Reuniting Capitalism and Democracy

Portrait_of_Milton_Friedman

Conventional wisdom today has capitalism out and democracy in.

The financial crash supposedly proved markets don’t work, at least not for most of the people. Democracy, on the other hand, is all the rage. From Egypt to Oakland, protesters and pundits insist they are “the 99%,” and that every political and economic policy must be judged by whether it is more or less democratic.

This idea of democracy is obviously about more than just election processes. But while a few ideologues really desire raw majority rule, more Americans seem to favor what is often called a “democratic society,” where individuals are empowered to live their own lives without being manipulated or controlled by others.

Milton Friedman pointed out in many writings and talks that the economic system that best approaches this standard of democracy is capitalism. Every other system involves—in fact, is defined by—allowing one group to control everyone else.

This week, on what would have been the Nobel laureate’s 101st birthday, it is a fitting time to begin knitting the ideas of capitalism and democracy back together.

The very foundations of American law and prosperity rest on this understanding of capitalism and democracy. To put it another way, before there was Milton Friedman, there was James Madison.

Madison wrote eloquently in Federalist No. 10 about where property rights come from, why they must be protected, and why government power must be limited and checked to prevent groups of people from harnessing that power to interfere with the property rights of others. (All emphases in the quotes is my own.)

Madison explains that “the rights of property originate [from] the diversity in the faculties of men.”

The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.

What Madison is interested in is justice and liberty, which are made possible by the rule of law. His argument is that groups of people (“factions”) will try to use government power to their advantage at the expense of other people and of justice.

The latent causes of faction are thus sown in the nature of man; and we see them everywhere brought into different degrees of activity, according to the different circumstances of civil society. … the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of the government.

Madison points out the conflict between the idea of democracy as simply majority rule versus the idea of a democratic society: a government that allows a majority of voters to plunder the few is simply lawless. (This is the version of democracy described as “two wolves and a lamb voting on what’s for dinner.”)

Finally, Madison sketches an argument against reliance on central planning, good intentions, and what Friedrich Hayek will later call “the fatal conceit.”

It is in vain to say that enlightened statesmen will be able to adjust these clashing interests, and render them all subservient to the public good. Enlightened statesmen will not always be at the helm. Nor, in many cases, can such an adjustment be made at all without taking into view indirect and remote considerations, which will rarely prevail over the immediate interest which one party may find in disregarding the rights of another or the good of the whole.

Our constitutional system was designed to protect property rights, first from other individuals and then from government. It was designed to do this not in order to create prosperity—that was a side effect and not well understood until 20th Century economists like Milton Friedman. Rather it was based on the understanding of the connection between democracy and capitalism.

Check out our series of essays and study guides to re-explain to Americans the democracy inherent in free markets.

This was originally posted at the Freedom Foundation of Washington state’s website.

Lincoln’s Logs Part I: Simple Division

AbeLincoln

This is the first essay in a three-part series commemorating the history surrounding theLincoln-Douglas debates and their relevance today.

One hundred and forty-five years ago this month, Abraham Lincoln rose from his seat to address a packed house at the Illinois State Capitol building. In front of a thousand hopeful delegates, he delivered perhaps one of the most powerfully forgotten speeches of his career and, perhaps, our nation’s history.

It was not his address at Gettysburg, it was not his proclamation of emancipation, it was not his first or second inaugural speech. For all intents and purposes, the context did not require any historic words to be uttered. Nevertheless, in true Lincoln fashion, his content superseded the occasion.

It was his acceptance speech for the Republican Senate nomination in Illinois that roused a lanky, unorthodox Abraham Lincoln to thunderously deliver his “House Divided Speech”, which served as an appetizer to his historic bouts with Stephen Douglas a few months later. Referring to the country’s blatant divide over the issue of slavery, Lincoln cited a well-known Biblical phrase as his thesis,

“A house divided against itself cannot stand”

He proceeded to argue that the nation stood at a crossroads, those in favor of slavery and those opposed. As a result, its people must decide which road to take or risk the potentially fatal consequences. Lincoln reassured his audience of his confidence that the “Union” would not fall, but it would surely choose a path. A path begotten from contention, conflict, and “crisis”.

