Avoiding Disaster Now: The Principles of 1776

When people first find my blog, most see the "1776" and assume it is in some way a patriotic or "American" blog. After you have been reading this blog for a while, you will understand that...

I chose 1776 for two primary reasons...

1. I argue that the Founding Fathers had radically different intentions when they founded our country and ultimately wrote the Constitution versus the way we are governed today. I believe the evidence shows that our long drift from our founding principles has come via activist courts, an overly powerful (imperial) view of the presidency and an abdication of responsibility by Congress. This move away from first principles has damaged our republic and threatens individual liberties.
   
2. The Free-Markets view of economics was first defined and gained momentum in 1776. In that year, Adam Smith published The Wealth of Nations in Great Britain. In this book, he redefined "freedom" and changed the world forever. I believe that the evidence supports this as the only correct economic model to maximize societal happiness, wealth and freedom.
   

Taken together, these are the lenses through which we should view and critique issues we face and actions taken by our federal government. (For individuals, families and communities, the Biblical lens is in my view also essential.)

Why Should You Care?
Both of the points above were massive paradigm shifts in understanding human association and economics as it effects individuals. (As an aside, the 3rd was the Protestant Reformation in 1517 and the Biblical principles it recovered.) Without these 2 events in 1776, your freedoms, your economic mobility, your personal liberties and your "station" in life would be radically different. Drifting from these principles reduces our freedoms and liberties. Further, it increases economic inefficiencies and reduces economic motivation. In today's post, I explain the basics of free market economics. This should be your filter to distill today's disastrous political theories and rhetoric.

Free-Markets 101
Since 1974 when F.A. Hayek won the Nobel Prize in Economics, free-market economists and their thinking have ruled the day with the Nobel Committee and within the academic world. It isn't just their ideas that have won... it is the body of factual evidence that has killed the Keynsian/Marxist views. Even so, if Obama has his way the old Keynesian central planning, regulation and redistribution of wealth model will have a tremendous resurgence, no matter how wrong it is.

There are two primary schools of thought when it comes to adherents of free-market association / free-market economics: The Austrian School and The Chicago School. (Over time, I'll write a 201 piece on how the two schools differ.)

While these two schools have some significant disagreements, they agree on a core framework that defines free-market economics:

- BOTH SCHOOLS BELIEVE...

• Individuals, pursuing their own economic and non-monetary success, will ultimately maximize the economic success and freedoms within a society. Adam Smith called this "the invisible hand."
  
• Because of this invisible hand, liberty and order can coexist.
• Respect for private property is essential to freedom and progress. Without private property, there is no real mechanism for exchange.
• Free trade, within and between countries, is essential to individual and therefore societal maximization.
• For trade to be free, there must NOT be government controls on prices, the exchange process or wages (including minimum wages).
• Limited government is essential. Government's only necessary functions should be defending the nation against attack, protection of individual property rights, and limited infrastructure projects.
• There should be no central planning of the economy; it cannot be effectively done.
  
• Deficit spending should not be needed.
• Market intervention (as Keynes suggested) is not the path to economic stabilization.
• Progressive taxes are harmful.
• Using the tax code for social engineering is wrong.
  
• Income redistribution and the creation of the nanny state hurts individuals and the nation by destroying their liberties/freedoms and reducing motivation.
• Importantly, they oppose "corporate welfare", not just individual welfare.
• Finally, they believe in privatization of almost all government assets.
  

The Current Issues
The principles and freedoms created in 1776 have become the freedoms threatened by our current political leaders and bureaucrats... disaster looms. The core principles of free-market economics must be used daily, especially in this political season. Obama wants to institute a massive tax increase and an equally massive program of central planning and redistribution of wealth. We just made a mistake by increasing the minimum wage (See July 24 post... Minimum Wage - Maximum Ignorance). The Social Security and Medicare disasters threaten our economy and have robbed individuals of prosperity. And the list goes on and on.

That is why we need to understand ...

1776
Now More Than Ever !

Note 1: I have just added a link to The Independent Institute.

Please take a minute and visit them.

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