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When we buy a good, we are unaware of how many people are involved in the production of a single good. Right away we make the assumption that there is an individual giving orders to produce products and what amount to produce. The chain of command is only exclusive to small organization. At the time when an individual enters the labor market he is required not to be employed to a certain occupation. However, there are different wages for different jobs. Every society has some sort of command elements. These elements are in many forms from levying taxes to discouraging smoking. A voluntary exchange economy promotes prosperity and human freedom. No society has ever achieved prosperity and human freedom unless voluntary exchange was the main principles of organization. This making voluntary exchange the main element of achieving prosperity and freedom. Voluntary exchange enables enormous amounts of people to cooperate. According to Milton and Friedman, they discuss a story called, “I, pencil: My father tree as told to Leonard E. Read” to explain this phenomena. For instance, when we go to the store to purchase a pencil, we are exchanging for the amount of services by the thousands that produced the pencil. Back to voluntary exchange, how was the pencil produced? No one gave order to these thousands of people to produce this pencil. How did this happen? According to Adam Smith it is the role of prices. A lot of economic fallacies were established because individuals assumed everything was fixed. The price system performs this duty without having people interact. The price system works well until the government gets involved. For example in the text they describe the OPEC oil embargo, where the United States had long gasoline lines due to the legislation of the government. Prices in some areas were ordered to be below that would have been equal to both the amount of gasoline available at the gas stations to the amount consumers wanted to buy at a price. Gas supplies were sent to different areas of the country by command by the government rather than the response to the demand.
Approximate Word count = 1357
Approximate Pages = 5.4
(250 words per page double spaced)
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