Free Enterprise

Free enterprise is about applying liberty to economics. If you don't have economic liberty, then you don't have liberty at all.

Full disclosure on a few things: (1) I am not an economist. The following is only my opinion on what I've learned about economics so far. (2) In this article, “free enterprise” is code-word for “capitalism”, since it's become a dirty word. (3) We do not live in a capitalist economy.

What is Free Enterprise?

Free enterprise is based off of two negative rights: your right to your own property and your liberty to control how you use your property. When these rights are truly carried out, we create a free enterprise. Our current economy does not truly match these ideals. A free enterprise is antithetical to confiscatory taxes, government setting prices, and wealth redistribution.

In a free enterprise there are two ways in which one parts with one’s money: either through mutual-beneficial trade or through charity (where the donor voluntarily gives their resources for non-immediate or non-compensational benefits).

Free-trade and Wealth Creation

Any time that an owner parts with their money there is always some sort of trade off. (Or at least a perceived benefit.) If you give money to a homeless person, your reward may be a good feeling, or the idea that you helped someone in need without force, and therefore are showing your love for your fellow-man. For me, as a Christian, when I give charitably, I believe that I will have a reward in heaven. In any trade, the benefit you get is self-perceived and subjective.

When you spend money on a product or service, the benefit is more tangible, but the value is still self-assigned. Meaning, you will only buy the product if it’s worth it to you.

There are three ways that we add value to the world (create wealth). First is innovation, using creativity to turn raw materials into something more complex, like art or a new invention. The second is effort, you always need to exert some effort in order to improve things. The third is trade, if we both walk away with something that we value more, we both walk away richer.

The Government in the Economy

In both economic and social interactions, the government is supposed to act like a referee. The government doesn't intervene until someone has been fouled (their negative rights have been violated). No referee should pick winners, and there is no need for the government to do that either. In free trade, there is no need to pick winners, because both parties can win. So, in the economy, the role of the government is to protect both the producer and the consumer against force and fraud, to ensure both sides walk away winners.

When the government starts setting prices, redistributing wealth, participating in over-regulation and over-taxation, it hurts the economy. It's like a referee that stops the game to give points to the losing team, simply out of pity. It's demeaning to both sides.

Decentralization

“Wait, why is centralized government a bad thing?” my friend asked me.

I was a little shocked by the question. Especially since we had been through many of the same leadership courses, so I expected him to know the answer. I can't remember how I responded, but the fact is that centralized power is micro-managing. That is why decentralization and delegation are essential to leadership, especially in government.

The Danger

Think about what your job would be like if you had to get your bosses approval for every decision you made. Your place of business would collapse if it operated like that. The same goes for the whole economy. The more regulation and micro-managing we get from our leaders, the more the economy will slow down, until it collapses on itself.

The Rule

“Every problem should be handled by the smallest level of government possible.” This is the principle that my mentor taught me four years ago. Last night, I got to visit him and talk about politics (our favorite topic). Sure enough this principle came up again, and we spent a good amount of time talking about it.

In today's political arena, it seems that the exact opposite happens. When someone has a problem, too often they want the federal government to fix it. However, there are more immediate institutions that can solve the problem. Even private institutions. This wastes time and resources for the federal government, and cheapens the smaller levels of government.

What are the levels?

The Tenth Amendment states “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

So right here we are looking at three levels of government. First there is the federal government, which is established by the Constitution. Second is the state government. Finally there is the people. There are many other levels not mentioned here, like county and town governments, but the people have the greatest degree of power. Each individual is a sovereign entity, responsible for himself and his possessions.

Some individuals are part of a family unit. While the family isn't an official level of government, it is nonetheless an essential component of civilization. Families and individuals ban together to form towns/communities, which ought to be the strongest form of official government. The farther up the levels of government you go, the weaker and less involved they should be.

Our nation used to operate like this. So much so, that the federal government wasn't even thought about by most people. Instead, today we need to spend a lot of time and energy on federal politics, because all the power is concentrated there.

Solving a Problem

When you have a problem, the first level of government that you ought to turn to is yourself. Can you solve the problem yourself? Self-sufficiency is important for both a free society and for personal growth. If you cannot solve the problem yourself, turn to your family, or some similar small support group. If your family cannot solve the problem, then move to your local government, and from there you can move up the levels of government if necessary. 

Decentralizing helps you to keep as much freedom as possible, and prevents higher levels of government from being over-burdened with too many responsibilities.