Social Economics

   We are witnessing a renewed clash between those who favor free market economics and those who prefer social economics, an effort by every segment of society to help ensure all citizens benefit from a healthy society.
   In a fully free market economy, players follow only the rules they choose to observe, claiming that free and open competition will benefit society in such a way as to guarantee the survival of the fittest.
   At the other extreme is an economy fully controlled by government, designed to guarantee the survival of everyone.
   As part of the battle, free marketeers have made "socialism" a dirty word -- part of their strategy to win regardless of the cost to others.
   It  seems current free marketeers have learned little from history, and are likely to repeat it.
   There are many folks still alive today who remember the disastrous years of the Great Depression, when those who believed in free market theory shrugged off the problems faced by those whose wages were cut or who lost their jobs as employers reacted to a decline in business.
   The suggestion at the time that government intervention with public works projects to provide employment was contrary to basic economic theory because, to them, government had no role in managing an economy. According to this interpretation of this free market theory, reduced wages were a necessary function of a firm's responsibility to its owners and shareholders.
   To them, the basic economic law of demand and supply applied equally to labor as to any other input, and labor union contracts fixing a pay level led to what they called "sticky wages," preventing a firm from adjusting its costs as sales declined.
   Others have pointed out, however, that if employers had treated workers fairly to begin with, labor unions would not have been necessary as a way to force fair treatment and adequate wages.
   It may be simplistic to say, but this clash between labor and management -- which began in the 19th Century -- resulted in some countries moving to strong government control of an economy and others, including the U.S. and most European nations, moving to what economists call a mixed economy, which is somewhere between a fully free market and full government control.
   Now, the problem lies in determining where on the social economic spectrum a nation can best serve its people.
   Full corporate freedom leads inevitably to labor action, strikes and sometimes violence to force fair wages and treatment. Full government control means arbitrary decisions by officials too often out of touch with the needs of producers as well as consumers.
   Meanwhile, the pendulum swings between the two extremes, as consumer and labor oriented factions sometimes dominate government, alternating with profit oriented producer factions.
   We now see a national government in the guise of the Republican Party favoring the needs, wants and desires of Big Business, often at the expense of wage and salary workers and consumers.
   The current administration has been reducing or eliminating regulations that protect many natural resources so that producers can get at them to produce more and increase their profits.
   But unless consumers maintain their ability to purchase the additional products and services, through reasonable wages and prices, the consequences can mean an economic catastrophe.
   Too much emphasis on one side, from a government determined to bring back a free market economy, can easily cause some of the major social problems that government itself should set out to prevent.
   Danger. That way madness lies.