Lesson in Economic Freedom: America Thrives When She’s Free

We live in a world where some countries enjoy a comfortable-- many would say lavish-- standard of living while other countries are mired in poverty.  So what sets these ‘have’ countries apart from the ‘have-nots’?  Is it that the developing countries are hindered by a scarcity of natural resources?  Or, could the economic success of a country lie in the specific policy’s employed by its government?  I would argue that economic success lies directly in an abstract, but powerful, concept called freedom.

Let me begin by defining a foundation upon which I can begin my discussion.  In an economically free society, individuals are free to work, produce, consume and invest in any way they please.  That freedom is both protected by the state and unconstrained by the state.  And, importantly, the people are also free to keep the bulk of the property they earn -- the fruits of their labor.  In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.

For the past 16 years, the Wall Street Journal and the Heritage Foundation have published a study of the relationship between economic freedom and prosperity.  (Index of Economic Freedom).  The Index takes a variety of factors into account, including tax rates, the ease of opening a business, intellectual property rights, transparency/efficiency of the judicial system and level of corruption, to name just a few.

Studies in the Index of Economic Freedom demonstrate important relationships between economic freedom and job creation, per capita income, economic growth rates, human development, democracy, the elimination of poverty, and environmental protection.

As you can see from the below chart, there is a direct correlation between the economic freedom of a country and the prosperity it enjoys.  The 2008 index shows the United states in the “Free” category:

2010 finds the United States falling out of the top category of economically free countries, and even places her second in the North American region behind Canada.  This year’s score of 78, though high by global standards, is 2.7 points lower than last year, and bumps it to a second tier country of freedom.  The 2010 index is based on data covering the period from July 2008 to June 2009.

As the authors of the Index conclude, economies rated "free" or "mostly free" in the 2010 Index enjoy incomes that are more than three times the average levels in all other countries and more than 10 times higher than the incomes of "repressed economies."  Prosperity, the authors note, leads to higher literacy rates, access to education and longer life-expectancy.

In short, specific policy decisions positively or adversely affect an economy and the quality of life of its citizens.

Since the second half of 2008, the world economy has been undergoing a period of uncertainty and slowing economic growth.  While some have proclaimed the death of capitalism, the free market system has been incredibly resilient during 2009 and is now showing signs of an upturn.  Policy choices made during this critical juncture of the global recovery will undoubtedly shape the growth trajectory for the world economy in the years ahead.  Policy decisions made by global economic leaders will have have a profound effect on the world economy.

Many of the countries whose scores have dropped have responded to the economic crisis with policy moves that, whether intended or not, add up to a fundamental assault on the economic freedom of the people the represent.  The United States, for example, policies have included more intrusive regulations, government takeovers of businesses, government subsidies and bailouts of private firms, tax increases, and protectionist measures to reduce trade.  As a result, the Untied States Economic Freedom Index will surely continue to fall.  As the study shows, it will have an impact on America’s prosperity.

To score a higher Index,  a government can adopt free-market policies which create an environment that fosters economic growth and increases opportunities for all citizens.  Further, the government can reduce the tax burden, thus allowing its citizens to keep more of their hard-earned money and allow them to choose for themselves how, when and where to spend it.

The policies that result in a higher Freedom Index challenge the core beliefs of statists and populists on the left, who insist that certain countries are simply destined to remain in poverty because of the legacies of colonialism (or whatever their current excuse is).  If that were true, Hong Kong and Singapore obviously would not fare well at all, as both were once colonies in the British Empire.  The Index tells us a different story.

Economic freedom is crucial to increasing prosperity and creating jobs in the United States.  The tact of increasing government regulation, increasing taxes, coupled with the current uncertainty in the markets, discourage investment -- the key factor in creating jobs. 

The solution to creating more jobs and restoring economic growth lies with entrepreneurs and established businesses, not with government policy-makers.  The public sector has not and cannot  match the vitality of the private sector in promoting economic growth.  History has shown this to be true time and time again.  Governments, even those that promise change, are primarily agents of the status quo.  Real change happens when those outside the mainstream have the freedom and the resources to try new things.   Sapping the resources of these innovators will do nothing but slow the economic recovery and delay getting Americans back to work.

It’s clear that this administration will not enact policies that will work to increase our economic freedom index.  We can only hope that the 2010 election will provide a Congress with the power to prevent its further decline.

Fix Government Corruption – Give the Power Back to the People

Our political leaders keep telling us that the worst is over, financial conditions are improving and we are at the end of the recession.   And yet, their actions speak much louder than their words. 

