18. What is Liberty?
Liberty is not simply a state of mind. To enjoy liberty, people must be free to act. Coercion is the enemy of liberty. We create governments to protect our liberty from being impinged on by others. Exercising freedom requires personal acceptance of responsibilities and consequences. Freedom only exists when individuals can act on choices to incur a perceived benefit at a perceived cost.
In order to receive a maximum benefit from a free choice, the action must be self-determined, purposeful, and not forced. The actual benefit and expense from a free choice is determined by the effectiveness of the action. This may or may not match the expected cost/benefit. However, maximum welfare is only achieved when the costs as well as the benefits are internalized to the actor. This is the essence of liberty.
When two or more individuals exercise freedom of choice in a transaction, it is necessary that all participants perceive greater benefits than costs. When participants bear these costs, they are uniquely positioned to determine that benefits are greater than costs. Transactions in which benefits exceed costs expand welfare. Transactions based on free choices underpin our extraordinary success as a nation.
In non-coercive economic transactions, expand wealth and welfare. How do we know this? The transaction would not occur if all the participants did not receive a benefit. In America today, non-coercive economic transactions, the essence of liberty, are under attack by government imposed coercive transfers.
When one or more participants in a transaction are coerced, the action is no longer an economic transaction; it becomes a forced transfer. A coercive transfer occurs when any entity forcibly takes assets from one party and gives them to another. Coercive transfers separate costs from benefits. Non-economic transfers are always coercive because one or more parties are opposed to the transfer. Coercive transfers always contract wealth and social welfare because coercive transactions strip benefits from persons who bear costs, and assign the benefits to idle third parties. When benefits are stripped from costs, the act becomes costly and inefficient, directly leading to wealth and welfare losses. Also, coercive transfers do not occur in nature they require that someone be paid to enforce them. This added cost often makes the transfer contract wealth and welfare.
A decision maker undertaking a feel-good action when separated from the costs of the action is unable to efficiently allocate the benefit. These welfare losses accrue independently of the subjective feel good social intention underlying the transfer. Coercion forcibly transfers wealth to distant parties that bear no economic risk or costs in the transfer. Separated from costs, these transfers create moral hazards for all of society’s members and damage future wealth and welfare. Therefore, by definition, when government increases coercive transfers, non-coercive transactions decline, this cannot occur without decreasing freedom of choice. Freedom of choice is always restricted by transfers; therefore, if liberty is to be enjoyed, society must minimize coercive transactions.
Coercive transfers can occur at the point of a gun, a legislative act or a judge’s decision. Most often, they result from the implementation of laws, rules, edicts, or regulations that force economic transfers to benefit parties who bear no cost. Coercive transfers always strip inherent positive outcomes reducing the frequent exercise of freedom of choice. The responsibilities for those outcomes are no longer internalized in a coercive transfer environment. Today coercive political transfers are smothering the freedom to choose. As coercive government transfers increase and non-coercive transactions between two or more people decline they threaten to extinguish our wealth and welfare.
In 1787, our Constitution was ratified by thirteen states. The Constitution of the United States promised to change the existing realities of abusive central governments and leave the powers of choice to the states and the people. “Chains of the Constitution”, written in 1798 in the Kentucky Resolutions by Thomas Jefferson, stated that the simple intent of the Constitution was to chain down the government to prevent central government from infringing on the powers of the people. It was the overwhelming belief of the Founding Fathers that freedoms of choice and unfettered economic transactions were the democratic way to maximize social wealth and welfare. The 10th Amendment reserves all but the specific powers assigned to the federal government to the states and the people themselves. The Founders gave the federal government five major tasks in the Constitution. These five duties became embodied in the Departments of Defense, State, Justice, Treasury, and a combination of Departments and independent agencies given overlapping responsibilities for regulating interstate commerce. Today we have veered radically from the “chains” or constraints of the Constitution. Instead of doing the five required duties well, the government is doing thousands of things poorly and is increasingly dependent on debt to perform its functions. With no plan to pay the debt back. Debt creates involuntary servitude for future generations. While this form of bondage is outlawed by the Thirteenth Amendment of the Constitution, the federal government continues to create trillions of dollars in liabilities to be paid by the underage and unborn.
Even though the Constitution separated religion from government, Christianity flourished and church membership expanded for generations. The churches embraced the individual freedoms codified in the Constitution. Individuals had freedom to choose and people were viewed as purposeful, unique, responsible, individual beings. The doctrine of individual rights and responsibilities dates back to Moses and the Ten Commandments. It is ingrained in the Judeo-Christian tradition. It is fundamental to both Christianity and the Constitution. The individual possesses status higher than the state. This mutual respect and tolerance between religion and the Constitution rested on the twin pillars of individual liberty and individual responsibility, as opposed to government parenting.
Today the rules of engagement have changed. Through proxy the federal government has bought control of our banking system. Sixty percent of all banking assets have migrated to the top five money center banks while small community banks have declined from ten thousand to five thousand within a decade. This massive expansion of Statism does not require owning the means of production. If government controls the banks, soon all manner of businesses requiring capital will have to curry favor with the bureaucrats in government and the tentacles of control will prove coercive, pervasive, and smothering. The unique union between individual freedom of choice and individual responsibility, which has blessed us with unparalleled moral and material riches and held our nation in good stead for more than 240 years, is becoming increasingly irrelevant as personal consequences are being transferred by statists into moral hazard.
Belief that the state is paramount to the individual and paramount to the Judeo-Christian moral code (of freedom of choice with personnel responsibility) has descended upon us. Belief in the power of the state or ‘Statism’ has taken control of our economic purse strings. The statist believes that allowing freedom of choice is allowing selfish self-interest and that self-interest must be controlled by the state and the statists who manage the state. The statist believes in central government controls and implementing these controls through transfers despite the costs and contraction of welfare. Statists are opposed to individual freedom of choice. They rely instead on coercion through laws, regulations, edicts, and rules to achieve a ‘feel-good’ purpose, even when centralized methods of control have repeatedly been shown to reduce the welfare of the members of society.
The rules of engagement between the government and the populace have dramatically changed in the past century. The Constitution is no longer able to “chain down government”, as the Founders intended. Individual uniqueness, freedom of choice, and personal responsibility are apparently no longer the core beliefs of Americans. They have been supplanted by the state. As the state takes over more and more individual responsibilities, the intertwined freedoms we enjoyed are being forfeited. As each individual responsibility is ceded to federal government, so is our individualism. Self-styled statists with feel-good talking points are replacing individual freedom of choice with increasing central controls.
Thomas Jefferson said, “In questions of power, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.” The effort to diminish our liberty is well underway, along with the diminished wealth and welfare that the founding fathers labored to avoid.
It is appropriate to close with a quote credited to Alexander Tyler (a Scottish history professor) in 1787, the year we ratified our Constitution, similarly stated by Cicero, 60BC and Ben Franklin also in 1787:
“A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury with the result that every democracy will finally collapse due to loose fiscal policy which is always followed by dictatorship . . .through the following sequence:
1. From bondage to spiritual faith.
2. From Spiritual faith to great courage.
3. From courage to Liberty.
4. From Liberty to abundance.
5. From abundance to complacency.
6. From apathy to dependence.
7. From dependence back into bondage.”