Category: Economic Freedom

goodwill-worker“Most of economics can be summarized in four words: ‘People respond to incentives,’” says economist Steven E. Landsburg. “The rest is commentary.” The same can (mostly) be said about electoral politics: Politicians respond to incentives.

Politicians are often derided for following the crowd rather than leading on public policy. But in doing so they are often acting rationally. To gain votes you have to give people what they want, even if want they want is ultimately harmful.

When we can see or predict the destructive outcome of such policies there is a tendency to assume the politicians motives were dishonorable. But more often than not, politicians who endorse bad policies have noble motives — even if it is nothing more than the desire to give voters what they asked for.

I believe that is true in the case of Hillary Clinton, who became the first major presidential candidate to ever recommend paying all disabled workers the minimum wage. I assume her motives are perfectly pure, even though the result would lead to increased unemployment for disabled workers.
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apple-icon-appleThe early church father Tertullian once asked, “What has Athens to do with Jerusalem?” by which he meant “What has Greek thought and philosophy to do with Christianity and its Biblical heritage?”

Today we might ask a similar question, “What has Apple to do with Hobby Lobby?” or “What does the conflict between Apple and the federal government over encryption have to do with Hobby Lobby’s struggle with the government over religious liberty?”

The answer is: More than you might think. As Chelsea Langston argues, the tech giant and the craft store share a defense of constitutional protections for institutions:
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navy_shipsThe evening news reports there has been a complete blockade of the U.S. On the East Coast of the United States, Russian forces have instituted a naval and air blockade, similar to the one being imposed by China on our West Coast. A similar blockade has been set up on the borders of Canada and Mexico.

The blockade is somewhat porous. People are allowed to pass through freely (but only if they are not trying to enter the U.S. illegally). Exports from the U.S. also are unhindered. But all imported goods from every nation on earth are being kept out.

What would be your reaction? Well, naturally you’d cheer. This is great news! Someone has finally stopped the “invasion” of foreign products into our homeland. Without cheap imports flooding our market prices will have to rise, which means increased wages and better jobs. Factories will have to open since everything will need to be made in the good ol’ US of A. Unemployment will plummet since the demand for workers will spike. Our economy will soon be booming!

Wait, what’s that you say? You don’t think it’s a good idea? You say such provocation would be an act of war?

Okay, what if the blockade was limited. Instead of completely keeping out foreign goods, the blockading countriesmerely require importing countries to pay a “toll” of between 10 and 40 percent. And to keep the peace, the blockaders even give the money collected from the tolls to the U.S government. That would be almost as good, wouldn’t it? Maybe even better?

No? You still say the blockade would be an act of war? That it’d make us all worse off than before?

Of course, you’d be right. A naval blockade by foreign countries would hinder, not help, our economy. So why do we allow in peace what we oppose in war?

That was the question asked in the 19th century by the American economist Henry George. In his book Protection or Free Trade, George explained how voluntary governmental restrictions on trade are the same as blockades in a time of war by foreign nations:
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anti-establishment-bernie-sanders-donald-trumpWith Donald Trump and Bernie Sanders outperforming all expectations in the current election cycle, much has been said and written about the widespread dissatisfaction with the so-called “establishment.”

“We’re tired of typical politicians,” they say. “It’s time for real change and real solutions. It’s time to shake up the system!”

Yet, as Jeffrey Tucker points out, blind opposition to the status quo, no matter how bad it may be, is not the same as supporting liberty.

The state power we oppose is not identical to the establishment we reject. You can overthrow the establishment and still be left with a gigantic machinery of legalized exploitation. All the agencies, laws, regulations, and powers are still in place. And now you have a problem: someone else is in charge of the state itself. You might call it a new establishment. It could be even more wicked than the one you swept away.

Indeed, it usually is. Maybe always.

Or, as Peggy Noonan recently wrote, considering the prospect of a completely dismembered GOP: “Something important is ending. It is hard to believe what replaces it will be better.” (more…)

Conservatives are known for arguing about the ill effects of over-regulation, reminding us how it stifles innovation, cramps entrepreneurship, and harms small businesses. Where we’re less effective is connecting this reality to the more fundamental abuses it wields on human dignity in general and the poor and vulnerable in particular.

In a 45-minute talk given at Heritage Action, Senator Ben Sasse of Nebraska offers a detailed critique of over-regulation in America.

Pointing first to the proper scope of regulatory policies, Sasse proceeds to note the increasing overreach of the federal government and the range of reasons to oppose it. Watch an excerpt here:

Although arguments about over-regulation and taxation are bound to involve in depth discussions about numbers and econometrics, Sasse reminds us that our focus must remain on the preservation of freedom and human dignity. (more…)

FITW_World_Map_nolabels_GF2016_FINAL_940pxA new report shows that global indicators of economic and political freedom declined overall in 2015, with the most serious setbacks in the area of freedom of speech and rule of law. Freedom House, an “independent watchdog organization dedicated to the expansion of freedom and democracy around the world,” released its Freedom in the World 2016 Report which included some disturbing statistics and worldwide trends, particulary as it concerns the progress made by women in some regions.

The beginning of the report summarizes the situation:

The world was battered in 2015 by overlapping crises that fueled xenophobic sentiment in democratic countries, undermined the economies of states dependent on the sale of natural resources, and led authoritarian regimes to crack down harder on dissent. These unsettling developments contributed to the 10th consecutive year of decline in global freedom. [emphasis added]

Key findings from the report: (more…)

We welcome guest writer Stephen Schmalhofer to the PowerBlog with this review of Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies by Charles Koch (Crown Business, 2015). Schmalhofer writes from New York City, where he works in technology and venture capital. He is a graduate of Yale University.

Charles Koch’s Metaphysics of Business

By Stephen Schmalhofer

Adam Smith, that venerable a supporter of free enterprise, held businessmen in low regard, alleging that their every meeting “ends in a conspiracy against the public, or in some contrivance to raise prices.” While deference is due to the Scottish master’s lasting insights into the sources of the values of men in The Theory of Moral Sentiments and their success in The Wealth of Nations, I observe that many executives tout their “core values” but not all of these companies are successful. Businessman and philanthropist Charles Koch is successful by any financial measure and his unique approach to the creation of value and values at Koch Industries in Wichita, Kansas, where he is chief executive officer, positions him against Smith’s caricature of scheming backroom businessmen.

Charles Koch

Charles Koch

Since 1967, Koch has overseen operations at Koch Industries where he developed and implemented “Market-Based Management.” Following a large acquisition by Koch Industries in 2004, he urgently systematized the method and continues to share it with the fervor of an evangelist. Koch’s first book on the method was grandiosely titled The Science of Success: How Market Based Management Built the World’s Largest Private Company but in 2015 he re-entered the marketplace of ideas with a more accessible version — Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies.

Removing the pretense of science from the title better reflects the method’s foundation in the ideas of spontaneous order and the price system articulated by Austrian economist F.A. Hayek rather than in the pseudo-scientific central planning opposed by the Nobel laureate. Koch Industries’ business model is based on acquiring complementary companies that either enhance, or can be improved by, the performance of existing Koch business units. Koch managers seek to integrate these new acquisitions into the company’s operations to realize the expected gains from economies of scale and knowledge sharing. But this integration can blunt the information signals provided by external networks as well as create wasteful internal political battles, especially over budgets and other signs of corporate status unrelated to “good profit.” (more…)