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

Free Markets

Examples of government regulations that oppose free market principles

Farming subsidies

Farming subsidies are monetary grants issued by the government to businesses of the farming industry.  Of course it is not unusual for the government to believe that it can tweak the free market around to make things better for everyone.  As has been discussed in previous sections it is impossible for the government to grant a tax credit or subsidy for one business or sector of the economy and not in turn cause a bad effect elsewhere in the market.  In order for the government to grant money to a farming business it must obviously confiscate it from other individuals or businesses through taxation.  Farming subsidies are just another form of wealth redistribution that opposes the principles of freedom and liberty and unfortunately the farming industry is just another industry among many that has been hijacked by government regulations.

The reasons behind subsidies always sound benevolent.  A common argument is that food is essential for sustaining life and must be made available to people at a “fair” price.  Another argument is that the production of food is a risky undertaking due to factors such as the unpredictable nature of weather and the unpredictable forces of the market.  In order to guarantee that farmers will not go out of business as a result of an unprofitable year caused by bad weather leading to a low crop yield or low prices due to overproduction or lower than expected demand the government must provide assistance to them to minimize their risk in the farming industry.  Why should one type of business or sector of the economy get special assistance from the government?  In a country that is based on freedom and liberty all people and businesses should receive equal treatment under the law.

In a properly operating free market all products including food grown on farms will be delivered to the market at the lowest possible price.  If the demand for any product whether it be a new electronic gizmo or a food substance increases, the price of that product will consequently increase.  This will happen regardless of the fact that the product is “essential for life” such as a food substance or just used for entertainment purposes such as the latest video game station.  If the free market is left alone and the demand for a product increases and subsequently causes an increase in price, people will be naturally motivated to start new businesses or expand existing businesses to generate more of the demanded product in order to make a profit on the item that is needed or wanted by the public.  If too many businesses start creating the needed or wanted product the product will become overproduced and then cause the price of it to fall.  When the government stays out of the free market natural market forces will keep the prices of items whether they are essential for life or not at a fair price.

The United States of America claims to be the land of the free.  Is taking money from electricians, grocery store clerks, restaurant servers, or teachers and giving it to farmers to minimize their risk in the farming business an example of freedom?  In order for people to have freedom and liberty they must be allowed to keep the majority of the fruits of their labor and other forms of property.  The only portion of ones property that can rightfully be taken away by the government must be used for the mutual benefit of all the people living within the jurisdiction of government that collects the tax.  For instance if the federal government taxes people, which should be done on an equal basis and not using a progressive income tax like we have today, then it should spend the money collected only on items that mutually benefit everyone in the country such as military defense or funding the operations of the US Post Office and should not be spent on items that benefit only a few like a farming subsidy.

Farming subsidies are without question unconstitutional at the federal level of government since Article I, Section 8 of the Constitution does not grant Congress the power to regulate farming.  Despite the unconstitutionality of subsidies they have continued to be a part of the American farming industry since the 1920s.  There are different types of farm subsidies.  Most farming subsidies only apply to certain, specific types of crops.  Farming subsidies for specific types of crops generally either guarantee farmers a price floor for them or give a specific amount of additional money for them on top of the sale price for each unit produced regardless of the price.  Another type of farming subsidy is a direct payment to individuals that own farms.  The important thing to keep in mind is that it really doesn’t matter which method the government uses to spread the wealth of the people to the farming industry.  Americans must learn to realize that all subsidies are wealth distribution programs and should be banned from all levels of government in a free country.

How to correct problems with the American economy

It amazes me how difficult Americans make the problem of fixing the economy when the answer is really quite simple.  Americans simply need to realize that governments in general have proven time and time again that they are not capable of solving most problems in an efficient manner.  There are small problems and there are large problems and each type of problem needs to be handled at the smallest level of government possible that can still manage it.  Many problems should not be handled by any level of government at all but instead should be handled by individuals, families or local support groups such as churches, other places of worship and nonprofit community service organizations such as the YMCA or the Knights of Columbus.  The economy is not suffering because the government (federal, state and local) has not passed enough laws to regulate it or has not created enough hand-outs to help people in need.  The economy is suffering because people in general are entrusting too many problems to the government or the wrong level of government and not are handling them themselves when they can.  If Americans want to improve the economy they need to remove from every level of government, starting with the federal government, bureaucracies and departments that have the authority and responsibility of solving a problem that can be handled more efficiently at a lower level of government or by people, families, and local non-governmental organizations.

The reason why governments in general are not capable of solving problems efficiently is simple.  The people that work for the government who are in charge of managing large bureaucracies or departments of them are not incentivized to provide the best service at the best price.  This is mainly due to the fact that their own money is not at risk, there is no competition from other companies to provide a similar service, and for the most part there are no consequences for doing a poor job.  These factors together practically guarantee that all the tasks being completed by the government cost substantially more than they should.  Government bureaucracies once created shift their goals from their intended purpose to the same goal of every government bureaucracy and that’s making sure that the bureaucracy continues so that everyone who is employed by it continues to have a job.  After a bureaucracy is reasonably sure that the jobs of its employees are secure the goal of the bureaucracy then becomes making sure that the pay and benefits of the employees are raised as high as they can get away with at the expense of the tax payer.

