A Word From Our Founder About Free Market Public Policy
My involvement in public policy has nothing to do with politics, parties, or political personalities. In fact, I generally abhor the nation’s fascination with politicians and I find politics generally a bore. I don’t engage in political activities or partisan theatre. What I am interested in are philosophies and principles of government. These ideas of government are the foundational elements - the building blocks - essential to good public policy. Good policy leads to positive outcomes for all citizens. And freedom - and the freedom to choose - are indispensable to a thriving nation. Within that system, we must have a robust, growing economy. I believe a free market economy is the best way to provide the opportunity for human flourishing for every American.
At the core of the system for government that our founders outlined in the Declaration of Independence and U.S. Constitution is the idea that every citizen has equal value and thus equal protection under the law. And as American citizens, we inherit certain rights that are inalienable, such as the right to life, liberty, and property. These rights are what John Locke referred to as natural rights. We were born with them; they were not granted to us by a government. In fact, at its core, the main purpose of government is to protect and secure those rights. These ideas are not uniquely American. We adopted these ideas from philosophers, thinkers, and writers from England and Scotland. What is unique is the way the Founders organized our government and the way America has executed on these ideas over almost 250 years.
The U. S. system of government was designed with with very specific limiting principles. Because our Founders studied the history of civilizations and governments, they understood the inherit tendency of governments to grow in power and size. As government grows, individual liberty shrinks. As a way to combat government’s tendency to diminish the freedoms and choices of its citizens, we adopted a representative, federalist, republic system - giving power to government closest to the citizens and specifically limiting the concentration of power into a centralized government. We also adopted a further limiting system of balancing the powers we did give to government by establishing three co-equal branches of government: the legislative; the executive; and the judicial. This diffusing of power created a way to ensure the people were in charge of their government and elected representatives were accountable to their constituents.
What is described above in three paragraphs is the genius of an American government that has been the envy of the world for two centuries. That is not to say that America has been perfect. It has not. No government is perfect because no person is and a properly functioning government is only reflective of its citizens. We’re all a work in progress and constantly failing to live up to our potential completely. But what we have done is continually improve, correct, and rededicate ourselves to the founding principles. That is unquestioned for anyone who has taken the time to look at the data. In almost every measure, Americans of all ethnicity, race, and sex are wealthier and healthier than ever. Despite what we see on television or read in splashy headlines, citizens in the USA have more money, greater freedom, more opportunity, and live longer lives than ever. I believe the biggest reason for this is our adoption of free markets.
The economic system that has led to the reduction or eradication of poverty around the globe has been capitalism. At its core, capitalism is a system whereby individuals and companies compete with each other in an attempt to solve problems for consumers. It is a system built on consumer choice for products and services; not on coercion. In a free market - where competition and choice reign - companies cannot exploit workers or produce poor products because the market will punish them. Workers will go to competitors if they are treated unfairly and customers will go to the competition to seek better value for their consumption. When left untrammeled by government, free markets force continual improvement. It is only when government begins to overly regulate markets or inserts itself into the market by choosing the winners and losers that we see markets stop improving.
For more than three-fourths of a century, we’ve been moving away from capitalism and into its lesser siblings of cronyism and corporatism. As the federal and state governments have grown into bigger and more centralized authorities, they have become more involved in regulated business on the one hand and promoting certain business on the other. Such changes have demonstrably benefited the largest companies and weakened the smallest. When government starts promoting certain businesses in an attempt to help the economy, we begin to seriously tilt the economy towards the most well-funded and the most well-connected. This is dangerous for many reasons. Such a system rewards lobbying and political connections and diminishes innovation and research & development. It makes it more difficult for early stage companies to get to market. That’s a major problem when you consider that most of the game-changing innovations are generated by entrepreneurs, start-ups, and early stage companies. To put it into perspective, consider that the U.S. Federal Government is now spending roughly $2 trillion annually on administrative regulations that never go through Congress, which is the law-making branch of government. Yet, these regulations carry the same weight as laws passed by the legislative branch. Why is this dangerous?
When we centralize decision-making and expect a federal bureaucracy or central executive to be able to understand an inherently complex market - consisting of over 330 million consumers - we run the risk of mistakes costing us billons and trillions. When we run experiments and test ideas on a small scale, we reduce the risk of a very expensive mistake. If assumptions are discovered to be wrong, adjustment can be made without catastrophic effects. Watch most early-stage or start-up companies. They constantly fail and adjust at a small scale until they find the calculus that can then be leveraged at scale. We should run our government in the same way. If the assumptions of our federal government are discovered to be wrong (and there is a lot of evidence that happens), the results can be catastrophic because the federal government operates on a massive, central scale. This is why we should want our governments to focus on what they do really well and stay out of the things they do not. The federal government should protect our rights, intervene when someone is harming another citizen or taking his possessions, manage immigration and customs, defend the nation from enemies, regulate interstate commerce, negotiate free and fair trade policies with our allies, and otherwise leave the rest of it to the states and the private institutions of local schools, churches, nonprofits, neighborhoods, families, and businesses. These private institutions have done more to help real people in their communities than any government program ever will.
If we really love our fellow man and want to give him/her the best opportunity to flourish, we’ll do whatever we can to keep our governments limited and our markets free.