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Freeman Essay #132: “The Power of Freedom”

In the November 2010 Freeman I explained why, over the years, my confidence in markets grew.  My explanation is below the fold.

WARNING: After reading this column, many of you will want to send me emails condemning me for my apostasy or telling me why I am mistaken. I welcome your feedback as I beg your indulgence. So, here goes: I don’t believe that the welfare state, or the regulatory state, inevitably leads to widespread poverty or to oppressive collectivism.

There was a time when I worried that the dependency and inefficiency caused by government interventions would create a vicious, self-reinforcing cycle that fueled more calls for even greater intervention—a process that would continue until the State suffocated all individualism and initiative. But I no longer believe that such a progression—or, better, retrogression—is inevitable.

Two reasons explain my change of mind. The first is observed reality, and the second is what I (perhaps too vainly) believe to be a better understanding of society, politics, and economics.

Let’s first look at reality. From at least the 1930s—or as scholars such as Arthur Ekirch argued, from a much earlier time—government’s role in the American economy has expanded dramatically. And yet we continue to grow more prosperous. Beyond any doubt, Americans of 2010 [and, even more so, of 2018] are better fed, clothed, housed, informed, educated, medically cared-for, traveled, rested, and entertained than were Americans of 1930—or even of 1980. Despite some tax relief and deregulation since the late 1970s, these improvements in our living standards occurred with government taxing and regulating and redistributing as never before in the United States.

Look also at other countries. Although ordinary people in nations such as France and Sweden aren’t as wealthy as ordinary Americans, they are nevertheless extraordinarily wealthy by historical standards. And they’re getting wealthier despite their governments’ heavy interventions in their economies.

It’s a fact that real and growing prosperity is not necessarily quashed by government intrusion.  This does not mean, of course, that these intrusions do not reduce the level of prosperity and the rate of economic growth. I’ve no doubt that they are harmful—that ordinary men and women would be even wealthier and more secure (and freer) were the State to remove its tentacles and tax collectors from the economy.

But these tentacles and tax collectors are not necessarily fatal.

Nor are such interventions the leading edge of totalitarianism. As obnoxious and as intrusive as, say, the IRS and the FDA are, modern America is not remotely comparable to the Soviet Union under Stalin (or even under Gorbachev). Americans are incomparably more free than were the subjects of the Soviet regime.

Some readers of this magazine will dispute my observations of the real world. I report them not to be controversial but merely to be honest.

Assuming that my empirical observations are sound, what explains these facts? Why haven’t 80 years of a national government unmoored from constitutional restraints—and with an unending itch to poke, prod, and tax nearly every aspect of Americans’ lives—resulted in economic stagnation and Big Brother of the kind that haunts the characters in George Orwell’s great novel 1984?

I believe that the answer is the power of freedom.

Freedom is a beautiful flower more robust than crabgrass. Freedom is not delicate or easily uprooted. Like crabgrass, freedom is not indestructible; it can be killed. But freedom is not a frail institution that collapses and dies the moment it is attacked by some element foreign to its nature. If it were, we all would long ago have been well and truly enslaved.

The human spirit seizes opportunities to flourish even with less-than-maximum scope; it naturally resists being confined to the arbitrary will of others. We do not all fall in line behind the commissar or Congress’s commands simply because we’re ordered to do so. (How many Americans really care if the busboy at a restaurant is an “illegal” alien?) And even when we abide by the letter of legislation, we are wonderfully crafty at violating its spirit if that legislation is felt to be inappropriate.

So, too, with the free market. It is perhaps the most remarkably vigorous of all human institutions. Heavily taxed and loaded with arbitrary regulations, the market keeps on keeping on. Entrepreneurs creatively find ways around government intrusions or they discover techniques for reducing the intrusions’ ill effects.

Everyone who understands the logic of markets knows that, say, the unexpected destruction of a factory by an earthquake will barely slow the market’s relentless push to improve living standards. We understand that markets are remarkably resilient at dealing with—and reducing the bad effects of—natural obstacles such as mountains that separate suppliers from customers, or weather disasters that destroy existing inventories and supply lines.

Although we’d be even wealthier if these obstacles and weather disasters never materialized, their existence does not condemn us to everlasting poverty. Entrepreneurs—given sufficient freedom—are guided by prices and profits to overcome these obstacles. Likewise, entrepreneurs—given sufficient freedom—are guided by prices and profits to overcome government-erected obstacles.

The vital question here is, how much freedom is sufficient? I have no answer, except to say, ”Freedom is sufficient for economic growth even when it is far less than we should have and are capable of having.”

Many libertarians will read this column and wince, thinking I’m discounting the importance of freedom. But they would be mistaken.  In fact, the theme of this column is to celebrate the great and creative power of freedom. To point out that freedom can be hobbled and hamstrung by a predatory State and nevertheless continue to shower blessings on ordinary men and women is to praise freedom—to applaud it loudly and lovingly.

Additionally, those persons who recognize the resilience and vigor of freedom and free markets gain even greater credibility when insisting that the role of the State should be reduced. If it were true that the slightest burden government placed on freedom led inexorably to tyranny and poverty, then anyone who champions freedom might be thought to do so for purely pragmatic reasons. But the champion of freedom who recognizes that the economy might still be reasonably dynamic in the face of government regulations, and who doubts that such regulations will lead to his or her being tyrannized, is an even more believable spokesperson for freedom, for that person can speak more from principle than from narrow pragmatism.

He or she can say, ”Look, even though eliminating this tax or repealing that regulation will not mean the difference between poverty and plenty, I still believe that the tax should be eliminated or the regulation repealed. The reason is that they are immoral. There’s a practical case for reducing government’s role, but even when practical considerations do not loom large, ethical considerations do. Even though this tax or that regulation won’t condemn us to a material hell, they nevertheless violate human rights that ought never be violated.”