Some have propounded that America is the epitome of a capitalist nation. With the largest GDP globally and generations of hard-working individuals behind it, the country has become the center of world financial markets. On the fundamental level, the country has free-market economics, a principle that is grounded in the very Constitution itself.
One might think that with such a background of incredible success, the government would not want to enact policies that would go against this foundation of free-market economics. However, this is not always the case. Rather than leave a working system to continue to work, many in the government have continually tried to resize a shoe that already fit.
Over the past several years, many Americans have become increasingly apprehensive of the encroaching power of government. As the federal government has assumed an arbitrary prerogative to interfere in the private sector at will, financial markets have become extremely sensitive to the fact that the government has expanded its intrusion into free markets.
For instance, in recent weeks, investors have been uncertain about the direction of the Federal Reserve as President Biden considers leadership changes that would be in line with his policy priorities of big government expansion and spending. The concerns of investors are not unfounded. The recent administration has increasingly embraced the policies of Keynesian economics that often prioritize government control of the economy as a key to market success.
To recognize the effects of such a posture of government control towards the private sector, one need not look any further than the nation of China. In an attempt to rein in control of financial institutions, the Chinese government banned financial institutions from trading in cryptocurrency.
This led to an 11 percent drop in the value of Bitcoin in less than 2 hours. Many have grappled with this recent spectacular decrease in the value of cryptocurrency. These are ultimately the shockwaves of government overreach being felt. This is all despite the fact that the Chinese government has no direct policy jurisdiction over the American economy.
If the Chinese domestic policies of economic interference and government control can have such a rippling effect on even the American economy, how much more danger is there when American investors have an ever-encroaching government of their own to deal with? Indeed, the United States federal government itself is proposing even more regulations for cryptocurrency that have made many investors uneasy in an already fluctuating market.
Despite the grand plans and agendas of economic bureaucrats and regulators, such plans beg the question of whether or not government oversight has a consistent track record of bringing about prosperity. If America wants a more prosperous economy, is a conglomerate of government bureaucracies really the way to achieve it? The success of free economies suggest otherwise.
“The advantage of a free market is that it allows millions of decision-makers to respond individually to freely determined prices, allocating resources – labor, capital and human ingenuity – in a manner that can’t be mimicked by a central plan, however brilliant the central planner.” -F. A. Hayek