Lincoln then mapped out the uphill battle that he and those present must face in order to blaze a new path of freedom for those enslaved under the supposed constructs of liberty. Verdicts had been made, statutes had been passed, and norms had been established, each posing their own unique obstacles. But his firm words laced with moral fortitude seemed to render the odds obsolete. With a bold conclusion exposing the truth of his rival Douglas’ plans to merely leave slavery up for each state to decide, Lincoln called upon his party to remember their roots, remember their original purpose, and adamantly oppose both a compromise of practicing slavery as well as its outright exercise.

crossroads

Image from http://crossroadsdenver.wordpress.com/

Our nation currently stands at a similar crossroads. With the ever-intrusive hand of the federal government relentlessly regulating, mandating, and manipulating its way into millions of its citizens’ lives, it is clear that our house is not united. Apart from the usual debates between Democrat and Republican which forge strong policy, we have seen an administration blatantly disregard the wishes of its people and states in favor of a predetermined agenda.

For example, the Affordable Care Act has received overwhelming backlash from the states, many of which have opted to not even participate in the lose-lose exchange programs offered by the policy. In fact, just weeks after the policy passed the House, polls found that close to half of voters were opposed to it. An unprecedented law, shrouded in controversy, unread by most of its supporters, and opposed by nearly half of the American public still managed to squeeze by our nation’s legislature and become the law of the land.

So what is our response? How do we make sense of such monstrosities to freedom? Shall we look to our respective parties? Even Lincoln’s fellow Republicans did not fully agree with his notions. Shall we wait and hope for a fearless leader to emerge? History has proved the pitfalls of such power. What then? Perhaps the words of a lanky, unorthodox, one-time grocer familiar with defeat but never influenced by its suggestions can provide some guidance as to which path we shall take.

This path cannot be chosen by the poetic advice of Robert Frost, nor can it be chosen merely by the words of a persuasive orator. Perhaps it takes a unified body with a clear purpose and unwavering sense of right to correctly lay a new path. Perhaps it takes a house.

*Top image from http://evanjsegal.authorsxpress.com/tag/abraham-lincoln/

33% of Union Households Would Opt Out

NEFW

Are you for workers’ rights, but against union bosses and bullies?

Then grab some comeback cake, raise your Twinkie, and celebrate National Employee Freedom week! You may be asking, “What do Twinkies have to do with labor relations?”

Right-to-work laws in some states, which give employees the ability to opt out of compulsory union membership, could be crucial for the Hostess company’s comeback. The company went bankrupt last year, leaving many Americans nostalgic for the classic sugary snack cakes, after a standoff with its unionized workers. Thankfully, Twinkies are set to hit shelves again by July 15th thanks largely to non-union workers, bakeries located primarily in right-to-work states and their more efficient operating structure.

However, in many states, unions have used their political power to restrict a workers’ rights to opt out of membership. As a result of the union’s compulsory stranglehold on labor relations in both the public and private sectors, employees end up receiving harmful unintended consequences. In these states, employees  out on opportunities in jobs with many companies, like Hostess, when they decide to locate facilities outside of their borders. Additionally, union workers have no choice but to deduct a portion of their paycheck to support union policies that they may not agree with or are even antithetical to their political views.

Today ends a week of celebrating and bringing to light the ways employees across the nation can empower themselves to choose whether union membership is right for them.

When asked, “If it were possible to opt out of membership in a labor union without losing your job or any other penalty would you do it?” A national survey by the National Employee found that around 33% of union households would opt out of membership.

If you’re in that 33% percent with a union that isn’t serving you, acting against your own political interest, or you have a better way of spending your dues, visit http://employeefreedomweek.com/ and find the ways you, as a worker, can take back your right to choose.

Portrait of a Whistleblower: Justin Hopson

WTPWhistleblower

Edward Snowden, Sherron Watkins, and Justin Hopson. What do these three names have in common? While the first two are widely recognized as two of the most consequential “whistleblowers” in American history (Snowden leaking the NSA reports and Watkins exposing the Enron scandal), perhaps lesser known is the story of former New Jersey policeman and current South Carolina resident Justin Hopson. Hopson’s story can be found in the Post and Courier.

After a mere eleven days into his rookie year with the New Jersey Police State Police Department, Hopson was faced with a choice that would change his life forever.

During a routine pull-over, Hopson witnessed his training officer arrest a woman for drunk driving…while she was riding in the back seat. Hopson refused to support the charge, confronted his training officer, and eventually brought his case to court in 2003.

There was no grey area.

But Hopson’s integrous choice to stand for justice was not a popular one amongst his peers.

He claimed that he was then targeted by an organized, secret society within the state police called the Lords of Discipline that harassed him regularly. Hopson also said he was physically beaten, his car was vandalized, and he received threatening notes left outside his station. Nevertheless, Hopson stood his ground and paved the way for the largest internal investigation of the department in state history.

