How can/will the free market help our economic situation?

If we would leave it alone, it would cure itself. Unfortunately, our myopic government is using this as an opportunity to convert us to a Marxist system of highly controlled socialism.

@UScitizen… I agree. If this governement really wanted to help create jobs ( as opposed to arrogating power to itself by trying to control everything ), it would extend loans to people who want to start their own businesses, eliminate as much of the damned paperwork as possible, and then let the free market work.

If we left it alone, it would have collapsed, like it did during the Great Depression™.
To be more elaborate,
1. at least two of the “big 3” would have gone bankrupt, leaving countless parts suppliers, raw material suppliers, car retailers and the car makers’ employees themselves dead in the water and without a job.
2. More banks would have gone bankrupt, the confusion and fear would prevent the rest of the banks to lend money and to demand instant repay of loans. This would result in thousands of companies going out of business and millions more becoming jobless, possibly the majority of the working population.
3. Millions of people without a job means a massive decrease in purchasing power, meaning a massive decrease in revenue for the remaining companies, many of them already on the edge, which would drive even more businesses out of, well, business, and even more people out of work.
4. Repeat from 3.

The ensuing monstrous chaos and hopelessness will directly lead to extremist parties gaining power, likely leading to widespread oppression and possibly killing of minorities, like it happened in Nazi Germany.
Would the system restart itself? Well, yes.
But not without killing itself and causing a global economic and social cataclysm and the loss of countless lives. Do you want to let that happen, just to keep a system “pure” that, by its very nature, has no other choice but to destroy itself again and again? I can tell you, I do not.
And you merely reset the count down until it happens again. Unless someone with sufficient power intervenes. Which happens to be the extended arm of the people itself, also called the Government. It is the government’s job, because the people created it to do just that, and keep the capitalist system that is supposed to serve the people, not the other way around, in check, balanced and stable and to balance out inequalities that are an inherent result of the system itself, such as the ever growing divide between the poor and the rich.
That, my friend, is the essence of the ‘Social Market’, and it is good.

The theory is that the companies will play nice, compete with each other in a way that increases quality while reducing consumer prices, and invest their profits in job creation thus money will come trickling down.

Then again, the theory was that the HMS Titanic would safely complete it’s maiden voyage. : \

@jerv I see, thanks lol.

try asking your question again in a more specific way. This seems too open ended. If you want to know how a market economy improves the standard of living for the general population, I can only point you to books and your local university. Surprisingly, a market system is quite complex and requires a lot of studying to understand just how it works and what it does.

The first introduction to economics for most is Economics in One Lesson, and oldie but goodie. It directly relates to the Clash for Clunkers and helps get your mind into the economic way of thinking.

@arpinum You’re right, thanks a lot.

@arpinum You are correct; it is quite complex. And as we have proven, there are a lot of ways it can go wrong too :P

To nudge people a bit, Economics in One Lesson can be read in an hour. You should read it a few times.