The Movement and Future Of Freedom

"If we are to succeed in the great struggle of ideas that is under way, we must first of all know what we believe.  We must also become clear in our own minds a to what it is that we want to preserve if we are to prevent ourselves from drifting."  From the introduction to F.A. Hayek's The Constitution of Liberty

Hayek wrote these words in 1960.  He wrote Constitution in the United States, his last place of residence preceded by two decades in Great Britain and a youth and life in his native Austria.

He also dedicated the book to the following:

"To the unknown civilization that is growing in America."

Reading the introduction in light of the current place and future of freedom in America places significance on this otherwise enigmatic dedication.

What civilization, in 1960, was growing in America?  Given Hayek wrote Constitution, an exhaustive and "ambitious and perhaps presumptuous task of approaching [economic problems] through a comprehensive restatement of the basic principles of freedom" (his words), he saw both the danger and potential for American life.

Would American civilization build on the basic principles of freedom and thus continue on the path of prosperity and civilized progress, or would it abandon the genesis of its prosperity and greatness, freedom, and give over to the collectivist and socialist siren call like so many erstwhile free and prosperous countries in the West?

Since 1960 we can fairly say the pendulum has swung significantly to and fro.  JFK boasted the virtue of income tax relief, that Americans are due to keep more of the fruits of their labor.  This was an encouraging step forward since he was the first Democrat to occupy the Oval Office since Truman, a New Deal hanger-on.   LBJ, though, had his turn at accelerating the welfare state by initiating a flurry of redistributionist legislation, Medicare, Medicaid, and the like.

Things again looked up with the election of Nixon, at least a vocal devotee of limited government and freedom.  Things soon looked dour, however, as this Republican imposed wage and price controls onto the market, signed into law the creation of the EPA, drummed up an ill-guided and wasteful War on Drugs, and told Congress, "I am a Keynesian now."

Then there was Carter, faithful to the welfare state.  Then Reagan, bringing a renewed faith in America and freedom, but not enough so to put freedom at the fore of American political and social life.

Bush 41 made little mark, then Democrat Clinton made the tremendous declaration in his 1996 State of the Union Address, "The era of big government is over." 

Whoa.  That sounds like a major shift in favor of freedom.

But, alas, it was not, and the era of big government is with us and growing.  The Republicans who looked to reorient the political cosmos of The Beltway with their Contract With America proved only to tease the public with promises of a return to a freer country.  They did achieve welfare reforem but he best they could muster for the 1996 election was Bob Dole, not exactly a proponent of reigning in government spending and its influence in our lives, as his career in the senate proves.

So we trotted along, not fully devoting ourselves to an outright redistributionist regime, nor reinvigorating a fidelity to freedom by pulling back the tentacles of government overreach in our lives and property.

It seems appropriate, then, that Bush II was the successor of this political double-mindedness.   Galloping into town the champion of limited government and less spending, he jetted out of town leaving a 60% increase in federal spending, coming in just under LBJ's 66% increase.  He also set the table for our current bailout mania and pushed through the trillion dollar TARP.

And now we have 19 months of Obama and a Democrat Congress under our belts.  Looking back on the last Democrat president's statement about the end of big government, that seems like a headline right off The Onion.

So what is the "unknown civilization" in America?  Are we fully culminating in a society that embraces or rejects individual freedom?

Taking a step back to survey the wider social landscape in America, it cannot be said America is embracing collectivism.  Watching elites trying to annex America to western Europe is like watching an irrationally resolute infant trying to cram a round peg into a square hole; it can be done but not without coercion and an ugly fit.  And it just begs the adult in the room to set it right.

True, we've witnessed vast new growth of government, most notably the groundwork for government run health care being set.  True, the supposed opposition party to this agenda has not given the voting public any reason to vote for them other that "we're not them."

But also true is the continuing grassroots resistance to government growth, spending, and redistribution.  The larger the push for concentration of power in government and less freedom, the bigger the social push-back has been.  Largely viewed as the Tea Party movement, such resistance has only gained momentum and influence since it began in the spring of 2009.  Primary candidates, for example, with Tea Party backing are having success.

The movement's basic message is an insistence on limited government, fiscal restraint, and a return to a freer and prosperous society.  (See the Contract From America)

The concomitant, and thus greatly encouraging, revival of interest in the Constitution, American history, basic rights, and reading of the books that explain, defend, and promote freedom is a social indicator that we are meeting Hayek's concern to know what it is we are preserving, and that we are not drifting.