Finally, in 2007, the state court found seven officers guilty of harassment but said they found no evidence of the Lord of Discipline’s existence, despite multiple victims’ reports of their activity, and made a settlement agreement with Hopson.

Despite this, there is a larger principle at stake here than simply innocent or guilty, settlement or no settlement. The conviction to do the right thing is a value that the majority of Americans nowadays seem to have deemed old fashioned. In an age where corporate criminals and whistleblowers alike seem to garner similar reactions from the media, incentives for “old- fashioned” ethics are not exactly enticing.

However, regular people like Justin Hopson who possess the fortitude to go against the grain in support of a higher purpose that transcends any job description or social norm are the same kind of regular people who founded the freedoms that set America apart from so many other nations.

It’s not a matter of clout, it’s not a matter of recognition, it’s a matter of caring. Dare to be “old fashioned” and stand for something greater yourself.

Whether it’s in your community, your neighborhood, your church, your family, act with integrity. Justin Hopson

If you are in a situation to speak up on the state or local level and need support, then please see the Freedom Foundation of Washington’s resources or contact your state-based freedom center.

George Washington: The Reluctant President

GeorgeWashington

Today is not just another federal holiday, but it is a day we celebrate one of our greatest war heroes and founding fathers. George Washington was not only our first victorious commander in chief, but he also set a precedent for limited executive power. He foresaw the threat that concentrated power can hold.

When he was commissioned by the Continental Congress as Commander in Chief of the Continental Army on June 19, 1775, Washington wrote this in a letter to his wife Martha:

“You may believe me, my dear Patsy, when I assure you, in the most solemn manner, that, so far from seeking this appointment, I have used every endeavor in my power to avoid it, not only from my unwillingness to part with you and the family, but from a consciousness of its being a trust too great for my capacity, and that I should enjoy more happiness in one month with you at home than I have the most distant prospect of finding abroad.”

His dream was not conquest or personal glory. A humble, private life suited him.

On February 4, 1789, the 69 members of the Electoral College made George Washington the only chief executive to be unanimously elected (cited from The Smithsonian Magazine).

On the way to begin his presidency, he wrote in his private diary:

“About ten o’clock, I bade adieu to Mount Vernon, to private life, and to domestic felicity and, with a mind oppressed with more anxious and painful sensations than I have words to express, set out for New York…with the best dispositions to render service to my country in obedience to its call, but with less hope of answering its expectations.”

Washington almost retired after one term, but decided to run for a second for the good of the country. He sensed that the factional division between Alexander Hamilton’s Federalists and Thomas Jefferson’s Democratic-Republicans would be too much for the young country to bear.

He famously set the tone for a two-term presidency when he refused to run for a third term in 1796.

Throughout his presidency, Washington expressed great humility and even anxiety that he was not good enough for such a monumental job. He truly viewed his position as one of public service and sacrifice, and he had no desire to be an empire builder.

George Washington’s example of leadership is one that should be emulated by business leaders, community leaders, and, most importantly, every commander in chief elected to serve the people of the United States.

 

Students Deserve the Opportunity to Succeed

School Choice Week

Matthew, a former high school dropout from Chicago, and Ryan, an autistic student from a rural town, have something in common.

Their public schools were not working for them.

Several years ago, Matthew Rainey dropped out of high school.

In doing so, Matthew became one of the many casualties of Chicago Public Schools, or CPS – a system in which four out of 10 kids never graduate. But Matthew longed for a second chance.

He received that chance after hearing an ad for a free market-based charter school called Youth Connection Charter School Virtual High School, or YCCS, powered by K12.YCCS is one of Chicago’s oldest charter schools, operating 22 campuses across the city, and is the only charter school authorized by CPS to serve high-risk and at-risk students.

YCCS, one of the 22 campus sites, prides itself on accommodating students’ individual needs by matching their educational level upon matriculation with a uniquely tailored, innovative learning environment.

“[Students are] not just sitting passively in a classroom here,” said Tamara Carpenter, K12 vice president of school development. “They’re actively engaged in moving themselves forward in their goals.”

This environment suited Matthew, who said he never quite fit the set curriculum CPS offers.

“Here you have more of a personal connection,” he said. “At Chicago Public Schools I felt like ID number 43618884. Here I feel like Matthew Austin Rainey.”

