A Blind Eye toward Athens
After Sparta and Athens defeated the Persians in 479 BC, both returned to a peacetime economy. The authoritarian Spartans went back to their stable but stagnant agricultural life. The Athenians deployed their navy as a merchant fleet and began to trade all over the world they knew. In effect, Athens chose free enterprise.
During this period, called The Golden Age of Athens, the foundations of Western civilization were laid, a result of the freedom to enable growth of business and trade leading to increased wealth. A successful trade requires skepticism and critical thinking -- excellent training for a philosopher. Ever hear of a Spartan philosopher? The leisure time available in the wealthier Athenian society allowed some to ponder the nature of the world or proceed with Socratic dialogues. So, to a real degree, free enterprise was responsible for the beginnings of Western science and philosophy.
Some 2,240 years later, the industrial revolution began. Production moved to large-scale enterprises using scientific advances to make products more efficiently. The standard of living increased dramatically. Men who started industries made a lot of money. Though some writers abhorred them, the working conditions were a vast improvement over the harsh life before industrialization.
All this required large amounts of capital, thus the enterprise itself was often referred to as capitalism. Capitalism was a term of disparagement coined by socialists in the mid-nineteenth century. Adam Smith, in The Wealth of Nations, had called it "economic individualism." Economic individualism was based on the right to pursue one's self-interest and the right to own private property. Without these rights, there would have been no industrial revolution.
The period after the Civil War saw one of the largest economic expansions in history, called by Mark Twain "the gilded age." In the forty years after 1870, the U.S. economy doubled (GNP adjusted for inflation), and U.S. per capita income become the highest in the world. This was an age where the government largely stood aside and let businessmen make their fortunes. There was no IRS. They didn't have to deal with an EPA, EEOC, FTC, HHS, DOL, NLRB, DOT, etc. Critics called them "robber barons," though whom they supposedly robbed wasn't clear.
History is full of such examples. Economies prosper in direct proportion to the extent people are free to pursue their own wealth. The "progressive" left has blinded itself to this lesson, as progressives themselves tweet from their iPads at Starbucks that it doesn't work.
President Obama, in his Osawatomie, Kansas speech, spoke of free enterprise without government interference, saying, "It doesn't work. It has never worked."
The preceding examples refute that comment. Actually, free enterprise has never been tried without some interference, but anywhere it comes close, it works. The residents of prosperous Asian economies like Thailand, Malaysia, Taiwan, and Singapore would agree. Even China found what happens when people are permitted to have the fruits of their own labors. A long list of thinkers and economists would disagree with the president: Ludwig von Mises, Friedrich A. Hayek, Milton Friedman, Thomas Sowell, Walter E. Williams, Murray N. Rothbard, Margaret Thatcher, Ronald Reagan, Ayn Rand, and many more.
Also in the same speech:
Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefited from that success.
Now, how can it be that "folks who contributed to the success of our economy" did not benefit? Were they working for free? Were they slaves? Did Wall Street cheat them of their income?
When did someone's hard work stop paying off? Was it the '70s or '80s? Herman Cain and Steve Jobs would disagree! Was it 2004? Mark Zuckerberg would disagree! Maybe it was when people were forced by the evil bankers into mortgages they couldn't afford? No, not that -- Barney Frank said it was all right.
Of course, the real message of the Osawatomie speech is that the president, with his superior wisdom, is going to ensure that the economy works and everyone would benefit. The Lord of Government will rule over us and bring about true "fairness." The truth is that a government-run economy is what has never worked.
There are two glaring comparisons of "fairness governments" versus free governments, both in divided countries. They are North vs. South Korea and the old Communist East Germany vs. West Germany. One must use force to prevent its people from fleeing, while in the other, people live free and prosperous. F.A. Hayek explains why:
A claim for equality of material position can be met only by a government with totalitarian powers.
Wealth redistribution is not a humble request for donations, but a demand backed by the full power of government. It can be implemented only by force.
The only "fairness" government interference achieves is choosing one as more fair than another. The GM unions were "more fair" than the bondholders. GM was "more fair" than Ford. Solyndra was "more fair" than BP. High-speed rail was "more fair" than the Keystone Pipeline. The Machinists Union was "more fair" than Boeing.
Quoting again Mr. Hayek:
Even the striving for equality by means of a directed economy can result only in an officially enforced inequality - an authoritarian determination of the status of each individual in the new hierarchical order.
The government will be deciding for whom it is "more fair." Rewards will go not to hard work, but to those with government connections, those with pull. Some will be more equal than others. Rather than a nation "for the people," we will have a nation for some of the people and against the rest.
Today, we are far from truly free-enterprise. Indeed, we are headed to a dark and ominous horizon, described 55 years ago by Francisco d'Aconia in Atlas Shrugged (pp. 387-391):
Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion--when you see that in order to produce, you need to obtain permission from men who produce nothing--when you see that money is flowing to those who deal, not in goods, but in favors--when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you--when you see corruption being rewarded and honesty becoming a self-sacrifice--you may know that your society is doomed.
Gary Horne is a retired engineer and the creator of barbershopvalues.com.