Interest in freedom has been awakened, revived, and set anew.  There is a movement afoot, and it is not restricted to organized protests and rallies.  It has moved to living rooms and kitchen tables and pubs and water coolers (or on both sides of filtered water bottles, at least).

The historical record of the political parties is clear enough: we cannot and should not place our hope in them.  They must be made to listen to the freedom movement and act accordingly.

Echoes appear and disappear in direct proportion to how long and how strong the voices are that create them.  Eventually, public opinion echoes in the halls of legislatures, but only if the voices creating them remain consistent and strong.

A movement based on the principles of freedom can create those echoes and bring about a policy of freedom.

And that's the policy befitting a free civilization.

Ignorance is Bliss: Knowledge, Progress, and Freedom

"All political theories assume, of course, that most individuals are very ignorant.  Those who plead for liberty differ from the rest in that they include among the ignorant themselves as well as the wisest."  F.A. Hayek, The Constitution of Liberty

It seems counter-intuitive to suggest that the preservation and progress of civilization depends on a great amount of ignorance.

But it does.

As Hayek points out in chapter two of Constitution, The Creative Powers of A Free Civilization, societies should take seriously the Socratic admonition that ignorance is the beginning of wisdom.  Doing so leads to the practical conclusion that freedom in society is the genesis of the advances in civilization we've come to take for granted.  Freedom is also the best policy to ensure we preserve the progress already made and continue to progress and flourish.

For an individual to take the Socratic approach to wisdom, he or she recognizes they are ignorant about a great deal of life and do not presume to act upon knowledge they do not have. "I know what I do not know" is an excellent way to walk a path to greater understanding and avoid the trappings that await those less humbled by their ignorance. 

As a society, it would greatly behoove us to admit so much and recognize that civilization has not made advances through carefully planned strategies and some guiding hand of experts endowed with accumulated knowledge.  Believing so leads to the erroneous conclusion that there is a fixed amount of ignorance that can be conquered with the advance of science and that human activity can, and should, be efficiently arranged and ordered, and that society should be less free to go about in an uncoordinated way pursing respective self-interests through competitive capitalism. 

Hayek reminds us:

"It is for this reason that those intoxicated by the advance of knowledge so often become the enemies of freedom." 

Even a cursory view of the brutal totalitarian regimes of the twentieth-century are chilling historical testaments to the lengths to which such intoxication can lead.

Individually we benefit a great deal from the workings and knowledge of countless other individuals in society.  I, for instance, am very much ignorant as to exactly how the bag of coffee beans I conveniently bought two miles from my home arrived there for me to purchase.  How were they harvested, roasted, packed, shipped, distributed, trucked, promoted, sold, bought, arranged, etc., etc., etc.?  And how does every business involved in this process operate, and how many other businesses and people are involved in how they respectively operate?

I don't know. 

But I ignorantly bought and enjoyed he beans anyway, all because many, many people out there in society are individually pursing their own self interests and utilizing the knowledge they have and I do not.  Multiply that one bag of coffee beans and the many people it required to deliver it to a shelf two miles from my house by the countless goods and services and countless more people and respective knowledge it requires to provide the current high standard of living for 300+ million Americans enjoy.

That is a lot of individual, respective knowledge spread out over a lot of people, and that equals a lot of collective ignorance as to how society has generated the advances we have come to take for granted.

What central board of experts could possibly command so much information?  What person could possibly control just coffee beans?

Hence embracing ignorance and allowing for a maximum amount of liberty in society is the only way to preserve and ensure progress:

"Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen."

Accidents are things we do not and cannot plan for.  They are unseen and result in spite of our most carefully arranged plans.  In a free society, these accidents are the discoveries and advances of civilization that government interferences, dictates, and regulations did not and cannot ever plan for.   

As we face a future where our health care and personal property are headed for increased control by the federal government, it would be best to remind ourselves and Capital Hill there is a lot they do not know and a lot we know individually about what's best for our own health, lives, retirements, etc.  Greater restrictions on our freedom to maintain the health of our bodies and the fruits of our labors would be societal regress, not progress consistent with the preservation of civilization.

If government is limited according to how much it does not know, and we are free order the welfare of our lives, we can confidently proclaim that ignorance, in this context, is a good thing.

You might even say it is bliss.

Liberals, Now and Then, Continued

I've been perusing the net for appropriate videos to follow up the last Chalk Talk.  I have not found exactly what I was looking for.  The video below is brief and is accompanied with thrasher-metal music, but it touches on the topic.

