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On August 11th, 2000, Ron Brownstein, a reporter for the Los Angeles Times, boarded Air Force One to meet with President Bill Clinton. In the ensuing interview, Mr. Brownstein asked Mr. Clinton the following question: “In your mind — this is a legitimate debate — how significant a role did your economic decisions, the ’93, the ’97 budget, the other things that you’ve done, how important has that been in the prosperity of the last eight years?” “I think it was pivotal,” the President responded.
Supporting President Clinton’s contention that he deserves the credit for the economic performance of the nation is Vice President Al Gore. “For almost eight years now,” Gore told those gathered at the Democratic National Convention on August 17th, “I’ve been the partner of a leader who moved us out of the valley of recession and into the longest period of prosperity in American history. I say to you tonight: millions of Americans will live better lives for a long time to come because of the job that’s been done by President Bill Clinton.”
The operative assumption underlying both the statements of Clinton and Gore is that of the cult of personality: the indispensable man; the Superman of Nietzsche; the “enlightened” despotism of the philosopher-kings of Plato. Many of the cheering masses may believe the Clinton-Gore -drivel. But drivel it is, for it is not true. It is doubtful, in fact, as to whether or not the principal members of the Clinton administration even believe it. For they aspire only to power, and to achieve that power they are willing to pander to the simplistic sophistry that it takes a Superman to ensure the common man his daily meal.
This is all an evil and regrettable charade. It is not the president, the government, political candidates, or any individual or organization which brings true prosperity to a nation or a people. Liberty is the key that unlocks the door to prosperity. Slavery of a people under a Superman or philosopher-king can only result in the most abject misery and poverty. This is a truism driven home by Ludwig von Mises, the great Austrian economist. According to Mises,
… free labor is incomparably more productive than slave labor. The slave has no interest in exerting himself fully. He works only as much and as zealously as is necessary to escape the punishment attaching to failure to perform the minimum. The free worker, on the other hand, knows that the more his labor accomplishes, the more he will be paid.... What we maintain is only that a system based on freedom for all workers warrants the greatest productivity of human labor and is therefore in the interest of all the inhabitants of the earth.
Economist Milton Friedman, addressing the same theme as Mises, summed it up this way: “Wherever we find any large element of individual freedom, some measure of progress in the material comforts at the disposal of ordinary citizens, and widespread hope of further progress in the future, there we also find that economic activity is organized mainly through the free market.”
Freedom Philosophy
Despite their genius, the principle that prosperity and freedom are inextricably intertwined was not discovered by these 20th-century economists. In fact, this concept was widely understood in the America of the Founding period.
In Newburyport, Massachusetts, in 1774, Niles gave a powerful sermon in which he analyzed and described the benefits of liberty. Said Niles on that occasion: “It was observed that liberty has its rise in such a constitution as tends to the highest good of a community, and that the due administration of such a constitution affords a state of freedom. Hence, the bare idea of liberty discovers it to be an inestimable good, for whatever tends to the highest good of great numbers, must, undoubt-edly, be an invaluable treasure.” Continuing, Niles pointed out that “when we enjoy liberty, and are sure of its continuance, we feel that our persons and properties are safely guarded by her watchful eye, her impartial disposition and her powerful arm. This excites to industry, which tends to a competency of wealth.”
The accumulation of wealth, however, is not the only blessing conferred upon a society by liberty. For Founding Father John Adams, it was important to work for liberty so that all the blessings of culture and civilization might be realized by future generations. Writing to Abigail, his wife, Adams explained: “I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons must study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry and porcelain.”
In his Newburyport sermon, Nathaniel Niles stressed the same point. “Liberty not only removes every obstruction out of the way of industry, frugality and wealth,” he said, “but rouses even indolence to action, and gives honest, laborious industry a social, sprightly, cheerful air....” Liberty, Niles continues,
… discountenances disorder, and every narrow disposition. Thus the mind is fortified on all sides, and rendered calm, resolute, and stable.... In such a state, a free people will enjoy composure of soul and their taste will become refined. The study of the fine arts will follow of consequence, and, after these, a long train of science. Industry, frugality, and a curious turn naturally invent and perfect the useful arts....
Unfortunately, admits Niles, “liberty never has been enjoyed in perfection by any of the nations of the earth....” But, he says, “from the small degree of liberty, with which we are acquainted, the consequences of perfect liberty may be justly inferred.” He rightly concludes, therefore, that “the more [liberty] we can obtain, the greater will be our enjoyment. Each degree of liberty is a precious pearl.”
Such a strong understanding of the connection between liberty and prosperity as exhibited by Niles was something of a rarity in the world during the time of the Founding Fathers. Little mention of the principle is made outside England or her American colonies during the 18th century. Indeed, even in England, such ideas fell into disfavor following the French and Indian War, and the resulting increases in taxation and regulation fastened onto the American colonies by the English Crown had a primary role in bringing about the struggle for American independence.
