Just like national freedom, economic freedom must be defended. When we stop defending it, we are on the Road to Serfdom.
Ginger and I attended a family wedding recently where many of the attendees were members of the military. I mentioned to a small group my typical phrase, “Thank you for your service to our country.” Then added, “You know, just like our national freedom needs defending, so does our economic freedom.”
What is Economic Freedom?
A good definition is “The Fundamental Right of Every Human to Control Their Labor and Property.” In an economically free society, individuals are free to work, produce, consume, and invest in any way they please.
For a member of the military, it means you had the economic freedom to control your labor, by joining or not joining the military. I will argue that Milton Friedman was the greatest economist of the 20th century, and he gets most of the credit for ending the draft, with the simple assumption that a volunteer force is more motivated than a conscripted force. In a committee meeting on the topic, Friedman asked “General Westmoreland, would you rather command a slave force?” That totalitarians and socialists like to command labor is not my subject today. I’ve unpacked some of that in podcast #61 titled Socialism and Slavery.
I pointed out to some of the wedding party that one of the first books on economics, by Ludwig von Mises, was titled Human Action because economics is about more than money, it’s about how you use your freedom to produce and distribute goods and services. Obviously, serving in the military provides a service. Friedman was correct: Those who freely volunteer to serve are more motivated than those whose freedom is taken away from them as conscripts.
There is an abundance of scriptural support for economic freedom. It’s the first of the ten Biblical commandments of economics that Sergiy Saydometov and I wrote about in our book, Biblical Economic Policy.
The Fallen Nature
The Christian Worldview contains three elements: Creation, fall, and redemption. Perhaps the most dangerous assumption in national freedom is to assume there is no fallen nature. Actually, it’s the most dangerous in economics as well, but I want to explain national freedom first. When the Soviet Union fell in 1989, the cold war was over, and in the decade of the 1990s, the Clinton administration quickly traded guns for butter.
Three books in a 13-year period predicted a safe, secure future world, consistent with President Clinton’s move to a peace-time military. All three books were wrong because they denied the fallen nature.
First, in 1992, Francis Fukiyama explained in The End of History and the Last Man that history records when a country knocks off its neighbor. Since we seemed to be in a period of relative calm, he predicted that would not happen again.
Next, in 1998, Yergin and Stanislav wrote in The Commanding Heights, that all developed nations had some sort of democratic government and relatively free-market capitalist economies.
Finally, even after the terrorist attack on the World Trade center towers in 2001, Thomas Friedman wrote The World is Flat, in 2005 and predicted a world of peace and harmony, where individuals would trade freely across borders.
Then Russia took Crimea in 2014, and invaded Ukraine in 2022. The lesson is simple: We must continue to assume that humans are fallen. Yes, they can rise ABOVE their fallen-ness, but to assume they will on a general basis is a dangerous assumption: Both in national and economic freedoms.
My favorite measure of economic freedom comes from the Heritage Foundation which releases an annual report. This year, the US ranks 25th, the lowest in the history of the rankings. Heritage explains the US situation in this way, “The U.S. economy faces enormous challenges. Big-government policies have eroded limits on government, public spending continues to rise, and the regulatory burden on business has increased. Restoring the U.S. economy to the status of “free” will require significant changes to reduce the size and scope of government.”
Spending: Federal government spending is projected to be $6.1 trillion this year. Biden’s own proposed 2024 budget would be 55 percent higher than Trump’s spending in 2019, and his budget projections are even more alarming. His 2024 proposed budget has spending that will reach the $7 trillion threshold in 2025, $8 trillion in 2028, $9 trillion in 2031, and $10 trillion in 2033.
The old axiom is true: As government gets bigger, individuals get smaller. Dennis Prager says it this way, “The bigger the government, the smaller the citizen. This is one of the most important realizations about society you will ever have. In fact, this understanding is the primary reason for America’s unique success as both a free and affluent society. Everything gets smaller as the government gets bigger. Liberty gets smaller, individuality gets smaller, goodness gets smaller, and human character gets smaller. This is not a point on behalf of a political party. It is simply an observable fact. And it’s just common sense.” Economic freedom is decreased, when government spending increases.