I am looking for video material that focuses on the switch in the term "liberal," occurring during the progressive era prior to the New Deal.  Essentially, progressives took ownership of the the term "liberal" and applied to it the opposite of it meaning: a focus on the primacy of the individual, free trade, free markets, and limitations and decentralization of government power.  There is some reading in Freedom 101 about this switch, but I wanted to pull in some outside material.

Recommendations are always welcome!

Back to the video.  Disclaimer: I don't know what the author of this video is all about, I am simply interested in the part of his video that hinges on the switch in the understanding of the term "liberal."  The author suggests "taking back" the term.  Presently, I do not use "liberal" to describe policies that mean their opposite, nor do I use the term to apply to myself.  Maybe I will in the right circumstance and stir up a good conversation.

Liberalism, Now and Then

Liberal and conservative, Left and Right, Republican and Democrat, Libertarians, Progressives, Klingons, Druids, Hobbits....

What do all the labels mean?

Presently the term "liberalism" is a generic description of a preference of government-run solutions to problems, real and contrived. Government-run health care, for example, is the solution to health care costs and inefficiencies. Government is the primary answer to most any question of policy and social issues. Liberal policies, therefore, are those that place primary importance of government power, government growth, and government involvement in more and more of the lives of Americans.

This wasn't always what a good liberal preferred.

“Classical Liberalism” was a movement of the 18th and early 19th centuries that stressed the primacy of the individual over the state and individual rights secured through limiting the power of  government.  Competitive free market capitalism and free international trade was the economical fruition of this thought, acknowledging that social welfare and advances in living standards come from freedom in the marketplace, not the dictates of central governments. Furthermore, international peace, it was argued, was more probable through free trade among peoples of respective nations, therefore punitive tariffs damaged whatever degree of both domestic and international tranquility that could otherwise be attained in an imperfect world.

The Founding Fathers are widely viewed as classic liberals.  The Constitution, with its limitations on government powers and protections of individual rights, fits the description quite well.  Also, the Declaration of Independence, our founding document, states in assertively plain terms a clearly classically liberal view of man, government, and justice. Jefferson’s Declaration—with its insistence that governments derive their legitimate powers from the consent of the people—reads like a footnote to John Locke’s Second Treatise, is another lodestar of classic liberalism.

The term, liberal in today’s sense means the opposite of what it originally meant. Modern defenders and apologists for classical liberalism such as Milton Friedman refused to relinquish the title liberal.  From Capitalism and Freedom:

"In the name of welfare and equality, the twentieth-century liberal has come to favor a revival of the very policies of state intervention and paternalism against which classical liberalism fought.  In the very act of turning the clock back to seventeenth-century mercantilism, he is fond of castigating true liberals as reactionary!" [Emphasis added.]

Ludwig Von Mises, in the introduction to the English version of his book, Liberalism: The Classical Tradition,  explains that liberalism today means the opposite of the liberalism he is setting forth to defend:

"In England the term 'liberal' is mostly used to signify a program that only in details differs from the totalitarianism of the socialists.  In the United States 'liberal' means today a set of ideas and political postulates that in every regard are the opposite of all that liberalism meant to the preceding generations."  

So here comes the skull cramp: Roundly speaking, people today identified with "conservatism" are actually trying to conserve liberalism.  Conserve liberalism, there you go. 

Today’s conservatives believe, generally, in the primacy of the individual, individual freedom, and free markets.  They are suspicious of government activities beyond national defense and the judicial system, and stress the importance of constitutional limits on government power. 

Today’s liberals believe in further government intrusion in the market place, in the affairs of our lives, believe elites in powerful positions are better equipped to order society and our lives than individuals bandying about, willy nilly, in an unplanned free market environment.

How did the term "liberal" come to be interchanged with the opposite of its true meaning?

Discussing that question helps us understand much of the political rhetoric that fills the news.  And that we will save for the next Chalk Talk. 

And then there are the terms "progressive" and "libertarian"...

"Nobody Knows"

Barney Frank is right. It was "dumb" to believe a handful of people could predict the unemployment rate. (Click here for the video of the entire interview. The "dumb" remark begins at the 3:20 mark)

If only the chairman of the House Financial Services Committee would exercise that bit of economic humility every time he and his colleagues attempt, and continue to attempt, to legislate the economy into the image of their choosing.

