How Truly Free Markets Help the Poor

Ryan McMaken
Mises Institute
Feb. 16, 2015

Discussing poverty as an advocate of free markets is tricky business in today’s world. If one takes poverty seriously and points out the very real plight of the impoverished, it is often assumed that one must therefore be advocating for government “solutions” to the problem. The knee-jerk reaction of many defenders of free markets is to simply deny that poverty exists much at all, or that if the poor just try a little harder, or aren’t so lazy, they won’t be poor anymore.

This sort of reaction is natural for one who labors under the mistaken impression that the American economy is a free-market economy. Since the American economy is so free and filled with opportunity, they think, there’s really no excuse for being poor.

But, of course, the American economy isn’t even a mostly free economy. The entire financial sector is heavily subsidized and regulated. The regulatory costs imposed on small businesses are enormous. Trade of all types is regulated, and many goods are prohibited outright. Minimum wages make many entry-level jobs illegal, and one can’t even drive people around for money without facing a bevy of government regulations — and sanctions.

With all these millstones tied around the necks of poor and low-skilled workers, it’s a bit nonsensical to declare that poor people should just try harder. Perhaps they did try, and the government sent them the message loud and clear: “just give it up, because we’ve made everything you’re qualified to do illegal.”

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