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View related content: Free Enterprise
Earlier this month in the first presidential debate, Mitt Romney made an unusual argument by modern political standards: that long-term deficit spending is not just an economic issue, but a moral one. “I think it’s . . . not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation.”
This is a notable occurrence, not just because Romney is frequently chided for being cool and detached, but because it represents a return to something our founders knew but succeeding generations have forgotten: Limited government and individual liberty aren’t merely policy alternatives. They’re moral imperatives. “Limited government and individual liberty aren’t merely policy alternatives. They’re moral imperatives.” — Arthur Brooks
America’s founders were moralists, not materialists. The Declaration of Independence defends not our right to material prosperity, but, rather, the covenant between government and citizens of “life, liberty, and the pursuit of happiness.” In both public declarations as well as personal correspondence, the founders discussed, debated, and explained their thinking using moral language.
In today’s commercial republic, the freedom our founders fought for is expressed in the form of free enterprise: the system of laws and institutions that rewards entrepreneurship and hard work, largely on the basis of markets and competition. Free enterprise is what Thomas Jefferson meant by the “free exercise of industry … and the fruits acquired by it.” Free enterprise is compatible with government in the case of market failures (such as crime) and a safety net for the indigent, but it is inconsistent with today’s growing statism and corporate cronyism.
Today, we rarely hear a moral defense for free enterprise from our politicians, which is why Romney’s statement was so striking. And the general lack of moral defense explains why – despite the fact that surveys find a large majority of Americans think the government is too big and trying to do too much – we acquiesce to larger and larger government from both parties. Indeed, it is why government at all levels has grown from 15 percent of U.S. GDP in 1940 to more than 35 percent today, and – according to the Congressional Budget Office – will hit 50 percent in 2038.
Day after day, politicians offer one government benefit after another to our citizens. This has made a majority of Americans into net beneficiaries of the welfare state, as my colleague Nicholas Eberstadt chronicles in his new book, Nation of Takers. While most Americans dislike the crisis and culture this has brought us, few are eager to give up their benefits. It is not compelling enough to point out that these goodies will lead to fiscal problems sometime in the future. It isn’t even enough to scare citizens with threats of a Greek-style debt crisis, which will surely come if we continue to build a Greek-style social democracy with Greek-sized government.
Only the moral case for freedom and opportunity – the case that stimulated the struggle of our founders – will have a chance to save the American experiment that we say we want. That case requires that we make three arguments.
First, we have to argue for the right of every American to earn his or her success. Earned success does not mean making money. It means creating value with our lives, and in the lives of other people. For some, this means starting a for-profit business; for others, it means creating a beautiful work of art, raising great kids, or helping others. Regardless, there is a tremendous amount of evidence that people who say they have earned their success are our happiest citizens.
For earned success, we need a system that matches our skills and passions, rewards hard work, and lets us keep these rewards. If not, we will suffer what the eminent University of Pennsylvania psychologist Martin Seligman calls “learned helplessness.” This is a condition in which our earned rewards are stripped away, or we are given something we have not earned. When we learn helplessness, we become passive and unhappy.
Second, we have to argue for basic fairness. For most Americans, a fair society is one in which hard work, creativity, and honest competition result in financial reward. It does not mean that we redistribute resources through government power just to get more equality. It also does not mean rewarding the government’s cronies in favored industries – from green energy, to banks, to labor unions. It means rewarding merit and creating opportunity. It does not mean insider dealing, social engineering, equalizing economic outcomes, and pork-barrel spending.
Third, we have to argue for the rights of the poor, and fight for the system that lifts them up by the billions. Between 1970 and 2010, the percentage of the world’s population living on less than a dollar a day has been reduced by about 80 percent. What explains this miracle? The United Nations or International Monetary Fund? U.S. foreign aid? Of course not. It was globalization, free trade, entrepreneurship, property rights, and the rule of law spreading around the world.
So what is the system that satisfies our demand to let people earn their success, that is fair, and that lifts up the poor by the billions? There is only one: free enterprise.
Two hundred years ago, Jefferson wrote: “The last hope of human liberty in this world rests on us.” That is as true today as it was then. Free enterprise is America’s blessing, and our gift to the world. Yet it is in peril, and only a moral defense will save America from squandering it as we follow the ruinous path of our European allies. We need more politicians, intellectuals, activists, and everyday Americans to stand up for free enterprise – not just because it makes us better off, but because it makes us better.
Arthur C. Brooks is president of the American Enterprise Institute and author of “The Road to Freedom.”
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