FREE ENTERPRISE VS. BIG GOVERNMENT 35

Former Florida Governor Jeb Bush said don’t blame FEMA (the Federal Emergency Management Agency) for the delays in getting relief supplies to victims of Hurricane Wilma, blame me. Why should any government official at the local, state, or federal level be blamed for not anticipating or responding with complete efficiency to natural disasters such as hurricanes which are by their nature capricious and unpredictable? For that matter why, quo jure, should the survival or deliverance from these disasters not devolve as the prime responsibility to the individuals and families of the people affected? This is not to say that succor, from governments and from private charities, should not be provided to the unfortunate people who find themselves in those circumstances, but where is individual responsibility? People were told prior to the arrival of Hurricane Wilma, as well as the other hurricanes, by federal/state/local officials to lay in at least a three days supply of nonperishable food and potable water, but many did not. It should not have been necessary to so instruct people, say nothing of them ignoring sound advice and for the ones who would choose to leave the area there was sufficient time to plan that. Free to Choose – that’s the ticket. The Rev. Jesse Lee Peterson from Chicago wrote eloquently on the subject of personal responsibility including for the people caught up in hurricane disasters this season.

The implicit assumption among the general population and certainly the mainstream news media now seems to be that it is the primary responsibility and imperative of first, the national, then the state, and finally local government to take care of people caught up in natural disasters. It would make more sense if our form of governance were like the old Soviet Union, although I would not put much faith, so to speak, in an entity like that. It makes absolutely much less sense for people living in a free society to so think. In September 2005 in a repeat of a C-SPAN Book-TV program originally telecasted in 1994 on the 50th anniversary of the publication of the F.A. Hayek book The Road to Serfdom, economist Dr. Milton Friedman explained what it means to function and live in a free society. Hayek, an Austrian economist, won the Nobel Prize for economics in 1974 – Friedman won the Nobel Prize for economics in 1976. Friedman wrote an introduction to the 50th anniversary edition of the 1944 book The Road to Serfdom, a slightly expanded version of the introduction he wrote for the German 25th anniversary edition.

In his 1994 C-SPAN interview, Friedman went on to expound that all over the world socialism had failed and everywhere it was tried, capitalism had succeeded. He said that everyone admitted it (perhaps that was a slight exaggeration – the hard left, in this country and elsewhere, would not admit anything of the kind) and yet free enterprise/capitalism has been losing ground for some time. When Friedman was born in 1912 the percentage of the GDP by the federal government in this country was approximately 15% - 85% was due to private enterprise. In the immediate years after WWII, 1947-50, the government’s portion had grown to 25% and by 1994 it was 45%. And considering the controlling effect of governmental regulation on private business, the percentage realistically was over 50%. The good Dr. Freidman seemed as bemused and perplexed at this illogically continuing trend as any savant or ordinary clear thinking folk would be.

Yet this growth of government, especially at the federal level, seems inexorable, be it under control of Democrats or Republicans. What are we to make of this? If economic history has taught anything it is that economic wellbeing for most people is best served by as free an economic system as it is possible to create and encourage. I am not advocating license for an absolutely laissez-faire system without regard for laws or morality. The brigands of WorldCom, Global Crossing, Arkadelphia, Enron, et.al. were not engaged in free enterprise. They were particularly immoral and destructive thieves who undermined a true free enterprise system with their unconscionable deception and fraud. A possible punishment, although perhaps considered immoderate by a few, would be to subject them to the same extreme treatment that the Sindero Luminoso (Shining Path) guerillas perpetrated in Peru a number of years ago. To prove they could it and to terrorize and intimidate the people, they decorated Lima by hanging half of a dozen black dogs from lampposts around the city. It may prove unsettling to some and I would not recommend it, but the sight of the aforementioned thieves swinging from lampposts in New York, Philadelphia, Houston, etc. should, quod erat demonstrandum, have a deterring and salutary effect on would-be future corporate malefactors.

In his 1962 book Capitalism and Freedom, Milton Friedman states: “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. This is a fundamentally subversive doctrine.” He goes on to explain why that is so. It is my observation that many (perhaps most) people think that ExxonMobil is in the business of selling gasoline, motor oils, and elastomers and other petroleum derived packaging materials; Proctor & Gamble is in the business of selling soaps and household cleaners; and General Electric is in the business of selling electrical appliances. They are not. These corporations are in business to make money and the more the better – so long as they play by the rules by engaging in open and free competition, without deception and fraud. These companies and others make money by supplying their customers with goods and services to the best of their ability. If they satisfy their customers they will succeed and make money. If not they will go out of business. Clueless Bill O’Reilly and people of his ilk are in dire need of a course in Economics 101. O’Reilly had repeatedly said on his television show, The O’Reilly Factor, that “greedy” major oil companies should give back a portion of their profits to their customers. His arrogance is exceeded only by his ignorance.

As the price of gasoline kept increasing this year what was the result? After a slow reaction until it was obvious that higher prices were not transient, drivers began changing their habits by driving less and opting, in some cases, for more fuel efficient vehicles. And in the past couple of weeks gasoline prices began to abate. This is exactly what should happen. Price is the most efficient mechanism ever conceived for regulating supply. What if, under public pressure, government intervenes in this price/supply regulating couplet? By the imposition of a price ceiling on gasoline set below the natural market price, shortages would ensue. This is not mere speculation – it has happened with commodities, services, and labor all through history. I remember WWII price and wages controls and concomitant rationing. Of course war time has special exigencies from peace time as the country went into survival mode for the preservation of freedom. Still economic laws were not repealed – shortages or rationing inexorably follow price controls and during non war times there are no survival excuses.

Again quoting Milton Friedman: “[Price and wages controls] clearly would produce [commodity] shortages, labor shortages, grey markets, and black markets. If prices are not allowed to ration goods and workers, there must be some other means to do so. Price controls, whether legal or voluntary, if effectively enforced would eventually lead to the destruction of the free-enterprise system and its replacement by a centrally controlled system.” There are those to whom a centrally controlled system sounds splendid. I for one believe that the examples of Albania, Angola, Cambodia, Cuba, Eastern Europe, Vietnam, et al. and, the most striking of all, the 70 year miserably failed experiment of the Soviet Union are definitive. It is hardly accidental that mainland China has become and is increasingly so an economic colossus when they set out on the road to capitalism starting in 1979 under the leadership of Deng Xiaoping.

It is not only in the sphere of economics that big government is inimical to personal wellbeing. As government grows its influence intrudes into non economic areas such as personal freedoms of speech and actions. Differentiating between necessary laws for the preservation of public safety/welfare and excessively restrictive or intrusive laws is a whole topic which needs extensive elaboration. The recent Supreme Court decision allowing local government to use the constitutional right of eminent domain for seizing land for non exclusive public works such as shopping malls or sports arenas is but one of the latest intrusions. Such actions may not directly affect everyone, but to paraphrase 16th & 17th century English poet and clergyman John Donne: Do not send to know for whom those tenets affect, they will eventually affect you.