Free market, social mobility and inequality

Governments now have been given the mission to encourage the process of social mobility and reduce the social inequality, so when it comes to social mobility or inequality issues, people cry for more government intervention and social welfare policies. However, does that mean a free market can do nothing to improve social mobility and equality but worsen the issues?

A free market can do several things to improve social mobility and equality. Firstly, sometimes government intervention can increase the inequality. For example, many people criticize that since the 2008 financial crisis, many government market saving policies have benefited the big financial institutions, companies and rich shareholders much greater than the ordinary people and increased the social inequality and made the big companies even bigger. Without government intervention, these policies would not exist in the first place. Secondly, a free market encourages more competitions among all types of markets, including financial markets and labour markets. Everything depends on quality, price and demanders' preferences, when governments stay out of economic activities. Companies and individuals only need to obey laws and regulations, they do not need to collect more information from governments. If governments intervene in the markets, big companies and rich people are easier to collect information from governments than others, and the information could make significant differences in terms of making decisions on economic activities. Thirdly, increased competition can speed up skillful workers' promotion speed disregarding their background and other irrelevant characteristics. This is helpful to improve social mobility.

These are how a free market system could improve social mobility and equality; however, a free market system can worsen social immobility and inequality, which I will talk about tomorrow.