The financial reform bill that the House of Representatives past last December  authorizes the Federal Reserve to shell out up to $4 trillion in emergency funding to big banks the next time the walls come crashing down. This action flies directly in the face of the assurances we keep hearing that the bailout spree is over. Obviously this isn’t the case, as Congress is laying the groundwork for the continuation of their unfettered spending spree

This horrendous bill is the brainchild of none other than Barney Frank, the ultra-liberal chairman of the House Financial Services Committee.  Believe it or not, this is the same Barney Frank who has been calling for tougher regulations of Wall Street and its practices.  And yet at the same time, this man is prepared to give the bankers unprecedented amounts of money. How can this be?

As we have seen time and time again (on both sides of the isle), if we want to understand why a politician takes the positions he does, all you have to do is follow the money.  Representative Frank is no exception.  Kevin Connor offers up my supporting data in a recent article.

Many people think that all we need to do in order to thwart this corruption is to pass some reform bill that would regulate how campaign donations are given and received.  I would argue that this is just a futile hope.  The past has seen many bills of this kind, but politicians have always found ways to bypass them.  After all, such bills are written and legislated by the very people whose conduct we seek to regulate. It doesn’t take a rocket scientist to see the failed logic here.  So, we can be pretty certain that any measures they propose will be weak and full of the loopholes they love.

Well, we could just vote the bums out.  That would fix it.  This too has been tried before, and always with the same result: Most of those who replace the bums eventually turn into bums themselves.  The 1994 election is a prime example.  That election saw the Gingrich Republicans ride a wave of disgust with congressional slight of hand and the Republicans took over Congress.  But not even a decade later, one could hardly tell the difference between the new boss and the old one.

The problem lies not in the fact that all our politicians are inherently corrupt before they leave for a career in Washington.  Surely not many travel to Washington hoping to end up as whores of special interests.  Human nature is such that only a few can resist for very long the perverse incentives of the corrupt system.

So how do we fix this problem?  I don’t want to be one of those people who just complain and capitulate to the fact that “that’s just the way it is”.  This is not how our country was founded, in fact, it was designed to protect us against this.  What went wrong?

I believe the problem lies in our voluntary relinquishment of our liberties.   We have granted Washington the ability to regulate almost every aspect of our lives.  This act in turn has invited two kinds of bribery, which in Washington-speak is called "campaign contributions."  The first kind of bribe is those given by groups and individuals who seek to escape onerous regulations that Congress is constantly threatening to impose.  Bribes of the second kind are made by those who wish to get their grubby hands on other people's wealth.  The latest financial reform bill is a blaring example of both kinds.  Bribed to the hilt, Frank concocted a bill that essentially gives Wall Street a free pass while authorizing immense amounts of money for the next emergency.

It is clear to me (as it was to our Founding Fathers) that the only way to get rid of this corruption is to deprive Congress of its vast regulatory powers.  There is truly no reason why politicians should administer any portion of the private sphere.  Finance, health care, energy, housing, and all the rest should be left wholly to the market.  The market will always delivers goods and services in the most economical and cost-efficient manner (that’s the way it’s designed).   Every time our elected officials decide to regulate, they only make matters worse.

It is not coincidental that those areas that are the most heavily regulated.  They are typically the most problem-ridden, have lots of money and thus provide the biggest “cash-cow”.   Their ability to control and regulate these sectors is the main source of their clout and cash.

To sum it up, if we want our lives back, we must strip politicians of that power.  We never should have given it to them in the first place.  America is now paying the price for losing sight of this country's founding principles and granting politicians extra-constitutional authorities under the foolish belief that they would solve all our problems.  That was obviously an unwise thing for us to do, because instead of the goodies they promised, they have delivered waste, fraud, abuse, theft, and corruption.

Technorati Tags: Corruption,Government,Liberty,Freedom,Stimulus,Financial Reform,Barney Frank,Abuse of Power

The Little Red Hen – Ronald Reagan Edition

Ronald Reagan was always known for his jokes and his ability to make people laugh. Its not that he wasn't a man of depth or that he didn't understand the seriousness of life. He had a lot of setbacks in his life. He just realized that nothing was accomplished by being a negative and unhappy person.
 
Those of you who remember President Reagan’s stories will really  appreciate this one.  He was most definitely a great story teller.  He loved America and spent his years trying to protect us against the evils of socialism and communism.  His stories were always entertaining, but almost always included some humor and of course a “moral to the story”.

If you don’t watch the video, at least read the transcript.  Enjoy.

Nobel Prize Winner Walesa Says: America is Heading Toward Socialism

Nobel Peace Prize winner and former president of Poland, Lech Walesa, warns that the world has “lost that hope” with which it once turned America has to America as a morale leader.

"The United States is only one superpower. Today they lead the world. Nobody has doubts about it - militarily," said Walesa via a translator. "They also lead economically, but they're getting weak.

"They don't lead morally and politically anymore. The world has no leadership," he continued. "The United States was always the last resort and hope for all other nations.
 
