A Voice in the Wilderness In Defense of "Mere Conservatism"

The Economics of Mere Conservatism: Part II

by: R.J. Moeller

Economic freedom is an essential requisite for political freedom.  By enabling people to cooperate with one another without coercion or central direction, it reduces the area over which political power is exercised.  In addition, by dispersing power, the free market provides an offset to whatever concentration of political power may arise.  The combination of economic and political power in the same hands is a sure recipe for tyranny.

–Milton Friedman, Free To Choose

Let’s not kid ourselves: Everyone has an opinion on the matters that matter most.  Despite the pervasive lack of understanding in this country about even the most basic economic terms and concepts, I’d love for someone to try and convince me that economic matters – your job, income, investments, personal property, charitable donations, and taxes – don’t matter a great deal to every Tom, Dick, Harry and Sally in your neighborhood.

Of course they matter.  They matter more than almost anything else.

Contrary to the caricature perpetrated, it’s not only “greedy” conservatives and Republicans who are interested in how goods, services, and taxes are saved, spent, regulated and collected.  In fact, the exact opposite is true: modern American liberals and progressives fervently believe that economic issues are the most important factors to consider in nearly every single political, cultural, and moral decision a country makes.

But where the Left relies upon flawed ideology and fickle emotional pleas to make their case for top-down socialism and the systematic re-distribution of wealth, those of us who champion personal liberty, free enterprise and property rights stand on the firm ground of quantifiable facts, recorded history, Judeo-Christian teachings, and common sense. There is, of course, an emotional aspect to the “case for free market conservatism”, but it is a thin layer of topsoil above deep bedrock of truth, wisdom, and experience.

If you haven’t already, you should be asking yourself, “How is it then that liberalism, and progressive economic policies, so dominate the national consciousness?”

Dr. Thomas Sowell of Stanford University’s Hoover Institution believes the answer is fairly simple: because the Left believes so deeply in having the government “fix” things, their solutions are always political and political solutions are much more glamorous and get much more attention from a complicit media (and academia).  The Right believes in personal responsibility, free market competition, and limited government.  Not very sexy.

You won’t see George Clooney starring in an Oscar contending film about a hard-working, God-fearing businessman who just wants to live within his family’s budget and appreciates the freedoms his forefathers procured for him.

As Sowell puts it in his book Applied Economics: Thinking Beyond Stage One: Politics offers attractive solutions but economics can offer only trade-offs…Economics cannot answer all of your questions.  It can only make you aware of the need to ask them.

Well, fortunately for us, mankind has been asking economic questions for millennia, and those interested enough to seek for answers (and wise enough to discern them) have found many unavoidable truths.  The United States of America, blessedly, has applied some of the best of those answers and truths in its on-going attempt to “form a more perfect union.”  Last week in The Economics of Mere Conservatism: Part 1, I teased six of the most important answers (scarcity, property rights, division of labor, competition, rule of law, and a need for religion and morality among the citizenry).  We have succeeded where others have failed because of these things.

Today we move from the birds-eye view of Economics in Part I and descend to the on-the-ground facts that ground free enterprise in reality instead of just theory; truth instead of emotion.

What follows are brief descriptions of the six things you must know, and be able to explain, should you hope to identify yourself as a proponent of the free market system that has enabled the United States of America to become the freest, most prosperous civilization in the history of the planet.

1. Scarcity- We live in a finite world.  There is only so much of everything.  This doesn’t simply pertain to oil or diamonds or beach-front property or even Kanye West’s talents.  There are only so many hours in the days, people who can drive a 3-wood (and Cadillac SUV) like Tiger Woods, and jobs you can work at the same time.  There are only so many people born to rich families who waste their un-deserved good luck, just as not everyone born into poverty overcomes great odds to play a piano like Ray Charles.

The miraculous nature of the human mind is such that we can apply our Creator-endowed talents to natural resources in order to produce many things that we would otherwise be lacking.  But even to what we produce or engineer there is a limit to the amount of money we have to use to buy all of those equally limited goods or services.

Because scarcity is a reality, the world we live in is a world of trade-offs.  This means decision-making abilities are paramount, and experience, although not infallible, becomes a prized asset.  We all have to make value judgments every day about which products we want/need to buy, how much we will work, where we will live, and whom we will give charity to.