"In the first place, nobody knows..." (Emphasis added.) Now that Mr. Frank realizes the futility of predicting unemployment rates, let's hope he realizes the futility of controlling the economy in general.

Historians and economists who take history and the lessons of basic economics seriously take considerable time trying to convince us that "nobody knows" enough information to command and control economies. The lesson of history is this: Since there has never been a person or group of experts endowed with both the intellectual powers and angelic nature it would require to wisely and justly plan the choices before millions of people seeking to buy, produce, and create wealth, the market is better left unplanned by central authorities, politicians, and bureaucrats.

When politicians take it upon themselves to order the economy through excessive regulation and historically short-sighted legislation, consumers and producers in society (the rest of us) become less free to interact in our respective self-interests. When this happens the overall productivity and dynamics of the market suffer because the capital in the market is not efficiently directed where it should be.

Thomas Sowell reminds us: "The efficient allocation of scarce resources which have alternative uses is not just an abstract notion of economists. It determines how well or how badly millions of people live." (Basic Economics: A Citizen's Guide To The Economy)

Who, then, "knows"? Who is capable of making these decisions that determine the material welfare of millions of people?

You know. You neighbor knows.  That cousin whose name you cannot remember when you see him every seven years at a family reunion knows. We, the market, know best.

When politicians express no confidence in the "private sector" or "the market" and attempt to regulate the economy in the direction of their choosing, they are presuming to have the knowledge it requires to do so; they are distrusting We The People of The Market with the freedom it requires to function a diverse market economy.

True, "nobody knows" what the unemployment rate will be in six months, but somebody does know how to run the market. And that somebody is us, uncoordinated and pursuing our respective self interests, not a group of preening economic divines inside the Beltway.

In his classic work, The Road To Serfdom,  F.A. Hayek carefully explains that the central characteristic of the authoritarian regimes of twentieth-century Europe was an outright rejection of the unplanned, free market activities of nineteenth-century classical liberalism.  This authoritarianism resulted from the desire to move all decision-making of the market to government central planning boards.

(Hayek also wrote a book devoted solely to the fallacy of central planning by a group of elites, properly titled, The Fatal Conceit) 

In chapter 5, Planning and Democracy, Hayek explains:

“That our present society lacks such ‘conscious’ direction toward a single aim, that its activities are guided by the whims and fancies of irresponsible individuals, has always been one of the main complaints of its socialist critics.”

The more our "whims and fancies"--freedom, that is---annoys the elites in Washington, the better.  The more they act on their annoyance, the worse off we become, materially and politically.

The more of the economy that is diminished by government control, the less free we are as the market to determine our respective welfare. And the less free we are individually, the less prosperous we become as a society.

This much history tells us, and this much we know.  Acting contrary to this knowledge would be just plain "dumb."

Video: Free Market v/s Political Distribution

In this video clip from Freedom Watch, Judge Napolitano and Walter E. Williams discuss how the free market provides for the needs of society versus how government distributes provisions to society.



At the 5:18 mark the Judge summarizes the fundamental difference in how the market produces wealth and how government consumes wealth; how producers seeking profit must please the wants of the voluntarily consuming public and how government needs not care about the wishes of the public as it has the "bottomless pit" of tax payer funds at its disposal.

We would hasten to add that profits, in a free market uncorrupted by government-enforced monopolies formed through subsidies and burdensome regulations, are secured by pleasing consumers through voluntary cooperation and free exchange.  Government distribution of property occurs without the consent of the taxpayer.

Williams calls this the "morality of the market."

These points are also detailed in Ludwig von Mises' book The Anticapitalistic Mentality, wherein he explains that free market exchange (what we call capitalism) turned masses of serfs and slaves into the buying public for whom profit-seeking businesses seek to please.

Williams comments on the concept of one dollar one vote.  Mises calls the serfs-turned-consumers through freedom in the market the "sovereign consumer."  When the market is free to provide for the wants and needs of public, consumers vote every day millions of times a day with their dollars.

As opposed to politicians, profit seekers must be reelected every day.  With every transaction,the market pleases every consumer; every vote cast with a dollar brings to the consumer what the consumer desires.  Political elections yield to the general desires of the majority, leaving the minority's wishes unfulfilled.

Reducing freedom in the market equals disenfranchising the consumer.

A Book Recommendation, and A Lesson

Below is a book written by Thomas DiLorenzo, one that will indeed go to Book Reports and be used in future Chalk Talk and In Real Time posts:

How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present
This book is an excellent resource on the real economic history of America.  DiLorenzo communicates the basic principles of real free market capitalism--what it is and what it is not--and how it has unfolded in American history, from the Pilgrims to the Great Depression to the present.  He does a very good job of separating the real workings of capitalism and historical fact from the fables and myths that pollute the education system and common public discourse.

