The Key 2 Liberty involves learning the principles of freedom for yourself and then sharing your knowledge with others.

Free Markets

Personal freedom and economic freedom are one and the same

What exactly does it mean to be free or have freedom and liberty?  The Declaration of Independence correctly explains that people have certain unalienable rights that are granted to them by God, the creator of the universe.  Because they were granted by God these rights can never rightfully be taken away by any government.  The Declaration of Independence states only a few of the most obvious rights; “… that among these are Life, Liberty and the pursuit of Happiness.”  The most important word of that sentence is among.  It means that the three items listed (life, liberty, and the pursuit of happiness) are not a comprehensive list of our rights and that we have many others not explicitly stated.  Nearly all of our unalienable rights, or those that cannot be taken away by ANY government, are derived from the three basic rights mentioned in the Declaration of Independence (life, liberty, and the pursuit of happiness).

The right to life is the most obvious right of all and barely needs an explanation.  No person or government can deny another person the right to his or her life.  This agrees wholeheartedly with the tenets of Christianity and most other religions.  An exception to this is when one person must kill another in self-defense.  Another variation from this is capital punishment.  As of 2011 capital punishment for the crime of first degree murder is used by 34 states.  Whether or not capital punishment denies a person of his or her right to life is a very controversial subject.  Various religious organizations have different opinions regarding this matter.  Those in favor of capital punishment argue that a person forfeits their right to life when they unjustly take away someone else’s right of life.  Those against capital punishment argue that as long as a person can be safely incarcerated and thus removed from being a further threat to the public that capital punishment is not necessary.

To have the right of liberty means that the government cannot regulate where a person lives, when or where a person can travel, or what religion if any a person desires to follow.  It also guarantees the right for a person to own and dispose of private property.  The right to pursue one’s happiness means that the government cannot regulate a person’s choice of profession, mate, personal hobbies, and things of that nature.

But what about a person’s right of economic freedom?  If someone is allowed to live, to reside in the place of his or her choosing, to travel freely around the world, to choose their profession, mate and hobbies and to own private property but has no useful goods or services (property) to buy, that person, for all intents and purposes, is a slave of the government or entity in charge of distributing the goods and services.  In order for a person to be truly free, or have freedom and liberty, that person must have access to a free market to be able to purchase the goods and services that he or she needs and wants.  To have a free market of goods and services means that people have the right to buy and sell goods and services between each other with an absolute minimum of interference from the government.  This includes the right for people and businesses to engage in contracts with each other which are formal, legally binding agreements that explain current or future transactions of property or services between the parties involved.  The level of personal and economic freedom retained by the citizens of the United States has been the motivation for millions of people from around the world to migrate here. 

The Founder’s view on free markets

The Founders understood that in order for a country to be economically successful it must have a free market of goods and services available to and run by the people.  In a free market system goods are produced when there is a demand for them.  The laws of supply and demand should be the only forces that determine the price and supply of a certain product or service.  The government should never attempt to regulate prices or production of products or wages of the people that produce them or provide services.  Whenever the government attempts to micromanage the economy by doing things such as subsidizing a failing industry, instituting a minimum wage law, or giving tax credits for special circumstances it almost always negatively affects every other person or business that does not directly benefit from the government’s intervention.

George Washington once commented on price controls, “To limit the prices of articles… I believe is inconsistent with the very nature of things and impracticable in itself.” – To James Warren. Fitzpatrick 14:313. (1779.) [The Real George Washington, p. 760]

Ben Franklin firmly believed that the free market is most successful when it is not regulated by the government.  He once said, “In general I would only observe that commerce, consisting in a mutual exchange of the necessities and conveniences of life, the more free and unrestrained it is, the more it flourishes; and the happier are all the nations concerned in it.  Most of the restraints put upon it in different countries seem to have been the projects of particulars for their private interest, under pretense of public good.” – Smyth 9:19. (1783.) [The Real Benjamin Franklin, p. 391]

Thomas Jefferson said, “Agriculture, manufactures, commerce, and navigation, the four pillars of our prosperity, are the most thriving when left most free to individual enterprise.” – First Annual Message to Congress.  Bergh 3:337 (1801) [The Real Thomas Jefferson, p. 449]

The people of a free nation must not only be able to trade with each other within the country but also with people of foreign nations.  This obviously means that goods must be able to be physically transported from one place to another without the threat of theft or destruction by any foreign powers such as foreign navies or pirates.  This can only be accomplished by having a large and effective navy.

