Writing assignment: 500 words on this topic, “Who should have the authority to set prices, the free market or the state? Why?”
The free market should have the right and authority to set prices, not the state. In a free market, businesses have the right to choose for themselves how much to charge customers for their products or services. But meanwhile, customers decide whether or not those prices are fair. If a business sells a cheap product or charges prices that are way too high, people should and will eventually stop buying from them. This forces businesses to learn from their mistakes and make their business stronger so it can last longer. As a result of poor products or services, the business must lower its prices, improve quality, or ultimately go out of business. This system of competition encourages businesses to provide better products at affordable prices to stay in business longer than their competitors.
For a long time now, people have debated over who should control prices. Some people think that it would be best if the government were to control prices to help customers and slow down inflation. These government controls are called price controls. These price controls set minimum or maximum prices on products and services. It may seem that price controls are helpful, but over time they cause much more harm than good. The government’s helpful price controls can lead to shortages, rationing, poor quality products, and even illegal markets. They may work for a very short period, but they are not generally effective long-term solutions.
In a free market, the economy works through supply and demand. Simply put, when people want more of a product, businesses will usually produce more of it. When demand drops or fewer people want the product, businesses usually have to adjust and lower prices or reduce their production. This repeating process allows the economy to function how it should without too much government interference. Customers play a very important role in this system, because their choices determine which products and businesses last. A free market allows consumers to actively participate in the economy rather than become victims of government controlled pricing because their choices determine what products and services remain in demand. This market allows business owners to decide their own prices and run their business in the way that works best for them. Since business owners understand what works for their company, they can make better decisions that help the business grow and earn more money.
The main purpose of the U.S. government is to protect the people, defend the country, and to support general welfare. The government was not created to control businesses and set prices for every product. When the government gets involved in businesses too much, it often causes taxpayers to pay the price. For example, government bailouts use taxpayer money to support private businesses. Since the government doesn’t create its own money, it has to collect taxes from citizens to fund these actions.
With government involvement, it can hurt businesses by increasing taxes and regulations. Sales tax, property tax, and all other state imposed costs only raise the cost of doing business. In some cases, this helps the state make more money than the business itself. If businesses are forced to follow government set prices, they might lose profits, reduce quality, and even shut down. With all of this, you can see the harm of state price controls.
In conclusion, the free market should have the authority to set prices because it encourages competition, innovation, affordability, and customer choice. Businesses and customers both benefit when prices are determined naturally through supply and demand instead of government control.
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