Some Left-of-Center ideologies would prefer to make most of your decisions for you, but then a society quickly learns how scarce things like freedom and liberty are in this world.

2. Private Property (Property Rights)- The term “private property” can conjure up images of a foreboding “No Trespassing” sign in a Scooby-Doo cartoon.  In a sense, this is completely fair and accurate, for “private property” essentially means that an individual owns something to the exclusivity of others.  Or in other words, it’s yours and no one else has claim to it unless you say so.  (So stay out, you meddling kids.) The alternative to being able to (legally) own something that someone else cannot take or use without your consent is tyranny.  It is collectivism, socialism, and communism.

Despite admittedly boiling down centuries of meaningful thought and discourse on the matter, so much of the modern disagreement over the importance of “private property” can be explained by the differences in worldview between two particular people: the Brit John Locke (17^th century) and the Frenchman Jean-Jacques Rousseau (18^th century).

The constitutional and cultural fascination with personal freedom and liberty that is uniquely American comes from the school of Locke.  Building upon the Judeo-Christian belief that man is created “in God’s image”, Locke maintained that while we all enter the world with the same “natural rights”, the individual could (and should) claim ownership over something as simple as a piece of fruit they themselves climbed a tree to pick.

In his Second Treatise on Government, Locke states:

God gave the world to men in common; but since he gave it them for their benefit, and the greatest conveniences of life they were capable to draw from it, it cannot be supposed He meant it should always remain common and uncultivated.  He gave it to the use of the industrious and rational, and labor was to be his title to it.

This is a very basic and simple concept: If a man works, he should be compensated.  If he buys, he should own.  If he owns, then someone else cannot take.

But some are not happy with that kind of set-up.  Jean-Jaques Rousseau did not care for the accent mark of mankind’s history to be put over the individual and his or her rights.  Rousseau believed that in order for a society to truly progress, individuals needed to forfeit their claims to natural rights, individual liberty, and the entire concept of private property.  He taught that man derived his purpose from the collective.

From this type of thinking we get socialism, Marxism, and leaders like Hugo Chavez.

Private property, and the property rights that logically spring forth from it, is the basis of economic, political, and religious freedom.  It gives the individual a vested interest, a meaningful stake, in the world, nation, state, town, and neighborhood around him.  It creates incentives to work harder, save more, and spend wisely.  To deny that human beings are hard-wired to respond to incentives is counter-intuitive and a key reason for why Left-of-Center thinking is inherently flawed.

3. Division of Labor- In the past, a farmer and his family would have to produce for themselves nearly everything they needed to survive.  Other than the occasional 4-mile horseback ride to borrow a cup of sugar from the neighboring farm to make those Johnny Cakes your brother Zebedee loved so very much, families relied on what they could make or grow, and the lack of technology, transportation, and communication prevented Americans from effectively maximizing their time, resources and talents.

Whereas Joe, Jim, and Jack used to have to each grow their own corn, milk their own cows, and raise their own hogs for bacon, it became more sensible (and cost effective) for Joe (who lived for tilling the fields) to grow corn, and Jim (who raved about his cows) to focus on dairy-related products, and Jack (who never met a BLT he didn’t love) to raise himself some pigs.  That is “Division of Labor”, or "specialization", in a nutshell.

I think it is fairly obvious how much more effective and productive this way of doing things is as compared to the “self-sufficient” farms of centuries past, or the centrally-controlled planning systems of Soviet Russia, but I’m not sure most people appreciate just how important Division of Labor is to their own lives.  Although not everyone gets the job of their dreams (see: scarcity), the fact that human beings can even theoretically pursue the career they want is a direct result of the fact that you do not have to churn your own I Can’t Believe It’s Not Butter or extract the Guava for your herbal shampoo.  Think about it.  I barely tolerate having to dress myself in the morning.  I cherish Division of Labor.

4. Competition- When you combine scarcity with property rights and division of labor you eventually arrive at “Competition.”  When a man decides to become a dentist, he has chosen a profession that will require him to be reliant upon other people to produce his food, clothes, and shelter (Division of Labor).  The dentist is able to purchase the goods and services he wants and needs because the fruits of his labor (i.e. clean teeth, root canals, etc.) were rewarded with compensation from his patients and he has exclusive claim to said compensation (Property Rights).  His patients came to him because there are only so many people who choose to be dentists (Scarcity).