Matthew Rainey

Matthew recently graduated from YCCS at the top of his class and was accepted to the University of Illinois, where he plans to pursue a degree in business. And Matthew is just one success story of the free market model.

Ryan Fox is an incredibly bright 17-year-old student from Washington, and he is among the many autistic students whose learning needs were not being met by the one-size-fits-all public school. He was so frustrated trying to learn by sitting in a regular classroom.

It wasn’t that Ryan couldn’t learn, it’s just that he learns differently. He was finally able to make a breakthrough in his education through online learning.

“I love online learning, it has changed my life. I really believe that in the future, everyone will learn this way. We will all be able to learn from the very smartest people on earth, and we’ll do it at our own pace every day. Our abilities will matter more than our disabilities.”

Ryan Fox

Watch Ryan’s story:

Any parent or teacher will tell you that every child is different, so why does our education system not reflect this? Education should not be determined by the federal government, state officials, or the  neighborhood where a child lives.

We can speak out and change the system. States like Louisiana and Arizona have already changed their education systems and allowed charter schools and education savings accounts for parents. For more about school choice options, check out this guide.

Today marks the last day of National School Choice Week, a time when people around the country from all different backgrounds and political persuasions ban together to demand more choices for students like Matthew and Ryan. Will you join students, parents, teachers, Democrats, and Republicans in speaking up for school choice?

 

Heroes of American Exceptionalism: Dr. Martin Luther King Jr. and John Winthrop

MLK_WTP

Freedom, equal protection under the law, a culture of service and charity, and economic opportunity for all; these ideas are among those that make America a “city upon a hill” and exceptional on the world stage.

These principles are forgotten in a time when an economic recession, palpable disunity, rising unemployment, unspeakably violent shootings, and $16 trillion dollars in debt have left us wondering how to change course as a nation. Polls even tell us that Americans believe we are headed down the wrong track.

Today, on both Martin Luther King Day and Inauguration Day, we are reminded that our history is full of heroic leaders who made risky stands for freedom. We look back at Dr. Martin Luther King Jr.’s “I Have a Dream” speech, his “Letter from Birmingham Jail,” and the inaugural addresses of great presidents like George Washington and Abraham Lincoln for direction and the courage to move forward in a time of economic and political uncertainty. All of these men faced seemingly insurmountable odds, but overcame.

The very first reference to American as a “city upon a shining hill” was during what could be considered our very first “inaugural address.” Puritan leader John Winthrop delivered a political speech that laid our foundation aboard the ship Arabella at the end of a grueling voyage across the Atlantic to seek religious and economic freedom in 1630. In his foundational speech, A Model of Christian Charity, Winthrop famously coined the phrase “we shall be as a city upon a hill” and said:

“We must love brotherly without dissimulation, we must love one another with a pure heart, fervently we must bear one another’s burdens, we must not only look onely on our own things, but also on the things of our brethren…”

As we reflect on our history as a nation today, I hope that we have a gut-check and remember what it takes to be a “city upon a hill.” It takes brave men and women like John Winthrop, his passengers aboard the Arabella, Dr. Martin Luther King Jr., and the protesters around the Lincoln Memorial to protect freedom and build strong communities.

They spoke out, disobeyed unjust laws, left their comfort zone, and exhibited self-sacrifice.

What can you do today to restore America’s exceptional character and stand against injustice? Will you take care of a neighbor in your community? Will you petition your state government to allow children of all backgrounds educational choice and the chance at a better life? American history has shown that it only takes a few brave people to do the right thing.

Protecting a Worker’s Right to Choose

There has been outspoken debate about the Right to Work law passed recently in Michigan. The issue boils down to a simple principle: one should not be coerced to join an association and have dues extracted from his or her paycheck as a condition of employment. Further, there Right to Work laws bring more prosperity to citizens in states that enact them.

Have you ever gone to purchase something and found out that to get the product you actually wanted, you were forced to buy something else you didn’t need?

Workers all over America face a similar situation when they are forced to join a union as a condition of their employment. Maybe the worker doesn’t like the union’s politics, maybe they don’t believe they are getting value for the amount of union dues they pay out each month, or maybe they believe they can represent themselves to the company better on their own. As it stands now, those reasons are invalid in many states because workers are required to join a union and have their dues extracted from their paycheck each month. The principle is simple – workers should have a right to choose who represents them in the workplace.

Watch the Freedom Foundation of Washington’s most recent Talk Back on Jobs video to see that right illustrated:

How do Right to Work laws help citizens?

