Eroding Foundations Of Economic Freedom

There is so much that I could write about this morning. There is the correct decision made by the AIG board to not sue the U.S. government over TARP payback terms. I cannot believe they would even consider biting the hand that fed them. Or, I could discuss the Dreamliner problems. Boeing’s stock went down $2 per share as a result of the problems the new plane is having, however, Boeing is working those problems and the stock price rebounded yesterday. Having worked at Boeing I know how safety conscious the company is. I know they will deal with each problem as quickly as possible, and find permanent solutions for each problem. But the topic I want to explore this morning is the elitist attack on freedom.

According to the Heritage Foundation, and reported in the WSJ, “the foundations of economic freedom are weakening around the world.” The most obvious area of concern is the post Arab-spring countries which have democratically elected governments, but those governments “are adopting totalitarian practices reminiscent of revolutionary Iran.” This is just one example of populist democratic activities hijacked by elitist coercive individuals whose goal is to control economic activity. In the past totalitarian governments were easily identified by corruption and cronyism. But the lines of modern government have blurred this distinction.

Africa has been known for its corrupt governments. Those political and legal environments have been a detriment to economic evolution, ensuring the cronies and relatives of the president would be well provided for. Matt Mitchell, of George Mason University, has identified a dozen different ways “in which government privileges for special interests hurt productivity and reduce efficiency.” He goes on to state, “The damage is not just economic. The pathology of privilege, which tends to favor the rich and powerful, erodes the integrity of political systems, too.”

I have previously discussed the Italian system of cronyism, which to me illustrates the problems Europe has with it government regulation and privilege. On the other hand, the European countries that have experienced extreme Socialism, such as Georgia, are evolving into progressive free market expressions. According to the WSJ, even Sweden “the former poster child for democratic socialism, has adopted more market-oriented policies promoting economic freedom.”

In our country, economic freedom has declined five years in a row. This is indicative of how the U.S. has moved away from its defining characteristic of free market leadership allowing free trade flows to stagnate. Buy American is a noble populist desire, but protectionist policies will “threaten consumers and businesses with higher costs and restrictions in supply.” Investment and hiring of employees detracts with higher input prices, thus hurting Americans first. Andrew Liveris in his book “Make it in America,” argues for economic freedom. He points on that everywhere the U.S. has a free trade agreement, the U.S. has a trade surplus. Thus economic freedom is good for the U.S.

I think Terry Miller sums this discussion up best. “All around the world, the true cost of lost economic freedom isn’t just slower economic growth, but poorer performance on social indicators such as health, education, poverty reduction and environmental protection. Freer economies are better able to achieve such progressive social goals than are economies that rely more on government regulation and centralized control.” I will say amen to that brother.

And that is my thought for the day!

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