If you stop and think about the parts of the U.S. that are not working well, they are almost all things that the government provides, not the free market. Public education has more than its share of struggles. Public mass transit often falls short. Roads are routinely congested. The healthcare system, while a mix of free markets and government programs, is universally acknowledged as overpriced and inequitably provided. Who looks forward to a visit to a government office?
What are the shared features of government provision of goods and services that lead to problems? That's easy; it is the lack of price signals and the missing connection to a paying customer.
Free markets do a wonderful job of providing people with what they want because it all happens automatically. People go into the market and make purchases. When lots of people discover a great product, the high demand for it results in shortages; the whole supply sells out quickly. This signals the manufacturer and the retailer to produce more and to raise prices. In this way the shortage will be alleviated and consumers will get more of the products that they like.
The extra profits earned by manufacturers and retailers with the larger volume and higher prices will be noticed by competitors. Those competitors will strive to rapidly create competing, substitute products and get them to market. To gain market share, these competing products will be offered for a lower price than the original product that was such a hit. If consumers find these similar products also to their liking, the new competition will gain some of the market and that competition will help bring the price down. Consumers get more of the products they like, and they get a fair price because of marketplace competition.
Similarly, if manufacturers make and retailers stock products that consumers do not like or price them too high, consumers will not buy much. Retailers, seeing the products sit on the shelves, will cut the price and place smaller orders for future deliveries. Some consumers will purchase the products once they are on sale, and as the production levels are reduced there will be less of the product in the marketplace. Supply and demand will move into balance.
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