  • Right-to-work means that unions can’t require an employee be fired for declining to pay union dues or agency fees, while maintaining a union’s ability to collectively bargain.
  • Right-to-work offers in-state opportunities for young workers. Between 2000 and 2011, right-to-work states have seen an increase of 11.3 percent in the number of residents between the ages of 25-34, according to the Bureau of the Census. Non-right-to-work states, over that same period of time, have seen an increase of only 0.6 percent.
  • Right-to-work means increasing wages. Private-sector, inflation-adjusted employee compensation in right-to-work states has grown by 12.0 percent between 2001-2011, according to data taken from the Bureau of Economic Analysis and Bureau of Labor Statistics. That compares with just 3.0 percent over the same period in forced-unionization states.
  • Right-to-work means low unemployment. Between 1999 and 2009, non-farm private-sector employment grew 3.7 percent in right-to-work states, but decreased 2.8 percent in non-right-to-work states. Further, the vast majority of jobs created during the Obama administration have been in states with a right-to-work law. According to the National Institute for Labor Relations Research, right-to-work states (excluding Indiana, which passed a right-to-work law in early 2012) “were responsible for 72 percent of all net household job growth across the U.S. from June 2009 through September 2012.”
  • Right-to-work makes states more attractive for business. States with right-to-work laws dominate the “Top States for Business,” as determined by CNBC. For 2012, nine out of the top 10 best states for business are right-to-work states. By contrast, Michigan is currently 33.

From The Mackinac Center for Public Policy

 

Make the Case for Free Enterprise

Why did your ancestors come to this country? Was it for the promise of material equality provided by income redistribution? Or was it the hope for a life of opportunity, where one could make something of one’s self?

Free enterprise is the only system that lets us pursue our happiness by earning our success. Arthur Brooks, of the American Enterprise Institute, makes the case that in order to protect the American spirit and the best system our world has ever seen, we must learn to make the moral case for free enterprise. It is this system that allows you to create value in your life and in the lives of others, and it let’s you define value in your own way.

So, what is the moral case for free enterprise?

  1. Free enterprise safeguards lasting happiness
  2. Free enterprise promotes real fairness
  3. Free enterprise does the most good for the most vulnerable

Watch this new video by Arthur Brooks for more information:

Governors Reject Parts of Obamacare: The Moral & Economic High Ground

We’ve been told by the highest court in the land that the Affordable Care Act is indeed constitutional. Well, shoot… But there is still a bit of good news: the states can refuse to expand the Medicaid rolls without being penalized by the federal government. This essentially gives them (the states) an escape clause.

Is this that rarest of things, the perfect prenup? It appears to be. States with governors who recognize the inherent moral and economic problems in taking money from Peter in order to pay for Paul’s medical expenses can refuse to expand to Medicaid without worrying about having their existing Medicaid funding rescinded.

Governor Rick Scott of Florida issued a statement saying:

Florida will opt out of spending approximately $1.9 billion more taxpayer dollars required to implement a massive entitlement expansion of the Medicaid program.

Governor Rick Perry of Texas, in a letter to Health and Human Services Secretary Kathleen Sebelius, stated:

Medicaid is a failed a program. To expand this program is not unlike adding a thousand people to the Titanic. You’re going to further drive this country into debt. You don’t expand a program that is not working already.

The criticism we’re hearing from the Left is that those governors planning on rejecting outright the additional Medicaid funds (Perry, Scott, Haley, Jindal, et al) from the federal government are in states with the highest rates of uninsured people. Thus, the states that stand to benefit the most are the ones choosing to opt out. This drives advocates of big government programs crazy. Why would people act ‘against their own economic interest?!?’

This argument comes around every time someone votes not to tax someone else who has more money. If you flip this question on its head, or place it in another context other than government taxation, you could phrase it like this: ‘Would you use force to take what someone else had earned in order to pay for your own bills?’ As soon as we take away the veil of legitimacy provided by the state, we see the sort of person who poses that sort of question for what they really are – thugs who misuse the force of government.

Even last week’s Economist didn’t quite phrase it right. Referring to the states that intend to take additional Medicaid funding as “happy to accept Washington’s cash,” it forgets that Washington HAS no cash except what it takes from individuals to begin with. Refusing to expand Medicaid might not be the best move politically, and it might bring some pain in the short term, but it is a principled move on the part of the governors. More should consider doing likewise.

Check out this video from the late, great Nobel Laureate Economist Milton Friedman:

Pages:12»