The first chapter is entitled "The Power of the Market." This explains the basic logic behind the operation of a free market. The first principle is voluntary exchange through cooperation, which is described as necessary for a society to achieve a heightened level of prosperity. People are most satisfied when they are doing what they want and believe they will personally receive some or all of the benefits of hard work. If one party refuses the deal because he does not feel that he is receiving a good price, then both sides can work harder to come to an acceptable arrangement. This idea is the driver behin

The Federal Reserve's has attempted to exert powers that it does not have in order to support these government objectives. Not only do they control the flow of money, they have attempted to control interest rates. These actions have created a roller coaster affect upon our money and interest rates.

The next principal of this chapter is the role of prices in a free market. The authors state, "Most economic fallacies derive from the neglect of this simple insight, from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another." Prices represent the implied value of capital invested in that item. It allows the seller and the buyer both to come to a term they think is fairly representative of that value. It weaves a mosaic of the millions of people who can be both directly or indirectly involved with even such a simple item as a pencil. Prices are the balance between supply and demand in a free market. Prices perform three functions in organizing economic activity. According to the authors, these functions are: first, transmitting information; second, providing an incentive to adopt those methods of production that are least costly, and thereby, use available resources for the most highly valued purposes; third, they determine who gets how much of the product-the distribution of income.

Equality of opportunity is an area that has been interpreted far too literally. Clearly, no one is born equal. Some may be born more physically capable than others, while some might naturally be more intelligent. It is only violated when one is denied a pursuit due to ethnic background, color, or religion. This has transformed into a different idea, which is equality of outcome. The government has attempted to insert 'fairness' into the system hoping that all will come out ahead. The graduated tax is an example of this. Taking from the rich and giving to the poor is a method that destroys the incentive to be part of the rich. Many people aren't willing to work more hours or overtime because they know that they will be taxed more heavily so that the extra work will reap no rewards. Such practice leaves little incentive to work and produce. It doesn't seem fair that some children are born into wealth that will allow them a larger inheritance or a family business to work for. But isn't it equally unfair that some children are born with natural skills and abilities that will allow them to surpass others. Should we place some sort of a 'tax' on these people as well?

The best form of consumer protection is inherent to the free market. If someone is selling goods that are harmful to the consumer, then they will quickly lose business and face lawsuits due to their immoral business practices. After all, we are living in the 'information age.' At no other point in history has the average person had such a large amount of data available, everywhere from newspapers to the Internet. A free market also provides the benefit of a 'middleman.' This is the sales person who acts as a quality expert on the customer's behalf. Doctors won't prescribe drugs that have proven harmful or come from questionable sources, nor will Sears sell a bad television set, because they want to establish trust and customer loyalty.

The Declaration of Independence stated that every person was entitled to "equality" and "liberty." These too, are definitions that have changed with time. When drafted by Thomas Jefferson, it was intended that each person is equal before god and should be able to serve his own purposes; that no other shall be entitled to invade. Equality before God-personal equality-is important because people are not identical. They have different values and tastes that will cause them to lead different lives.

The authors propose a simple and straightforward solution to this problem. Have all government schools charge fees covering the full cost of the educational services they pro

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Approximate Word count = 4074
Approximate Pages = 16 (250 words per page double spaced)