroom instruction. This seems a little bit extreme to braid hair.

Supporters of businesses licenses will point out that business licenses exist to protect the consumer. However, this “consumer protection” soon turns into protection for existing businesses from new competition. Naturally, existing businesses want there to be as many barriers to entry as possible for new businesses. In extreme cases, a group of existing businesses in a particular field must approve the startup of a new one. For instance, to start a taxi company in New York City, proper licenses that cost hundreds of thousands of dollars must be bought from an existing taxi company. In the end, what was intended to protect the consumer ends up hurting the consumer with higher prices and less market innovation.

Another way the government constricts the free market is through excessive regulation. To put things in perspective, in 2012, the Federal Register, which contains all business regulations, consisted of 76,961 pages. Do not worry; it has been growing steadily since then. If you manage to get your business license, you are required, by law, to comply with each and every one of those pages. While most agree some regulation is necessary, it is almost impossible to justify the entire Federal Register. Many of these rules are obsolete and are not even enforced. While these regulations wound big business, small businesses that do not have the same resources to combat them are crushed. It costs money and time to comply with these regulations. When businesses spend money and resources to try to keep up with the constant flow of new rules, the prices of their goods can increase, jobs can be lost, and less time can be spent innovating. Another problem is that new regulations simply do not stop being added. It is the job of people employed by regulatory commissions to regulate. Naturally, whether they are necessary or not, they continue to come up with more regulations.

When government gives subsidies to business the market is distorted and competition is put in jeopardy. In 2006, it is estimated that the federal government spent 96 billion dollars on what is called corporate welfare. Not only is corporate welfare a giant expense that the federal government cannot afford, but it also poses a threat to competition. Why does one business get money from the government but its competitor does not? Some supporters of corporate welfare maintain that this money can keep a company from going out of business. However, all this does is allow an inferior business to stay afloat. It may sound harsh, but strict market discipline is necessary. If businesses know that they can make reckless decisions and rely on the government to bail them out, they will. Imagine the situation from a business owner’s point of view. You finally beat out the competition, but no, the government comes in to save the day.

In conclusion, the market works best when it is free from government interference. Too often when the government gets involved, somebody gets hurt. This can be the consumer, small business, or business in general. Business licenses have become a way to protect existing businesses. Regulations, in excess, hurt businesses and consumers. Finally, corporate welfare costs the government billions and can often hurt market discipline. After doing the research, it becomes clear why America is outside the top ten of economically free countries in the world. This trend needs to stop or America will face serious economic problems and crushing debts in the coming years. One way to reverse this is to get involved. For example, business licenses are usually things required by state and local governments. On this smaller scale, it is easier for a person’s voice to be heard beyond the vote. If we take the steps to let the market free, it will lead the way to a prosperous future.