But while there are many dentists listed in the Yellow Pages, his patients chose his office because he was either better or cheaper than the dentist down the street.  This is Competition.  It is as natural as fish in water or syringes in Mark McGwire’s back-side.  Competition breeds invention and innovation.  Competition, in its proper legal and moral context (more on this in a second), is necessary for human beings to achieve their full potential in the marketplace of goods, services, and ideas.  Please understand that I’m not advocating the “Gordon Gekko” cut-throat, self-indulgent caricature of competition that unfortunately exists in any system that offers personal freedom.

Competition is what makes sports worth watching.  It’s what spurs bio-chemists to create a life-saving medicine quicker than the “other guy.”  It’s what keeps people on their toes and from growing complacent and indifferent in their work (a hallmark of communist societies).  If everyone won, if the entire world was run like a grade school’s Field Day Awards Ceremony, you can rest assured you wouldn’t be reading this essay on your iPhone right now.

But there is an even more important benefit of competition to consider: de-centralization of power.  People hate monopolies in business, but often don’t know why.  The reason monopolies are almost always a bad thing is because they leave the consumer with no options or recourse if they are unsatisfied with the good or service the monopoly provides.  The same idea rings true in terms of how powerful a government becomes.  When everyone is an employee of the “State”, when a federal government knows the people have to come to them for everything, freedom disintegrates.

5. Rule of Law- Without law and order, economics, like most everything else in a society, is chaos.  If I cannot trust that the local government will do what it can to protect me from burglars, my habits will change (or my address will).  If I cannot trust the state government to enforce the laws the legislature has voted into law, I have no way to gauge the impact zoning laws will have on my business.  If the federal government cannot be trusted to protect me from foreign invaders, I will spend less time working and more time at a target practice range.

Private property is meaningless if it cannot be protected and legally enforced and recognized.  If I produce pencils in my factory, but I cannot rely on the government to enforce a broken contract between me and my lumber supplier, I will not keep the factory open and all my employees lose their job.  If I invest my money in an institution that is, unbeknownst to me, buying bad loans that are subsidized by the federal government (via Freddie Mac and Fannie Mae), I lose my shirt and never trust the market again.  No one wins.

Everything is dependent upon the rule of law.  Our “law”, at a very basic, foundational level, is the Constitution.  The Founders envisioned a republican democracy (as opposed to a straight democracy and “mob rule”), with a limited and de-centralized government.  It should come as no surprise to any of us that as both political parties have wandered off the Constitution’s reservation; we’ve seen the economy grow more and more volatile.  A significant reason for this is that Americans involved in the private sector cannot rely upon the public sector (our government) to abide by the same “rules” year-to-year.

Economist Milton Friedman explained it as follows:

Just after the Berlin Wall fell and the Soviet Union collapsed, I used to be asked a lot: "What do these ex-communist states have to do in order to become market economies?" And I used to say: "You can describe that in three words: privatize, privatize, privatize." But, I was wrong. That wasn't enough. The example of Russia shows that. Russia privatized but in a way that created private monopolies-private centralized economic controls that replaced government's centralized controls. It turns out that the rule of law is probably more basic than privatization. Privatization is meaningless if you don't have the rule of law. What does it mean to privatize if you do not have security of property, if you can't use your property as you want to?

For the college student returning from a semester abroad in a poorer country than their own, the reason your adopted homeland isn’t better off usually has little to do with the price of Italian beef in Chicago and everything to do with the rampant, unfettered corruption at every level of that country’s government.  Will every country have the advantages and wealth that the United States has?  Of course not.  But does Costa Rica or Ghana or a former member of the Eastern Bloc have to remain a slave to 3^rd world-like conditions?  Absolutely not.  The rule of law, and the protection our military affords us, is the thing that enables prosperity to flourish.  Throwing money at the problems other nations will only exacerbate the problem if it is not coordinated with the implementation of stable governments.

But, you ask, what about human nature and the fact that people, even in free, safe America, will always look for ways to circumvent the law?

I’m so glad you brought that up.