Ronald Reagan once said, "The nearest thing to eternal life we will ever see on this earth is a government program."
The solution to fixing the economy is returning back to a free market system with a minimum of government interference.  The government should never be a mechanism for wealth redistribution.  It should not create unnecessary jobs.  If there is a legitimate problem that is greater than individuals, families and local support groups can handle then it is important to decide on which level of government is best suited to handle it.

There are obviously some large issues that must be handled by the federal government such as national defense.  One cannot expect an individual, family or a local support group to repel a foreign invasion.   This issue is even to big of a responsibility for a city, county or a state level of government to handle properly so the problem is best suited to be taken care of by the federal government.  Only by the entire country pooling its resources together can the United States afford to build nuclear weapons and aircraft carriers full of fighter jets.

There are other problems such as providing roads, police services and fire services that are too big for individuals, families and local support groups to handle but are well within the capabilities of state, county and city levels of government.  The federal government can certainly handle the responsibility of building and maintaining roads but so can states or sometimes even counties and cities.  The construction and maintenance of roads, like other problems, needs to be handled at the proper level of government.  Interstate highways are very large and long roads that interconnect cities of different states and provide an overall benefit to the entire country.  These can be justified as being taken care of by the federal government.  However smaller, state highways and local city streets should only be taken care of by the state or city governments where they exist in.

If the federal government starts taking care of local city streets then the unavoidable situation of wealth redistribution will occur.  It is impossible to fairly distribute funding across the entire nation for local city streets when the cost of building streets differs from one part of the country to another and the cost of maintaining streets differs from one part of the country to another.  Attempting to do so would create a game of politics as to which states and cities or parts thereof would get their streets paved first.  The wealth of one part of the country would inevitably get redistributed to another part of it unless the government was somehow able (and willing) to give back to each part of the country the exact proportion of money that it previously took from it or will take from it in the future though taxation.  The larger problem with the federal government attempting to evenly and fairly distribute funds to build or maintain local roads is that programs of this nature are usually paid for by taking out loans.  Each state, county or city should determine for itself if it is willing to go into debt to solve a local problem.  It is easier to hold politicians accountable if the projects they are responsible for are closer to home.  If the federal government spends too much money on building and maintaining roads the entire country suffers.  If a state or local county or city government spends too much money on building and maintaining roads then only that portion of the country or state suffers from an overinflated budget that will have to be paid for with higher taxes in order to properly balance its budget.

There are several problems that are currently being handled by the federal government that should not be handled by the federal government at all.  Some of these problems are taken care of by large, expensive bureaucracies such as Medicare, Medicaid and Social Security.  There is no reason why each state can’t provide its own safety net for its own people.  When the federal government takes care of health and retirement services it just becomes a wasteful, wealth redistribution service at best.  Why should people of one state have to pay for the health and retirement services of another?  Unless the federal government gives back to each state the exact proportion of the money that it took from it to fund a particular program or bureaucracy it is simply redistributing funds from one state to another.  This is not freedom by any stretch of the imagination.  Each state should run any welfare programs they choose to have in their own way.  If people do not like the state they live in because it does not provide enough government benefits or if the taxes are too high for having too many of them then they should have the freedom and opportunity to move somewhere else.  This creates competition between the states to provide the best services for their people.

There are many government services or programs that exist today that simply should not be handled at all by the government.  One that comes to mind is trash collection services.  Some cities mandate that they take care of the trash collection services of individual families instead of each family deciding on which private company to choose from.  Once a city department has a guaranteed customer base there is little incentive to keep costs down and to provide a good service.  If a city trash collection worker perhaps is consistently late or leaves pieces of trash on the ground next to where the trash cans are placed for trash collection then an individual’s only remedy is to file a complaint with the city and hope that the manager of the department takes action.  It is sometimes difficult for a manager of a city worker that is part of a labor union to compel them to do a good job.  If people are able to use the company of their choice to perform a needed service then they will have the option of selecting a different company if at any time they feel the service of their current provider is unsatisfactory.  Competition will always guarantee the best service at the best price as long as there are no strings attached by the government and the free market system is allowed to work.

In conclusion, the way to correct many of the problems with the American economy is to eliminate unneeded and wasteful government programs and let the free market handle every problem that it can.  When it is absolutely necessary for the government to handle a particular problem then it is essential that the correct level of government be assigned the responsibility of handling it to insure that inefficiency and waste are kept to a minimum and that government accountability is kept to a maximum.  The American people are very good at handling their own problems when given a chance.  Government departments and bureaucracies are in general wasteful and have less of an incentive to complete required tasks in an efficient manner.  The answer to having a successful and thriving economy is for the people to have more individual responsibilities and give fewer responsibilities to the government.