The Promise of Freedom: Is America On Course?

Freedom and liberty are cited in almost every speech President Bush gives. What does freedom mean? What is the promise of America in the coming decades?

The Liberal Viewpoint
Liberalism and libertarianism both focus on the idea of freedom. The nation has recently been heading away from the principles of freedom, such as the growing tie between religion and public policy, the taking of private property for purposes that are not public, undertaking warrentless surveillance of americans, and engaging in wars of choice. Liberals and libertarians are joined together to turn these trends around.

However, one area that liberals and libertarians diverge is in the economy, and more particularly, how most americans and their families are doing in today’s economy. Libertarians are united with conservatives. They turn the founders vision of individual freedom upside down. They take economic freedom to mean the free market and free market ideology. The nations public policy has increasingly deregulated the market and left it on its own.

The founders notion of freedom went way beyond a free market ideology whose ultimate goal is efficiency. Freedom starts with the transcendent premise of the dignity of every human being. Because each human has fundamental, inherent dignity, each person should be the end of his or her own choosing, not simply a means to the ends of another’s choosing. How does this play out in today’s economy? Each person, and not someone else, should receive the fruits of his or her own labor. Gaining the full product of one’s labor is a basic right of every person who is truly free. This principal is the founder’s firm and fundamental belief.

This principal was once alive and well in our country. It used to be that the pay of american workers rose as the level of their productivity and the quality of their work increased, in nearly a one-to-one fashion. But since 1973, there has been a 75% growth in productivity, but no change in compensation. Half that change is attributable to workers, and not technology. The gap has grown.

Because of a loss of compensation they have sustained, most families are having to work longer hours than before just to keep up and cannot save. It is becoming much more difficult to get ahead, and that is not freedom.

What broke the historic connection between productivity and pay increases for american workers is the abandonment of the founders vision of freedom in favor of a free market, do it yourself approach. The goal of a free market is efficiency in bringing together supply and demand, not freedom. Free markets will continue to reduce workers pay whenever labor is in surplus. The labor surplus that started in the 1970s came from the mass of baby-boomers and their children, and rising immigration. All these workers flooded the labor market.

Our workforce keeps growing, and this means that pay for workers remains stagnant. Nearly all of the compensation increases for workers better productivity have gone to top management and to profits, in opposition to the principals of freedom. This is why the trend continue towards greater disparity between a CEO and the lowest paid worker in companies across America.

An unfettered free market does and cannot do the job. It will take governmental action in order to maintain a society where the moral value of freedom stays relevant and defines our policy. Government is the way we join together to solve problems of freedom collectively that can’t be solved by private interest alone. Instead of reducing regulation and starving governments as libertarians advocate, a moral vision of freedom would lead to policies such as increasing the minimum wage, raising the earned income tax credit, and implementing and promoting the expansion of collective bargaining to help worker pay keep up with productivity. It would also involve policies such as extending health care coverage to the uninsured and making coverage more affordable, increasing aid to education, wage insurance and other similar liberal initiatives.

Each of these proposals aims to help lift the overall return to workers closer to their improved contribution, in keeping with the moral principals of freedom. Every family would be able to gain a living wage and health insurance so all workers and families are able to live in dignity. The nation, in the recent past, has been retreating from the time honored tradition of freedom.

The conservative and libertarian free market ideology of freedom falls way short of the founders principals of freedom that gave birth to the nation.

Freedom from the power not just of government, but also the power of other individuals is what the founders envisioned. Individuals do not have the right to harm others. Much of government regulations define what wrongful harm is, what you don’t have the freedom to do, where you are excercising power instead of freedom. When, in a spontaneous order, such as a free market, individuals are not allowed to get the benefit of their work, that is a big problem of freedom.

The common goal of society is to advance the common morality of freedom, based on the premise of human dignity. You should have the right to do things as long as you don’t harm or take advantage of others.

Libertarian Viewpoint

Freedom is the fundamental idea in America. But it does not require massive transfers of resources from rich to poor and massive government bureaucracy. Freedom is the framework in which we pursue our other values, such as love, happiness, compassion, friendship, achievement, and financial success. Everyone has different values.

Control over resources, money or income is not freedom, that is wealth. Freedom is the right of the individual to make his own decisions without force or fraud imposed on him by others. Sometimes we need government to act, but that has to be proved. The presumption should be that people are free to run their own lives and that the burdon of proof should fall on those who want government to act in a more forceful way. The excercise of governmental power, not the excercise of freedom, requires justification.

