The Road to Freedom (12 page)

Givers get rewards that are more important than money, too. For example, the data show that givers are happier and healthier
than nongivers. Americans who give charitably are 43 percent more likely to say they are very happy than people who don't, according to one 2000 national survey. It doesn't matter whether people give to a church or a symphony orchestra: Religious and secular giving both leave people equally happy, and far happier than those who don't give. (And the more people give, the happier they get.)
⁵⁰

Do you want to improve a young person's life? Don't tell her to march with a sign demanding her rights to someone else's money. Teach her to give to others and volunteer. In one study, researchers followed a thousand teenagers over five years and measured the extent of their charitable attitudes and behaviors through such questions as, “For the job you expect to have in the future, how important is helping people?” and, “How often do you spend time performing community service outside school?” The teenagers who were the most giving were the least likely to be involved in street violence and teen pregnancies. They were also the least likely to experience stress and negative feelings.
⁵¹

Charity exists in a kind of virtuous circle: people give their time and money because they recognize need and want to make life better for others. But in so doing, they also become better, more prosperous people. This in turn adds to economic growth and opportunity for the whole nation. For this reason, it is essential that the state not intervene in ways that will prevent people from acting charitably.

Unfortunately, the government thwarts private charity all the time. Consider this example. In 2006, Fairfax County, Virginia, adopted a policy (later reversed) to “help” the homeless. In order to prevent food poisoning, the county barred residents from giving food to the hungry on the street unless it was prepared in a county-approved kitchen. This policy disqualified the food produced by
approximately half the operating shelters and churches that had previously fed the hungry, despite the fact that food poisoning from donated food had never been reported. It also made it illegal for someone to share a homemade sandwich with a homeless person. The results were, of course, entirely negative for the homeless, who were now more likely than before to eat genuinely dangerous food out of dumpsters. It also deprived a community of the opportunity to volunteer by working in a soup kitchen or simply by buying a homeless man a sandwich. These kinds of government interventions are thus doubly destructive; they hurt the people who they're meant to help and deny the helpers the opportunity to develop their moral lives and flourish through giving.
⁵²

WE DON
'
T HAVE TO ACCEPT
the claims about free enterprise and its effects on the poor as a matter of faith. There is ample evidence about how the underprivileged are affected by capitalism and market economies. Free enterprise creates enormous opportunity and prosperity, including, especially, for the least among us.

Free enterprise advocates need to master the facts on this subject. Only then can they combat the common redistributionist argument that capitalism is good for the rich but not the poor, and that it corrupts us morally. The hard evidence clearly shows that free enterprise is the best system for lifting up the poorest in society and the best system for encouraging moral action on the part of private individuals.

Statism halts free enterprise's virtuous circle in its tracks. When we take away people's ability to prosper privately, they work less, earn less, spend less, and create fewer jobs for others. When the government crowds out private charity, people give less and we all rely even more on the government.

This destructive dynamic hurts everyone in the income distribution. Frankly, I am not very concerned about the rich: They will do just fine. I am concerned about the poor, who truly suffer when entrepreneurship and private charity are suffocated.

None of this is purely theoretical. For years, I have watched social democratic policies ravage the economy of my wife's home country, Spain. Government has grown, debt has grown, charity has withered in favor of government welfare, and private entrepreneurs have been vilified and harassed—all for the sake of the working man. The result is that today, unemployment in Spain stands at 21.2 percent, and at 46.2 percent for youths between ages sixteen and twenty-four.
⁵³
The poor are the ones suffering most from thirty years of reliance on the bloated, inefficient Spanish government.

I am not arguing that the government has no role in helping the underprivileged. It does. Markets do not always function properly and a social safety net does have a place in American society. In the second part of this book, I offer more specific information about what the government can and should do to help the poor in a free enterprise system.

But the moral of this chapter, I hope, is clear. If you love the poor, then you should privately give more and fight for free enterprise for everyone. It's what the Good Samaritan would do.

A
n economist is out for a drive on a country road. Unfamiliar with anything outside the big city, he soon gets hopelessly lost. Spotting a lone farmhouse, he pulls over, knocks on the door, and asks the farmer for help. The farmer gives the economist careful directions back to the city.

The economist thanks the farmer and while turning to leave, he notices the house is flanked by a large field full of sheep. Always on the lookout for a profit-making opportunity, the economist poses this wager to the farmer: “I see you have a lot of sheep there, sir. If I can tell you the exact number in ten seconds, will you give me one of them?”

The farmer, amused by the wager, says, “There's no way you can tell how many sheep I have without counting them. You're on.”

The economist immediately employs a complex set of analytic heuristic devices, refining his estimates in rapid succession until he reaches his conclusion: “You, sir, have 863 sheep.”

“Why, that is just amazing,” says the farmer. “That is exactly right!”

Being a man of his word, the farmer invites the economist to pick out any sheep he wants. The economist does so and walks back to his car with the animal in his arms. But before he departs, the farmer stops him.

“You know, I have a wager of my own. If I can tell you your profession, can I have my sheep back?”

The economist, amused, responds, “There's no way you could know my profession, given that we've only just met. You're on.”

