The Liberty Formula ~ As Government Expands, Liberty Contracts

I don’t like math… but sometimes you just can’t get away from it.  There’s a very simple mathematical formula at work in today’s America, one that we need to recognize and work to reverse.  In the words of Ronald Reagan, “As government expands, liberty contracts.”  Our country’s founders sought to provide as much liberty to the people as possible without creating anarchy.  When it was signed in 1787, the United States Constitution granted more freedom—and more responsibility—to the American people than had ever been given to a nation before.  Early Americans had suffered under tyrannical governments; they had felt the wrath of kings who tried to impose a certain religion on their subjects; they had borne high taxes and tight regulations.  They sought to protect our infant nation from such an outrage.  Our government is a Democratic-Republic, a self-government, reliant on the personal responsibility, accountability, and morality of citizens to restrain the government and preserve individual liberty.  Ronald Reagan joked that “The most terrifying words in the English language are ‘I’m from the government and I’m here to help.’”  Thomas Jefferson put it best: “When the people fear the government there is tyranny; when the government fears the people there is liberty.”  Keep that formula in mind: as government expands, liberty contracts.  American liberty depends on two closely related factors: citizens must care to learn how the government works so that they can cast educated votes and otherwise participate in the political process, and the government must remain small so that the people’s voice is heard and tyranny is avoided.  Those two things are, well, let’s just say they’re not as prevalent as our founders intended; thus, American liberty is… dying.

Until the early 1900s, the United States had a limited government and liberty thrived.  Since the Great Depression, however, the general attitude towards government has changed, resulting in bigger government.  In well-intended efforts to ease the effects of the Depression, President Franklin Delano Roosevelt instituted a set of “New Deal” programs.  He began handing out Federal subsidies to the unemployed and underemployed, introduced Medicare, Medicaid, and Social Security, established a Federal minimum wage, and artificially created jobs, just for a start.  The National Industrial Recovery Act (NIRA) laid out mandatory guidelines for businesses to help increase employment, maintain wages, and reduce unwanted competition.  The NIRA established about 540 specific codes, all of which actually tended to raise prices and wages, reduce hours, and remove competition and opportunity for innovation. 

Today, we are seeing even bolder federal intervention, and our freedom is declining dramatically.  Government initiatives such as minimum wage laws, rent control, international trade barriers, price supports, health and housing subsidies, and bailouts of corporations cause increased economic disorder and limit individual freedom and opportunity.  Take price controls for instance.  In a free economy, prices are allowed to follow the laws of supply and demand.  When there is a surplus of an item, its price goes down because it is in lower demand; when an item is in scarce supply, demand for that item increases, so its price also increases.  Consumers shop for the lowest price on the products they want or need.  Producers want to charge high prices for their products, but they also want to offer low prices that will compete with other producers and attract buyers.  Each individual, in pursuit of his own best interest, is free to gauge his opportunities and make the choices that will be most beneficial to him.  When the government reaches beyond its natural bounds to impose price controls, the laws of supply and demand lose some of their superiority, and competition in the market is reduced from the perspectives of both the producer and the consumer. 

The minimum wage is another good example of government intervention causing unwanted consequences.  The problems with minimum wage—problems that grow as we increase the minimum wage—are threefold.  First, it reduces job opportunities for unskilled workers.  Most minimum wage jobs are entry-level positions filled by people with limited education and experience; these lower-paying jobs teach such workers essential skills.  The higher the minimum wage, the more it costs employers to hire unskilled workers, so they’ll be much more likely to look for a better equipped worker—to put it bluntly, they’ll hold out for someone who’s worth a higher wage, thus eliminating entry-level positions.  Second, it causes prices to rise.  When it costs a businessman more to hire employees, he has to charge more for his products to make up for it.  Finally, minimum wage laws reduce competition, just like price controls.  When employers are free to offer any wage they please for the position they need to fill, two beneficial things happen.  Potential employees increase their skills to appeal to an employer who will offer them the highest pay, and employers in turn offer higher pay to compete with other employers.  Thus, wages and quality both go up and up and up.  A minimum wage reduces the incentive both for workers to make themselves worth a higher wage and for employers to offer a higher wage.  Minimum wage therefore causes the unemployment rate to stay stagnant or rise, increases prices unnecessarily, and reduces quality by reducing competition.  In spite of all these negative impacts—in the name of reducing income inequality—our president is currently fighting to raise the minimum wage again, to a level higher than history has ever seen it.

We can look at other examples of big government infringing on the liberties of individuals.  The Affordable Care Act (ACA), better known as Obamacare, recently passed by Congress and currently being implemented, contains a wagonload of oversteps of the government’s limits.  The obvious ones are the Individual Mandate and the Employer Mandate.  The Individual Mandate requires individuals to obtain health insurance or pay a fee.  It eliminates certain types of health insurance, so many Americans have to forfeit the health plan or doctor they had chosen.  Under the Employer Mandate, which goes into effect in 2015, employers are required to provide health insurance for their full-time employees.  This is increasing the cost of running a business, and causing businesses to cut workers’ hours down to part-time.  Individuals and families also receive subsidies based on their incomes—but there’s a catch.  Because of the way the numbers are crunched, couples are actually penalized for getting married.  If you have two hard working people who aren’t married but simply cohabit, their incomes are counted and subsidized separately.  If they get married, their incomes are combined, so it receives a lower subsidy.  This is being called the Federal Wedding Tax.  That’s not freedom.

Our founders intended for the government to have very little impact on the lives of private citizens.  Individuals, private corporations, and the free market were supposed to bear most of the responsibility, because they can do things most efficiently and productively.  In a famous conversation between Mikhail Gorbachev, the last premier of the Soviet Union, and Margaret Thatcher, then British prime minister, a perplexed Gorbachev purportedly asked Thatcher who saw to it that the British people got fed.  “No one,” she answered, “the price system does that.”  Our government today is trending towards Gorbachev’s line of thinking, that the government has to micromanage everything.  And when it tries to, things go downhill; but Americans are forgetting that.  Thomas Jefferson warned that “a government large enough to give you everything you need is a government large enough to take everything you have.”  We The People need to take this nation back.  As John F. Kennedy admonished, “Ask not what your country can do for you; ask what you can do for your country!”