If you want to convince people of a point of view that has no real logical support, an effective method is to frame your opponent’s case in a way that makes it seem like something different than it really is. It is called a straw man argument because, just as clothing stuffed with straw has no real substance and is easily blown over, a straw man argument takes all of the substance out of an opponent’s case and substitutes false arguments that are easily refuted. By refuting the false arguments, you can claim that all arguments are refuted. It is a favorite trick of the enemies of freedom and markets, those who support government as savior.

The straw man has been working overtime lately. Free markets, capitalism and individual liberty have been taking a lot of heat for causing everything from the failure of health care to the mortgage meltdown and burned Christmas cookies. To anyone who can see behind the straw, however, it is very obvious that we haven’t seen free markets for many decades. The capitalism that is manifested in private ownership and the protection of property rights has been thrown out the window. In its place is a crony capitalism that is embodied in “business-government partnerships,” a term that has been getting a lot of air time, but is, in reality, merely fascism with a smiley face. Individuals are continually losing more of their liberties to special interests and a central planning class that believes politicians and their economist sycophants know how to run your life better than you do.

When someone blames the free market for the problems that we now face, they are either unwittingly going along with the politically correct crowd, lemming-like, or they are committing a bald faced lie. All it takes to know the truth is to kindly ask that person to name one market in America that is free. There are none. There is no market that is not saddled with an incredible burden of regulation. 72,000 pages of new federal rules every year make it difficult for even the most diligent person to obey every dictate. Every person in the country is probably a criminal for violating some obscure law that they aren’t even aware of.

The manipulation of money, the constant changes in the rules and the animosity of many politicians toward investors and business people sours the climate for investment and innovation. It is what economic historian Robert Higgs has termed “regime uncertainty.” It was a contributing factor in extending the great depression and is preventing solid recovery today. Rational people are not going to invest a great deal of money only to have it frittered away by over-regulation or government subsidized competition. The risk is too great when the hand of politicians is too powerful and unpredictable and excessive taxation punishes success. American business tax rates are among the highest of all developed countries.

People see results that they don’t like and call it “market failure.” They point to cases such as the Madoff fraud, Enron, the real estate bubble and bank failures and say “See, I told you so. We need the government to intervene to prevent events like that.” There are some very obvious facts to point out to those people. Firstly, just because results don’t reflect someone’s utopian view doesn’t mean the market has failed. Inequality of circumstances in the American population does not mean that there is anything inherently wrong with a system. The fact that the poor in America are many times better off than the poor in most countries of the world is, in fact, an indication that things are indeed working for everyone, including the poor. Some of the most egalitarian countries in the world have an equally poor standard of living for everyone except the politicians and well connected elite.

Secondly, if government intervention is the solution, then we should no longer be experiencing any market failure. They have been vigorously intervening in virtually all markets for decades. The irony is almost humorous that those markets that are failing most miserably or are most out of control are those that are already being regulated to death; the monetary system, education, health care and insurance, for instance. Those industries that have the least interference are those that perform the best for the population in general. It’s time to burn the straw man. We need to stop blaming markets when markets and voluntary exchange in all areas of the economy is what has been missing.