The farmer says, “You, sir, are an economist.”

“Why, that is just amazing,” says the economist. “How on earth did you know that?”

“Simple,” says the farmer. “You got all the numbers right, but you're walking off with my dog.”

I LIKE THIS STORY
because I think it sums up the problems free enterprise advocates have today. They get the numbers right but get the most important things wrong. They're great at finding evidence that capitalism brings economic growth, but not as good translating that evidence into the real world and convincing people that free enterprise is the best system not only for prosperity, but also for a flourishing America.

The first four chapters of this book consisted of my best attempt to solve this problem—to make the moral case for free enterprise. In the next three chapters, I'll apply the lessons from those chapters to the issues the United States faces today, by doing three things.

First, I'll speak openly about what has gone wrong with the U.S. system. There has been a
bipartisan
slide toward big government
over the last few decades, under both Democratic and Republican administrations. People must get over the idea that one election or one particular party will solve the problem—both parties have colluded in the vast expansion of the government over the last hundred years.

To be blunter, there is no guarantee that a Republican administration per se will bolster the culture and policies of free enterprise. In the worst case, Republican political victories can even set back the free enterprise cause, because Americans tend to become complacent when they don't see that the system is under clear assault. The bipartisan forces of big government creep back in, and the process of state expansion continues.

Second, I'll lay out what I believe the government should look like. It is insufficient to argue simply that the government is “too big.” Free enterprise advocates have to be more specific and constructive than that, to rebuff the progressives' suspicions that all free marketeers
really
want is to help rich people (or that we are secretly storing up canned goods and waiting for the apocalypse).

Third, I'll offer tangible proposals for policy, not abstractions. Free enterprise's champions need to form an organized argument about economic growth, jobs, deficits, taxes, and the other key issues of our time—an argument that starts with the rock-solid moral case; uses facts and data to show that reform is necessary and urgent, provides principles for reform, and offers actual, specific policies.

AMERICANS ARE
ambivalent when it comes to the role of the state. They say they love free enterprise and dislike big government, but over the last century they've let the public sector crowd out entrepreneurship and make deeper and deeper incursions into their lives.

As I noted at the beginning of this book, Americans say they consider free enterprise central to U.S. culture and success. A 2010 Gallup poll, for instance, showed that 86 percent of Americans had a positive image of free enterprise, while only 10 percent had a negative image.
¹
According to a 2011 Gallup poll, 60 percent of Americans “strongly agreed” that “entrepreneurs are job creators.”
²
(Incidentally, the same poll found that just 30 percent of Europeans felt the same way about entrepreneurs.)

By commanding majorities, Americans say they prefer limited government over an expansive welfare state. In early 2010, a
Washington Post–ABC
News poll asked Americans, “Generally speaking, would you say you favor smaller government with fewer services, or larger government with more services?” To this question, 38 percent favored the latter, while 58 percent preferred the former.
³

Average Americans viscerally dislike big government. Most of their ordinary contacts with the government are pretty unpleasant. Remember how much fun it was the last time you had to go to the DMV? Have you ever tried calling the IRS's helpline for assistance filling out your tax returns?

So Americans profess a love for free enterprise and dislike “big government.” But here's the paradox: They are more than willing to accept policies that do violence to the system they say they love. For example, a February 2011 NBC News/
Wall Street Journal
poll asked a thousand Americans whether it was acceptable to cut Social Security as a way to reduce the deficit. To this question, 77 percent of respondents said that it was either mostly unacceptable or totally unacceptable.
⁴
About half of Americans tell pollsters they are pretty comfortable with the idea that the U.S. should “redistribute wealth by heavy taxes on the rich.”
⁵

One explanation for this paradox is that Americans don't
really
love free enterprise as they say they do. They talk about it sentimentally.
After all,
everything
was better in the old days. But in practice, Americans prefer a modern welfare state. This is the explanation I often hear from my progressive friends.

I don't think that's the real reason. I believe that most Americans still love and want the kind of freedom that the Founders envisioned. But a drift toward statism has happened so gradually that most haven't noticed it. It has happened because most people aren't really paying attention to the net growth of government. Americans are busy people, living private lives full of everyday jobs, church socials, and soccer practices. As the leader of a think tank dedicated to public policy, I would love it if Americans were as obsessed with policy as I am. But let's be realistic: most people don't have time to contemplate the potential damage each government bill—each tiny encroachment on their freedom—could cause.

Politicians have offered one policy compromise after another, from a government subsidy here to a hidden tax there. Slowly, people have become anaesthetized to the cumulative result. Over the years and decades, these gradual encroachments have reoriented the U.S. toward European-style social democracy. Americans know something is wrong—which is why 81 percent say they are dissatisfied with the way the nation is being governed.
⁶
But they rarely make the connection between their free enterprise values and the statism they are getting instead.

WHEN AND HOW
did this slide begin? The answer to this question depends upon whom you ask. Some say it started in 1912, with the election of Woodrow Wilson. Others say it began with Franklin D. Roosevelt's New Deal in the 1930s. Others say it started with Lyndon B. Johnson's Great Society programs of the 1960s.