Total Government Debt: Government debt decreases economic freedom. It’s now approaching $32 trillion. Interest on the debt is $580 billion, making it the fourth largest expenditure after healthcare, social security and defense. When my DBU sophomores were born in the year 2000, the debt to GDP ratio was 58%. It’s now 120%. Just in the last year, net outlays for interest on the public debt rose by $112 billion (or 34 percent), mainly because interest rates are significantly higher than they were last year.
Annual Deficit: Annual deficits compound to produce our previous subject: Total government debt. If you do the math from the US Debt Clock, we will have $6.1 trillion in federal government spending, and $4.7 in revenue, that’s a difference of $1.4 trillion. The Congressional Budget Office pegs the number at $1.5 trillion. That decreases economic freedom.
Taxes: I’m running out of time, so for the sake of brevity, let me just say that the higher the tax rate, the less economic freedom individuals have. Pretty simple.
Money Supply: Recent increases in the money supply caused inflation. During the Biden administration, we’ve seen the highest inflation in 40 years. It’s on its way down from about 10%, but at just over 4%, it’s a long way from the goal of 2%. During the Trump administration, the Fed was trying to RAISE inflation, because it was stubbornly low. I guess that’s one problem that President Biden can take credit for solving. In his book For God and Profit, Samuel Gregg made the point that governments have historically pushed currency levels up or down, depending on whether the government was a borrow or a lender. This is especially pernicious, that the government is now calling DOWN the value of the US dollar, as Government debt increases.
Interest rates: Allowing inflation to get out of hand caused the Fed to raise interest rates. When borrowing costs go up, you have less economic freedom.
Digital Currency: If the US dollar crashes, it will likely be replaced by a Federal Reserve Bank Digital Currency. I’ve warned about how that will decrease economic freedom in podcast #147 titled the Digital Dollar Deceit.
This is an entire podcast, and maybe a book. So, I will make only a couple observations today.
Bank Bailouts: Some of the data in today’s podcast comes from James Freeman’s column in the WSJ titled The Continuing Unreality of Bidenomics. The subtitle reads, The president’s economic claims are chronically at odds with government statistics. Outlays of the Federal Deposit Insurance Corporation (FDIC) rose by $53 billion as a result of facilitating the resolution of bank failures in the spring of 2023. The FDIC expects to recover much of that amount by continuing to liquidate the banks’ assets and collecting higher premiums from FDIC-insured institutions over the next several years. Just a casual reminder: The government has no money! So that $53 billion has to come from taxpayers, like you and me. That limits our economic freedom.
Student Loan Forgiveness: That’s the title of my podcast #137. Outlays of the Department of Education increased by $48 billion (or 49 percent), primarily because earlier in this fiscal year, the Administration recorded the costs associated with the final rule concerning student loans. How does this lower your economic freedom? The government has no money. It has to come from taxpayers, and that’s you! Simply: The less money you’re allowed to keep, the less economic freedom you have.
President Biden didn’t say much in his 2020 presidential campaign, which was mostly conducted from his basement. But I don’t remember his promise to lower your economic freedom. That’s clearly what has happened in fiscal, monetary and regulatory changes over the 29 months of his presidency.
I continue to think about the Greek myth of Sisyphus, rolling that stone up the hill every day. It’s a good metaphor for national and economic freedom. When we stop pushing economic freedom up the hill, the stone of socialism will roll down it, on the Road to Serfdom.
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Read Along with The #ChristianEconomist
- Biblical Economic Policy https://amzn.to/3nn8inO
- Economics and the Christian Worldview | https://amzn.to/3tIsYYM
- #61 Socialism & Slavery | https://youtu.be/mB76NKnktkg
- Human Action | https://bit.ly/40Z4SbU
- Heritage Foundation Freedom Report | http://tiny.cc/a7l8vz
- Heritage Foundation | USA | http://tiny.cc/c7l8vz
- Federal Budgets 2019 | http://tiny.cc/d7l8vz
- Federal Budgets 2022 | http://tiny.cc/e7l8vz
- Biden Budget | http://tiny.cc/g7l8vz
- Congressional Budget Office | http://tiny.cc/h7l8vz
- Money Supply Chart | http://tiny.cc/j7l8vz
- #147 The Digital Dollar Deceit | https://youtu.be/Cz45dMRyGVw
- The Continuing Unreality of Bidenomics | WSJ | http://tiny.cc/m7l8vz
- #137 Student Loan Forgiveness | https://youtu.be/9W0RhtK8KRE
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