The history of England’s American colonies prior to the French and Indian War, though, certainly played an important part in convincing Americans of the Founding era of the economic value of liberty. David Ramsay, a contemporary of Niles and the Founding Fathers, published his two volume treatise The History of the American Revolution in 1789. In it, he notes that “though the English possessions in America were far inferior in natural riches to those which fell to the lot of other Europeans, yet the security of property and of liberty” in England’s American colonies “gave them a consequence to which the colonies of other powers, though settled at an earlier day, have not yet attained.” As examples, Ramsay points to the colonies of Portugal and Spain. Those nations, he says, burdened their colonies “with many vexatious regulations....” France and Holland did the same to a slightly lesser degree. Notes Ramsay: “The settlements thus restricted advanced but slowly in population and in wealth.”
Eventually, of course, England imposed taxes and restrictions on her colonies and these led to the American Revolution. To Americans of the day, those restrictions must have seemed terrifically exasperating, since for so long before the colonies had been relatively unperturbed by restrictive regulation and taxation. Is it any surprise, then, that upon the success of the Revolution, the newly independent nation would strive to implement a constitution which would have as its central goal the protection of liberty and the rights of property?
Commerce and the Constitution
That the proposed Constitution would be conducive to the improvement of prosperity in the new nation was a fact to which nearly all agreed. Even those who disagreed with the proposed Constitution on other grounds agreed on this point. “The importance of the Union, in a commercial light,” said Alexander Hamilton in The Federalist, No. 11, “is one of those points about which there is least room to entertain a difference of opinion, and which has, in fact, commanded the most general assent of men who have any acquaintance with the subject.” The degree to which, under the Constitution, the new federal government would be limited in its sphere of activity ensured that to a greater degree than elsewhere in the world, the rights of property — and therefore commerce — in the new nation would be free of the chains of oppressive regulation.
In 1789, George Washington took office as the first president of the new United States of America. Already, with the Constitution having just taken effect, Washington was full of anticipation. “The prospect of national prosperity now before us is truly animating,” remarked Washington in a message dated March 1790. The new nation, under “the protection of a good government … cannot fail of attaining an uncommon degree of eminence, in literature, commerce, agriculture, improvements at home and respectability abroad.”
Washington’s optimism was well-founded. John Adams, who followed Washington in the Presidency, took the opportunity presented by his inauguration to review the progress made by the young nation during the administration of its first president. In his Inaugural Address, given in Philadelphia on Saturday, March 4, 1797, Adams explained that the Constitution already had had a great “effect upon the peace, order, prosperity, and happiness of the nation....” Adams, too, was optimistic for the future. He hoped, he said, that the retired Washington would, along with the rest of the country’s citizens, enjoy “the happy fruits” of the nation “which are daily increasing,” along with “that splendid prospect of the future fortunes of his country....”
Adams’ praise for the nation’s economy was justified. British historian Paul Johnson found noteworthy the increasing prosperity of America in the years immediately after the Constitution took effect. In his The History of the American People, Johnson pointed, as an example of America’s flourishing economy, to the young nation’s trade with China. “When Washington took office,” Johnson says, “an observer noted that of forty-six ships in Canton, eighteen were American; when Washington stood for a second term, the China trade had doubled and, when he finally left office, it had trebled.” Likewise, “internal economic activity boomed correspondingly,” Johnson observed. Freed from the bounds of tyranny, the new United States of America had quickly prospered, becoming the envy of a pretentious Old World that was slowly going from bad to worse, from feudalism to collectivism.
Modern Marvels
It is a self-evident fact that over the last century there has been an observable increase in statism and a corresponding decrease in the rights of property and therefore in liberty in general. Nonetheless, freedom has not been eradicated entirely. The rights of property still exist to the degree that the profit motive continues to encourage investment and invention. Take, for example, the computer industry. Forty years ago, there was scarcely anything resembling a computer industry. But the potential profit awaiting the clever individual or corporation who could perfect such a device and bring it to market stimulated effort. The effort paid off. Yesterday’s computer nerd whiz-kids are today’s wealthiest men and their companies are household names: Bill Gates with Microsoft; Larry Ellison with Oracle; Steve Jobs with Apple Computer. These three individuals and others like them have generated wealth by the application of their efforts in the expectation of a profit; but their invention of these devices has allowed others to generate wealth through their use, creating an economic cascade through society, enriching us all. This progress has been and continues to be possible because individuals still have the liberty to apply themselves as they see fit and can expect, generally, to keep the fruit of their own labor. Just imagine what progress could have been made if the growth of the welfare state had been aborted early in its infancy, or avoided altogether. Imagine, too, what the future could hold if we summon the courage to roll back that welfare state today.
In contrast, consider the case of the Soviet Union. It is well-known that property rights did not exist under this Communist dictatorship. Thus, citizens in the USSR lacked motivation — and progress and prosperity were scarce. Many will recall, no doubt, the reports of Soviet citizens suffering through shortages and rationing and standing in bread lines for hours and days only to arrive inside the store to find the essential commodities had long run out.
The dismal history of the Soviet Union reminds us of Thomas Jefferson’s warning: “Were we directed from Washington when to sow and when to reap, we should soon want bread.” Liberty, Jefferson knew, begets prosperity. “Still one thing more, fellow-citizens,” he stated during his first inaugural address in 1801, “a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government....”