6. Morality and Religion- It is in this sixth and final category where Mere Conservatism parts with the secular-progressive thought of modern liberal Democrats in the media and academia, and stands with the Founding Fathers (and their innumerable influences).  Many people would be thrilled to support the first five concepts I’ve described already, but stop short when discussions of morality and religion enter the equation.  The problem with stopping short is that you end up denying the one thing that really can be proven about religious, Judeo-Christian teachings: sin and the fallen state of mankind.

As I explained in the Theology of Mere Conservatism, the often unpleasant realities of this world mandate we impose constraints on ourselves, and when necessary and appropriate, on one another.  In a relatively free society such as our own, unless the citizens are accountable to something higher than their government, you will end up with either anarchy or tyranny.  Too little constraint will bring anarchy; too much, tyranny.  The Founding Fathers, even those only nominally religious, understood that an immoral and irreligious country was a doomed country.

“We have no government armed with power capable of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.” –John Adams

"For my own part, I sincerely esteem it [the Constitution] a system which without the finger of God, never could have been suggested and agreed upon by such a diversity of interests." -Alexander Hamilton

“God who gave us life gave us liberty. And can the liberties of a nation be thought secure when we have removed their only firm basis, a conviction in the minds of the people that these liberties are a gift from God?” -Thomas Jefferson

“We have staked the whole future of American civilization, not upon the power of government, far from it. We’ve staked the future of all our political institutions upon our capacity…to sustain ourselves according to the Ten Commandments of God.” -James Madison

If such quotes come as a shock to you, relax: you’re a normal American and likely a product of the public school system where the entirety of the history you learned consisted of Hiroshima, Jim Crowe, and the economic salvation FDR offered to a beleaguered nation that had been abused by capitalism.

My purpose, and the quotes I’ve used to help supplement it, is not to castigate the non-religious among us, but simply to clarify what values underpin our national identity.  That identity is one of political, religious, and economic freedom.  You cannot separate the three, and you cannot truly experience any of them without a citizenry predominantly comprised of moral and religious people.  Values matter, and you’ve got to be able to define and explain those values if you hope to maintain them for future generations.  It is my opinion that “You are a collection of randomly-gathered protoplasm” doesn’t have the same effect as “You are fearfully and wonderfully made by a Creator” when attempting to explain to a young person why they should care about the rule of law or property rights.

And so we come to the end of my description of what "The Economics of Mere Conservatism" entails.  If you’ve read this far, you at the very least recognize the importance of engaging ideas and thinking through what it is you believe, and why you believe it.  There is more to learn, more specifics to grasp, and I would suggest as a jumping off point from here that you familiarize yourself with the “Invisible Hand” theory 18^th century philosopher-economist Adam Smith developed in his classic Wealth of Nations.

Economics is an exciting, multi-faceted topic, with endless sub-sets of concepts and ideas, but what I hope you take away from this piece is the general outline of what one means when they use the term “free market conservative” to describe themselves.

If Americans don’t begin to think more seriously and substantively about economic matters, others will do our thinking for us.  Are you comfortable any longer with that set-up; with trusting politicians and bureaucrats to make decisions in your best interest?  Does anyone really believe that the economic crisis we find ourselves in is the result of George W. Bush’s “dumb” accent and Dick Cheney’s sullen demeanor?  Or equally as silly a notion that Barack “How Organized Was My Community” Obama and “Fighting” Joe Biden have “fixed” thing by spending more in one year than their predecessors’ previous four?

Develop a set of criteria by which you can judge everything from an economic policy touted by a politician to a seemingly attractive loan offered by a bank.  If you aren’t reading contemporary economists such as Thomas Sowell (Stanford’s Hoover Institution) Arthur Brooks (American Enterprise Institute) and Walter E. Williams (George Mason University), if you aren’t even loosely familiar with the prolific ideas espoused in Milton Friedman’s Free to Choose and F.A. Hayek’s Road to Serfdom, you are less wise than you might otherwise be.  There are great minds and articulate thinkers out there, providing intellectual ammunition for the cultural battle currently (and perpetually) being fought over the type of economy and government we will have over the next 100 years.

Read.  Study.  Pay attention.  Teach yourself so you can teach your kids.

Freedom and liberty, the kinds Americans have generally enjoyed for more than two centuries, are at stake.