A truly free market is controlled by supply and demand and lacks regulation. As such, the government should not interfere with failing businesses because the market has the ability to naturally correct itself by ridding itself of poorly performing businesses. Despite the fact that the American founders dedicated most of their efforts to ensure that America was a free market, this has not been the case for a long time now. Researchers today argue that the American economic system today is rigged by capitalism activities. The American government has long lost faith in the free market and has repeatedly artificially corrected the market system through funding failing businesses. As a result, the American market is hardly a free market using its definition and principles. Respected economists have gone on record stating that the reason behind this planet’s poor economic growth is due to market interference. However, the American people have long lost faith in the free market despite the growing support in nations like Brazil and China.
Availability of public goods is one of the factors that may lead to market failure since it is not a feature of free markets. This includes goods and services like police services, street lighting, roads, and public parks among others. Secondly, merit goods may also be a factor leading to market failure in the United States. These are goods that the government feels that if people are left to control by themselves; they might be underutilized therefore using subsidies. Externality is also another factor that may lead to market failure. These may develop due to poorly defined property rights as the producers and consumers may not be held responsible for their actions. Finally, the government’s efforts to correct problems introduced by market failure may lead to further problems. Interference by the government includes pollution taxes, providing public goods, artificially introducing completion in the market, and taxation of monopolies.
In conclusion, economies of democratic nations should be left to their own devices to correct market inefficiencies. Though governments may assume that intervention is necessary for the good of the public, their activities may worsen the situation in the future. Interference of the economy as a whole is basically postponing an event that may be bad in the surface but important for the greater good of several generations.
