Christine Smith's Blog

For Prosperity & Peace – Freedom works. Fear Does Not.

For the last three weeks there’s been a continual debate in the letters to the editor section of my local newspaper regarding where the country is headed with lots of discussion referencing socialism and capitalism – with free market capitalism repeatedly attacked with the most egregious of “arguments.” Most writers favor government involvement in one form or another to “stimulate” the economy and to help ease people’s hardship. One letter writer went so far as to say now is the time for dramatically increasing government spending as it will solve everything. Reading the paper, and realizing such opinions reflect that of many Americans, is certainly a motivator for libertarians to more than ever stay strongly committed to exposing the fallacies of government intervention in the economy. We do have our work of sharing ideas cut out for us – hey, but at least people are discussing these matters now and that provides us many opportunities to share.

The fear mongers (presenting themselves and often sincerely believing themselves to be putting forth a compassionate viewpoint) blame every social ill from lack of affordable medical care to homelessness, educational woes to the economic crisis the entire nation is suffering, on capitalism. The word “globalization” is often also, along with that of “capitalism” frequently invoked in a most condemnatory manner as if it is the great evil of our time. But I view a truly free market as not only the best means, but the only moral means, for economic growth and ultimate prosperity for a nation.

I do not fear unfettered commerce between nations as I do not fear reliance on any region of the world for resources, nor do I fear immigrants in the workforce – frankly, I’m glad for them all. But it seems many fear anything that’s unregulated, imagining all manner of exploitation unless government controls human actions (ironically, they fail to see just how exploited they are by the government). It is often those that claim the attainment of “peace” as their goal in life who most vehemently think government involvement in our economic lives to be the answer. But, as one who values peace, I know that it is attained only when both parties in a conflict value the truth. What works – works. Freedom works. Fear does not. In view of that, I share an essay I wrote several months ago about globalization and the oft cited fears of those who oppose it:

Globalization – Friend or Foe?

Prosperity.  Peace.  Both are desperately sought and intricately reliant upon the other; wealth and harmony aren’t some magical possessions bestowed upon an individual, a community, or a nation.  They are the direct result of applying human intent.  They are measured, increased and reduced by the mind of man.  Supply and demand works.  As Adam Smith, in The Wealth of Nations, observed “The division of labor is limited by the extent of the market.”

Throughout history, harmonious co-existence has always been linked directly to the self-interests of each party.  Cooperation, and thus prosperity and peace, exists when each participant is aware  the other’s success is directly related to the attainment of his own.  Thereby nations, their societies and the business communities within each, grow – expanding their material wealth -  even as a peaceful equilibrium  is established.  The laborers (who are both the producers and consumers) benefit as each engages in mutually beneficial transactions (be it in services, good, metals, or currency) free from interference from any third party.  Or as Adam Smith wrote in The Wealth of Nations, “Labour, therefore, is the real measure of the exchangeable value of all commodities.”  Supply and demand works.

The intrinsic beauty of such mutually beneficial commerce is that it encourages productivity, creativity, ingenuity, and excellence – characteristics which benefit all in society.  Specialized knowledge and expertise is rewarded, as is efficiency.  As one excels and develops their skill, they reap the rewards.

In the absence of such “selfish” (defined here as being motivated by one’s self-interest) cooperation, conflicts arise (be they between nations, corporations, communities, or individuals) eradicating wealth and peace as resources are wasted and destroyed.  Productivity comes to a halt.  The market has been limited.  Maintaining focus on self-interests maintains the need for production and output, as each party is reliant upon the other.  Division of labor works, and increases exponentially, as differences are put aside to facilitate creation of an ever-expanding marketplace.

The 21st century’s advances have more than ever before in our history created an atmosphere of virtually unlimited global communication and transfer of goods.  We have proved Adam Smith’s assertion again and again, with our prosperous global economy fully exemplifying his statements. Exchanges of services and products occur routinely between individuals and corporations worldwide, with individuals and nations alike benefiting.  For as individuals reap the rewards of their specialized labor, so too their society prospers.  As division of labor increases, markets to trade with grow resulting  in lower production costs, lower prices for goods, and even more mutually beneficial transactions. 

It stands to reason then, that with the enormous market available to all due to technological and communication advances, this point in history is an opportune time for virtually limitless prosperity and peace.  Adam Smith would be in awe of the huge market place, and its prerequisite of the most intricate diversity of specialized and individualized division of labor.  This worldwide phenomenon has reached its greatest scale ever, and we call it globalization.

Some regard globalization as a shift in our cultural identification, in actuality existence of multinational corporations (and thus multinational cooperation) is not the result of shared cultural values, but the flow of money and commodities creating alliances between markets and thereby cultures that didn’t exist before.  Globalization is the natural result of people acting upon their self-interests.  It’s the win-win reality Adam Smith saw for both producer and consumer alike – only on a grander scale than he ever imagined.
 