Freedom has three key ideas:

1. the idea of individual rights
2. the idea of spontaneous order: everything we do in life requires planning, and yet, the most complex systems in our world are unplanned, such as language, or law. Common law evolved over many years over disputes and how to settle them fairly. Money and the economy evolved in an unplanned way.
3. limited government: federal government powers are delegated because the people had them first, they are enumarated in the constitution, and they are limited by their enumeration in the constitution.

Libertarians seek a world of decentralization, competition and cooperation, and divided power. Power is what we have to fear, from government or from others.

In a free society we have our natural rights as people and the obligation to respect the rights of other individuals. Our other obligations are those we choose to accept by contract – a mortgage, a marriage, etc. We have the choice to enter into these contracts.

Libertarians want a complex society made possible by social interaction. A system of property rights, the rule of law, and minimal government allows maximum scope for people to interact, cooperate, and develop new forms of cooperation. All of the associations we form with other people, such as businesses, marriages, associations, make up civil society. Civil society doesn’t have a purpose. It exists to allow others to interact and form their own associations that have a purpose. A limited government allows free people to find the best ways to compete and cooperate.

David Boaz disagrees with John Schwartz’ comment that in today’s society individuals do not get compensated for the value of their work. A free market produces fair compensation because it is a complicated spontaneous order. While people may think it is morally wrong, Britney Spears makes more than a teacher because that’s the collective judgements of 300 million people. The individual who disagrees with that as unjust is trying to say that they are smarter than 300 million people. More people are willing to pay to see Britney Spears perform than a professor. People are choosing what they do with their own money. It may be unfortunate, but it represents the collective will.

People who think that others are being paid less than they are worth are ignoring all the price signals and all the choices that Americans have. In a market, people tend to get what they are worth.

The free market in the US has created unprecedented wealth for everybody. What causes poverty is the wrong question to ask. Poverty is the natural condition of the world. The right question is what causes wealth and prosperity. Capitalism is what happens when you leave people alone. They start trading, building, looking for better ways to do things, and collaborating. That system has brought unprecedented prosperity to all Americans. The minimum wage in the US is still better than 87% of the world. “In a (free) market, people tend to get what they are worth.”

The United States has created unprecedented wealth, not just for the superrich like Bill Gates and Donald Trump, but for everyone. The free market is what got us there. The free market is freedom. It is a system, a spontaneous order. It doesn’t have a goal. It is just what happens when you leave people alone. Efficiency is an outcome of free markets, not the goal as liberals imply. We should all be free to pursue our own purposes.

After listening to David Boaz, curator of the libertarian viewpoint, my only question is his take on Hank McKinnell’s $200 million severance package from Pfizer after destroying $137 billion of market value under his watch, which will surely cost average employees their jobs. Is the market dictating his worth, like that of Britney Spears? Surely, in 2001 the collective voices of shareholders would not have voted yes to hiring someone they knew would eventually drive the shareprice down from $46 per share at his last employment agreement to $26 when he left. And I’m sure the majority of shareholders were not happy with an additional $200 million walking out the door.

I suspect that his golden parachute was negotiated in private, with other powerful members of the Pfizer board. Is his severance an example of free markets expressing the collective will and bestowing riches on a deserving retiree? Or would David agree that his severance is eggregious, but that it wasn’t a result of free markets and some of their less desirable outcomes (after all, no system is perfect, they all have unintended side effects). Maybe the free market can police this type of activity without the government having to step in.

I think liberals would say someone needs to step in when the free market does not act on behalf of the collective. Golden parachutes are a growing trend, not an abberation to the norm. My personal view is that a growing number of public company executives use the company as a vehicle for short term personal wealth accumulation, like a virus. They feed on a host, lavish themselves with bonuses and compensation, then move onto the next host. One benefit of the growing power of hedge funds is to keep this trend in check. A CEO can’t BS smart investors indefinitely. However, hedge funds too have one purpose, short term profits, sometimes at the expense of long term company interest.

Moderator
Errol Louis
New York Daily News

Panelists
David Boaz
Executive Vice President, Cato Institute
Author:Libertarianism: A Primer, The Libertarian Reader (editor)

John E. Schwarz
Demos Senior Fellow
Professor, University of Arizona
Author: Freedom Reclaimed: Rediscovering the American Vision

Co-Sponsors: DEMOS & The Cato Institute