DiLorenzo writes crisply and persuasively, sparing those of us without PhDs in economics the graphs and jargon we often associate with economics.  Without reservation I recommend this book to elevate your appreciation of American history and to better understand the impact of today's government policies.

For this Chalk Talk we will pluck one lesson from DiLorenzo's book: Correctly remembering Herbert Hoover and the Great Depression.  (Chapter nine is titled, Did Capitalism Cause the Great Depression?)

This was the topic of a past Chalk Talk, quoted in part here:

"What is the standard public perception of President Herbert Hoover and the Great Depression? Is runs something like this:

'President Hoover deserves the blame for the Great Depression because he did
nothing while the country fell deeper into economic misery. He favored laissez-faire economics and refused to use the government to intervene in the economy, leading to higher unemployment and a deepening of the depression. It required the interventionalist policies of President FDR to recover the economy and save capitalism.'

None of the Hoover-was-doggedly-laissez-faire lore is true. The general script on Hoover is part of the fable that plagues the history of the Great Depression. Revisiting the historical record sheds truth on the matter and gives us deeper insight into what did actually cause the Depression to be so Great.

In truth Hoover deserves blame for the depression because he intervened too much and set the table fore the hyper interventionalism and meddling of the New Deal.

Hoover was a interventionalist across the board. He was anything but a proponent of "laissez-faire" economics. To that point in history (1929-1932) Hoover set all the records in relation to government intervention in the economy, only to be eclipsed by the dizzying manipulation of the market by his successor, FDR.

Here are some examples, from an excellent book on economic history, How Capitalism Saved America, by Thomas J. DiLorenzo. (When I finish reading the book I will submit it to Book Reports.)

• As Commerce Secretary under President Coolidge, Hoover disliked open competition in the market and favored government-sponsored competition, calling it "cooperative competition." This laid the groundwork for FDR's National Industrial Recovery Act and the National Recovery Association, a noxious system whereby businesses were forbidden from competing below price levels. Policies were set by business cartels supervised by government, and enforcement was provided by the government.

• As president he pushed for and signed the Smoot-Hartley tariff act. This high tariff cut off trade with consumers around the world, set off retaliatory tariffs from other countries, and greatly depressed domestic production of agricultural and manufacturing goods.

• Hoover was an enthusiastic proponent of public works. As DiLorenzo points out, by 1931 (FDR was not president until 1933) total government expenditures on public works was as high as any other year in the decade! This is astounding when we consider the millions FDR put on the public payroll with his myriad of works programs. Hoover also encouraged state governments to increase spending on public works.

• By 1931 Hoover's spending created a $2 billion deficit.

• He pushed through the largest tax increase in history, to that point in time. Income, corporate, surcharges, estate, and gift taxes all went up.

• Hoover created the Agricultural Marketing Act, creating another government-created cartel of large corporate interests in the form of the Federal Farm Board. This board colluded production interests that reduced production and drove up prices of agricultural goods. This was the predecessor of FDR's Agricultural Adjustment Act.

• He created the Reconstruction Finance Corporation (RFC). This board used tax payer funds to prop up uncreditworthy with credit, leading to the watering down of free market pressures and forces in lending and finance. This effectively steered capital investment away from productive ventures and job-creating businesses, skewing the market and depressing wealth creation and, therefore, job creation.

Decidedly not laissez-faire, all.

And all these gross interferences in the market occurred during the depression, paving the way for the Great Depression:

• When the market needed more freedom, not less, to create wealth and jobs, Hoover intervened.

• When people needed to save more of their own property in the form of savings, Hoover increased taxes.

• When entrepreneurs and businesses needed more certainty in the market in order to invest and plan for the future, Hoover rocked the boat with interventionalism.

• And when the country could least afford deficit spending, Hoover piled it on.

Setting the record straight on Hoover sheds much light on the actual causes of the Great Depression.  Capitalism---true, free market capitalism free from government collusion and manipulation---did not cause the Depression.  Excessive government meddling did.  That is, making the market less free, not more free, during the Hoover administration kept the economy down and set the table for more than a decade of economic misery during the New Deal.

Freedom works.  Government central planning does not.  Hoover proved so much.

And Thomas DiLorenzo reminds us so much.