"There was the hope, whenever something was going wrong, one could count on the United States. Today, we lost that hope."

The MSM in Chicago largely ignored Walesa’s visit to their city last week to endorse a conservative Republican in the gubernatorial primary race.  Surprising since nearly 1 million people of Polish nationality live in Chicago. The Illinois governor’s seat is up for grabs in a special race since Democrat Rod Blagojevich was impeached last year for corruption.



When asked why he is supporting Adam Andrzejewski for governor,  President Walesa said  “I believe that our times require it.  We all see that systems are corrupt.  Formal activities in the backrooms, people see that.  People want more justice, people want more order.  This is what I see in Andrzejewski. This is why I support him”  Walesa went on to say ,“The world must coordinate it’s values. The world must be built on honesty.”

The United States has historically been that moral compass, Walesa’s words should make it clear that our compass is broke and leading us in the wrong direction.

When asked by Founding Bloggers if America is moving toward socialism.  Walesa responded,

“The government will waste all the money.  They just build a bureaucracy --a bureaucracy just to support itself.  So, we have to be very careful. We have to take care of ourselves, help one another.  If we don’t pay attention to bureaucracy, look for the financial waste.  It’s better when when the individual takes care of the defense of him or herself -- and, when individuals have the money to do it , they spend the money right.  We see the light twisting in America and we will not let you build communist here.”

Abraham Lincoln once said “My dream is of a place and a time where America will once again be seen as the last best hope of earth.” It appears the Lincoln’s dream could be dying as our founders vision is tossed aside in order to establish the type of government they attempted vehemently to protect us against.

I wouldn’t even try to say it better than the “Great Communicator'”. His words ring as true today as they did in 1964:

"You and I have a rendezvous with destiny. We will preserve for our children this, the last best hope of man on earth, or we will sentence them to take the first step into a thousand years of darkness. If we fail, at least let our children and our children's children say of us we justified our brief moment here. We did all that could be done.

Technorati Tags: Walesa,Socialism,Reagan,Lincoln,Andrzejewski,America,Moral Decay

Fix the US Educational System – Imperative for National Security

You don’t need to be a rocket scientist to figure out that our public educational system is failing to prepare our children to be the leaders of tomorrow.  I would argue that we are failing to prepare our children to deal with life’s challenges in general.

The national dropout rate is nearly 30 percent.  That to me is incredible and inexcusable. 

Even more inexcusable is that the dropout rates among African-Americans and Hispanics is nearly 50 percent.

Candidate Obama made education a key issue during the campaign, however with the current economic situation, it is easy to understand why the Administration and lawmakers are more focused on reviving the economy than education.  But if policy makers continue to ignore the simple fixes that could improve education, we could be headed to an even more perilous economic future in the decades to come.

The impact to the economy will be a direct result of our failure to produce enough scientists, engineers and mathematicians.  A Heritage Foundation report  titled "Improving U.S. Competitiveness" expounds:

"For years, the U.S.-dominated science and technology fields filed record numbers of patents, which in turn empowered its military and fueled its economy. But times are changing. China has gained ground in electrical engineering and computing."

Thus our educational shortcomings will ultimately threaten our national security.

So, what’s the answer?  How do we repair our broken educational system?  Well, unfortunately, the answer for many is to simply increase federal spending on education. This has been tried again and again, including last year when the so-called "stimulus" package doubled the Department of Education's budget, to no avail.

I believe the real problem is the opposition to reform and competition from so many entrenched special interests in the education sector. Teacher labor unions furiously oppose meaningful reforms that could increase competition.   These special interests have gained such power that meaningful change has become nearly impossible.

The key to restoring American competitiveness will be in not capitulating when these special interests oppose needed changes.  It is an imperative that we restore our educational system.

Our failure to prepare tomorrow's leaders in math and science is a threat to our country's global economic standing. For far too long, policy makers have turned a blind eye to our crumbling public education system. This is no longer exclusively an education issue -- this is now also a national security issue.  We owe it to our children to give them the tools they need to secure their future.  The past half decade has seen us fail, we cannot continue to let our children down.

Air America Ceases Broadcasting – Watch Out, Here Comes the “Fairness Doctrine”

After 6 years of lousy ratings, Liberal talk radio network Air America closes up shop.  The radio network that gave us renown personalities like Al Franken and Rachel Maddow is no more leaving 100 radio stations in the lurch.

The website blames a lousy economic environment (couldn’t be the subject matter, could it?) and takes credit for the “progressive revival”.  Kind of strange that in the midst of this revival the only viable “progressive” outlet can’t stay a float.

So, the question is… Will the Dems use this crisis to revive the push for the “Fairness Doctrine” or some form of it.  I would be willing to bet it’s coming soon.  Probably some back room bill they try to push through late on a Saturday night since that seems to be the pattern with unpopular legislation.