The power of exchange as we know it, this era of globalization, is the building block of civilizations’ future advancements in science, medicine, health, travel, communication, food production, and more. It fosters human ingenuity.  It is the essence to human societal development bringing prosperity and peace to all peoples.  Globalization destroys barriers, real or imagined,  which prevented such harmony.  It is the key to mankind’s future.

With this in mind, should globalization be aided by government in an affirmative way to facilitate advancement of society economically?  Would such regulation help create a “fairer” playing field so all people have an equal opportunity to not only survive but thrive in this new global market?  Or would we be playing with fire with such well-intentioned adjustments?
 
The dangers of government intrusion into the marketplace, far outweigh any perceived “benefit.” Regardless of the situation or fear-based imaginations of possible dire futures of an uncontrolled market, there is not a single instance where government intrusion would benefit the people  and their economic situation in the long run.  All government regulation, moderation, or control of the free market, in the end, limits the scale of the market and thus always limits division of labor. Consequently, people suffer.

So why do so many express trepidation and fear about globalization.  Let’s examine just a few of the arguments that have been posed:

FEAR OF DEPENDENCY:  We are all dependent on many people worldwide for the goods and services we use every day.  There is no reason to fear such interdependence, only reason to celebrate in gratitude that we live in a world that has made division of labor the fundamental basis both economically and socially in this great and expansive world market so easy.  Think a market selling its goods to the United States is suddenly going to cut us off?  How absurd.  Why would any nation do so when they themselves benefit financially from trading with us.  On the contrary, international trade raises the standard of living for all, and greatly decreases the risk of war between trading nations and peoples.  As more and more nations prosper by engaging in free trade, wars lessen and economies flourish.
 
FEAR OF EXPLOITATION: The most egregious exploitation of workers occurs in totalitarian societies. On the other hand, capitalistic free market societies (proportionate to the degree they  actually possess a free market) allow for competition even amongst employers for employees, especially the more divided (specialized) the labor force.  As markets grow the increased demand for labor results in increased benefit to the workers (not less).
 
FEAR OF BIG CORPORATIONS, LOSS OF JOBS AND LOW WAGES:  It is when a society is thriving and rapidly growing economically that wages are highest.  As inhabitants increase, demands increase, and employment opportunities increase (yet another benefit of free immigration). Only stagnation in societal and economic growth (imposed controls/regulations & burdensome taxation) stops growth and thereby hinders both wages as well as work opportunities. Low wages result when there is a lack of competition within a depressed economy plagued by high taxation, costs of compliance with  burdensome regulation, and unjust favoritism bestowed upon some private enterprise sectors above others.  Savings/investments, another sign of prosperity, boom when the people have a free market resulting in low inflation and currency of value – all of which occurs in a society free of big government spending and control.  
 
There’s nothing to fear from big business which grows to a successful size purely by innovation in a free market economy, but there is much to be gravely concerned about when big businesses are essentially built by government favoritism and intervention in the form of non-competitive or excessive contracts, subsidies, targeted tax cuts for specific industries, and bail-outs.
 
Although emotionally based fear mongers mistakenly blame the free market as the corrupt influence responsible for economic suffering, the fact remains the most hideous and harmful corruption is that of government intrusion into an otherwise efficient market in the form of regulations, subsidies, price caps, tariffs, embargoes, government purchases and storage of surplus crops, and other controls.  The federal government also severely disrupts the marketplace by imposition of immigration controls and persecution of  (non-citizens) immigrants who seek work.

Further, the scores of federal agencies charged with regulating commerce (including so called protection agencies for the environment, health, etc.) are costing billions of dollars, with businesses passing down costs to consumers.
 
The precise costs is hard to calculate due to its enormity, but here are just a few of the facts about regulations’ impact on the free market in the United States (data quoted  from The Ten Thousand Commandments report of the CEI-Competitive Enterprise Institute, An Annual Snapshot of the Federal Regulatory State, 2008 edition, by Clyde Wayne Crews Jr): “Regulation costs more than seven times the $163 billion budget deficit; Regulations dwarf the $150 billion“economic stimulus package” passed in early 2008, and their rollback would constitute the deregulatory stimulus that the U.S. economy needs; Of  the 3,882 regulations now in the works, 757 affect small business.”

As the federal government forces the private sector (and states and communities) to pay for enormous regulatory costs without objective accountability, the people who are directly affected (measurably in every area of their lives as higher burdens are placed on businesses) have no representation in the matter.   The  American people are only aware of the the more familiar regulatory agencies ones such as the FCC, the FDA,the EPA, FTC (Federal Trade Commission), Equal Employment Opportunity Commission, but the agencies (and the rules) number in the hundreds.
 
