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GOP Idea: Ensure that Republicans who stress the virtues of “free markets” understand the theory behind free markets, the problems that arise in free markets and that the intersection of free markets and social morality explain why government exists.

I had the privilege of enrolling in microeconomic classes while earning graduate degrees in both business and public policy and the first lesson, on the first day, was almost identical in both courses. Both courses employed the basic microeconomic framework to describe perfect competition. In this framework, five circumstances are assumed to be true:

• Many buyers and sellers

• Low barriers to entry and exit

• Perfect information is available to consumers

• Firms aim to maximize profits

• Product characteristics are essentially the same

These are the assumptions that intellectually buttress free market theory because they efficiently explain why competition exists, how resources are allocated and when economic actors should make certain decisions. Most importantly, these theories provide the intellectual rationale for the behavior of firms towards consumers and vice versa. In both classes, after the professors spent the period hammering home why all future lessons would be based upon this lesson, both admitted that the lesson was bunk. “Free markets” and “perfect competition” do not exist, have never existed and will never exist for a host of reasons that are fairly evident. Republican policymakers, legislators, spokespeople and activists all seem to gloss over this little intellectual hiccup.

The larger intellectual hiccup is that free markets maximize economic efficiency --- and many accepted American social values are economically inefficient. For example, a coalition of American health insurers released a study that found state and federal governments will spend $3.7 trillion dollars on long term care over the next 20 years. How is this spending economically efficient? This is not education or infrastructure that could yield future benefits. The spending does not protect individuals and their property as military, police or fire services do.  The answer is that spending public money on long term care for individuals is not efficient.

And this is why the Republicans have no plans on most social welfare issues: because allieviating one individual’s suffering with another individual’s tax dollars is not an efficient use of capital within a truly free market --- meaning that unfettered free markets are incompatible with a social safety net.

Americans are intuitively smarter than most politicians and media types give them credit for --- they know that Republicans were preaching the virtues of the free market, had control of government for six years, yet more Americans do not have health insurance, high paying jobs or the belief that their children will have better lives.

The answer is not to forsake the belief that our economy should be based on free markets --- it should. The answer is to provide Americans to fully and knowledgeably participate in a free market, while providing a social safety net for those “inefficient” among us who have been stuck by unfortunate circumstances.

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