George Washington said, “To an active external commerce, the protection of a naval force is indispensable.” – Eighth Annual Address to Congress.  Fitzpatrick 35:314. (1796.) [The Real George Washington, p. 744]

George Washington also said, “However unimportant America may be considered at present, and however Britain may affect to despise her trade, there will assuredly come a day when this country will have some weight in the scale of empires.” – To the Marquis de Lafayette. Fitzpatrick 28:520. (1786.) [The Real George Washington, p. 688]

Thomas Jefferson also commented on the importance of foreign trade when he said, “It is impossible the world should continue long insensible to so evident a truth as that the right to have commerce and intercourse with our neighbors is a natural right.  For the European powers to suppress this neighborly intercourse is an exercise of force, which we shall have a just right to remove when we are the superior force.” – Bergh 8:33 (1790.) [The Real Thomas Jefferson, p. 372]

An excellent example of the US defending its right to protect its commerce with foreign countries occurred in 1801 under President Jefferson’s administration.  Prior to 1801 the United States was forced to pay a tribute to pirates of the Barbary States on the north coast of Africa in order to be assured safe passage to countries in the Mediterranean.  In that year Thomas Jefferson decided to take action against the pirates and sent warships to engage them in order to protect the trade routes to the Mediterranean.  The fighting lasted off and on for several years.

Ronald Reagan’s view on free markets

Although not a founding father of our country Ronald Reagan had many important things to say about free enterprise.  On his radio show on April 16, 1979 he explained his feelings on what free enterprise had done for the United States. 

The radio show went as follows:

It isn’t unfair to say that today the world is divided between those who believe in the free market place and those who believe in government control and ownership of the economy.

I’ll be right back.

Our free market system is usually termed capitalism and by that definition capitalism has hardly been around long enough to deserve all the evil for which it is being held responsible.

Most of us aren’t really conscious of how recently the capitalist system came into being.  Possibly we look back and think of the extravagant luxury of kings and emperors and see that as capitalism.  We have a modern counterpart today in the rulers of Marxist nations.  The ruling hierarchy of the Soviet Union live on a scale more akin to royalty than do the heads of capitalist countries.

Maybe our trouble is caused by the term capitalist itself.  Actually all systems are capitalist.  It’s just a matter of who owns and controls the capital- ancient king, dictator, or private individual.  We should properly be looking at the contrast between a free market system where individuals have the right to live like kings if they have the ability to earn that right and government control of the market system such as we find today in socialist nations.

We have a very visible example of the contrast between the free market and government ownership in a household necessity we take for granted.  The invention of Alexander Graham Bell- the telephone offers us irrefutable proof of the superiority of the free market.

As recently as 1880 there were only 34,000 miles of telephone wires on the whole North American Continent.  There were dozens and dozens of small telephone companies using several different kinds of equipment and there was no inter-connection between these different companies.  The same situation prevailed in all the other so called advanced nations.

If someone had openly advanced a plan to put a phone in every home, on every farm, in every hamlet and city and hook them all together I’m sure someone would have said, “Only government has the resources to do that.”

Now strangely enough in most other countries government did take over the telephone system and to this very day the telephones in a great many countries are part of the postal system.  In America the government wasn’t bulldozing its way into the free market place as it does today.  For that we can be grateful.  The scattered, competing phone companies were left to the magic of the market place.  And that magic worked as it always does.

We take the phone so much for granted it’s hard to realize things weren’t always this way.  We can dial directly to any point in the country and to a great many outside the country.

With no intention of insulting anyone I have to say it only takes a few days trip in many of those other countries where the telephone is a government service to realize there is a difference.  A long distance call there can be quite an adventure-so can getting a phone installed.

But here we have them in our cars if we like, in private or corporation owned executive planes and on boats.  We bounce long distance calls off privately owned satellites and use telephone lines for network radio and remote broadcasts of sporting and special events.

And all of this came about because private individuals wanting to make profit for themselves kept thinking of better services to offer, confident that we’d want that better service.

This is Ronald Reagan.  Thanks for listening.

[Reagan, In His Own Hand, p. 228]