The wasteful cost of regulation is due to government assuming the inappropriate prerogative of trying to facilitate the market.  Again, government hinders the division of labor and the extent of the market in the name of trying to assist the people.

Nearly every federal department is involved in some way which affects the free market adversely.  The common denominator:  control over areas which should be left entirely to competitive markets where the people will determine the outcome (failure or success) of any enterprise.  Central planning (any attempt at economic equity through social or corporate welfare) by the government, be it in the form of Medicare, Medicaid, Social Security, protectionism of  selected industries, minimum wage, increased taxation of the wealthy, all result in bankruptcy of society.   

Examples of unintended consequences of government intrusion to “facilitate” economic or social difficulties abound, to name just a very few: the savings and loan crisis of the 1980′s, the Mississippi River levee design and construction, rent control leading to shortages in housing (administered for the state of New York by the federal government from 1943-1950), the complete waste of billions of taxpayer dollars (since 1980)  on the subsidizing of ethanol (and unjust economic repercussions on others in agriculture such as largely unsubsidized soybean farmers, and livestock producers who rely on (the now inflated) corn and thus pass the costs down to the consumer). The market is huge; the division of labor at its height; left to the free market so many areas the government now involves itself in would be thriving, rather than draining our nation economically.  The free market will always provide superior services and goods, at lower prices, than government programs.

As government regulation (and spending and taxation) increases manifold, the people suffer. Whatever economic (or social)  area, issue or problem the government purports to try and help – it harms.  Ironically, as the economy falters, many look to the government to save them, their businesses, their homes, from collapse.  But the government, in all these cases, is to blame for the situation to begin with.
 
The more socialistic programs, the greater the people suffer. Socialism weakens people, morally debilitates them, and economically destroys them.

Our nation has suffered not because of big corporations and today’s globalization, but because of big government control over what should have remained the domain of the free market ever since the New Deal in the 1930′s.  That decision, and its socialistic programs, was a prime example of government trying to facilitate “a good cause.”  The result: the extremely difficult situation Americans find themselves in economically. Had our nation not embraced such rampant government economic regulation, but instead embraced the principles of the free market and a limited government, we would be prospering.  The economic distortions resulting from government regulation, taxation, tariffs, subsidies and other favoritism harm everyone.
 
Fairness (and prosperity) is the natural result of a people motivated by compensation; but guilt (as if they, the people, are financially responsible for the well being of others) is the powerful fear tactic used against the people to make them cooperative economic slaves.  Ironically, any attempt by government to intervene in the market causes the exact opposite of the desired result.  

If those who seek a fairer society come to recognize that moving toward genuinely free markets will advance, and not hinder, their goals, then they will point their efforts to achieve less government involvement for the benefit of everyone.The natural market process works. Should individuals (or corporations) make unwise choices in a true free market, they suffer the consequences and fail.  If choices are favorable, they succeed.  At no time, should government intrude to favor some while others suffer at their expense. Any intrusion into the free market irreparably harms society.Markets do not fail (any lulls self-correct), but nearly everything referred to as “market failure” throughout history has actually been the result of economic problems created by government intrusion.

The growth of Western civilization in the 19th century found a strong market and small government.  After World War I, some governments assumed greater power (as in the Soviet Union), or for our nation, after the Great Depression and following World War II, when belief in greater government planning (security) became the rule.  In the last forty years, such socialistic ideology and its prerequisite big government is being identified as the culprit in our social ills.  Once again, human nature is winning, as people return advocating smaller government and a free market.  

Any society which aspires to develop the optimal division of labor characterizing productive economies must focus not on government intervention, but on staunch protection of private property, likewise protection of free association with others in immigration and unrestricted trade, maintenance of a currency of value, little or no taxation, and most importantly of all: personal responsibility.  The government has no business interfering in the business of free enterprise.

Government just needs to stay out of the way, and let natural human interaction illustrate the political theory Adam Smith elucidated.  True cooperation among people, free from any government coercion, satisfies not only the need for necessities, but provides a  prosperity where people flourish enhancing their lives.

Globalization will benefit each society in direct proportion to the degree said society respects human nature: recognizing the good of free migration, permitting different cultures and nations to freely interact and engage in trade, and allowing the people to keep the money they earn to spend-give-and save as they choose.  

It is time to boldly oppose those who think the government should meddle in any private enterprise/private sector activities.  It is time to give a true free market an opportunity to save America from the dangerous downward economic spiral it’s on due solely to big government.  Supply and demand works.  Government involvement hurts.

The global economy is growing fast. Unfettered globalization is the friend of all.  It offers unlimited possibilities worldwide for the standard of living of millions to rise. It’s time to expand the market, no limitations, so the division of labor increases manifold and prosperity is restored to our nation.
In short, it’s time for economic freedom…because freedom works!