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The Free Market vs. the Interventionist State

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Here’s the John Locke Foundation’s George Leef introducing the article excerpted below by Richard Ebeling:

Many people complain about all the bad things they imagine “capitalism” is doing, when in truth we have a massive interventionist state that obstructs capitalism, wastes resources, and interferes with our liberty. Professor Richard Ebeling reflects on that unpleasant reality in this essay.

Republicans and conservatives need to help drive the proper narrative — explaining, as well as they can — a summation of what Ebeling outlines here:

By Richard Ebeling

In whatever direction we turn, we find the heavy hand of government intruding into virtually every aspect of American society. Indeed, it has reached the point that it would be a lot easier to list those areas of people’s lives into which government does not impose itself – and, alas, it would be a very short list. But it was not always that way.

Around a hundred years ago, say, in the first decade of the 20th century, all levels of government in the United States only taxed away and spent about 8 percent of national income, leaving 92 percent of what individual’s had produced and earned in their own hands to use and spend as they thought best as free people.

Plus, there was no regular deficit spending because the federal government in Washington, D.C. annually balanced its budget; and it often even ran budget surpluses with which it paid down government debts accumulated during past “national emergencies,” usually a war that had earlier needed rapid funding with borrowed money.

Today, all levels of government – federal, state, and local – tax or borrow and, then, spend around 40 percent of the Gross Domestic Product in the United States. And if one adds the financial cost imposed upon the citizenry in the form of economic and social regulations to which businesses and enterprises must conform, the total burden of government is significantly higher.

Government has also influenced the American people in another way: They have lost their understanding of what a free market society was, could, and should be. The growth in the interventionist and redistributive state over the last 100 years has resulted in several generations who have come to think that political paternalism is as normal and “American” as apple pie.

The Change in American Economic Policy

This shift in the role of government in American society was noticed by the free market, Austrian economist, Ludwig von Mises, while traveling around the United States on a lecture tour back in 1926. After returning to Austria, he delivered a talk on “Changes in American Economic Policy” at a meeting of the Vienna Industrial Club. He explained:

The United States has become great and rich under the rule of an economic system that has set no restrictions on the free pursuits of the individual, and has thereby provided the opportunity for the country’s productive powers to be developed. America’s unprecedented economic prosperity is not due to of the richness of the American soil; instead, it is due to an economic policy that has reflected how best to exploit the possibilities offered by the land.

American economic policy has always rejected–and still rejects today–any protection for inferior or less competitive against that which is efficient and more competitive. The success of this policy has been so great that it is hard to believe that Americans would every have reasons to change it.

Read more: Epic Times

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