The Importance of the Obvious; D. Peterson

The Importance of the Obvious JUNIOR HIGH and high school stu dents are having an increasingly difficult time understanding our economy. They are constantly sur rounded by talk of the complexities and problems of the economies of the United States and the other leading natipns of the world. Confusing terms are bounced over their heads in such a manner that they wonder if even their users understand them. With all the seeming chaos, they fail to realize why our nation has become such an economic success. Calvin Coolidge said, "If all the folks . . . would do the few simple things they know they ought to do, most of our big problems would take care of themselves." Mr. Peterson of East Greenville, Pennsylvania, teaches economics and history in junior high school. 502 Dennis L. Peterson Although this bit of practical wis dom was applied against a backdrop of a variety of national problems, it can be applied as well to the prob lem of simplifying free market prin ciples for young students of the free dom philosophy. And it never hurts for the older, more astute students to review the basics periodically.

Individual students have at times approached me privately to question some statement or statistic they have read or heard concerning the· econ 0my. While there have been several instances in which I have had to honestly answer, "I don't know," I have found that many of their in quiries can be answered by provid ing them with an obvious, simply stated principle of the free market philosophy. Six principles have been THE IMPORTANCE OF THE OBVIOUS 503 of special significance to their learn ing. More Freedom,Less Government First, the free market philosophy increases the freedom of the individ ual and limits the role of govern ment. Socialists look upon society as a herd to be directed by governmental herdsmen with no consideration of the individual. They think society produces and consumes goods. In reality, there is no economic activity of masses but only of individuals. The freedom philosophy permits the maximum activity of the indi vidual. It allows him to make choices and take risks. It does not promise stability, as does collectivism. In stead, it gives uncertainty, chal lenge, and opportunity. It permits one to dream and then to attempt mak ing those dreams reality. And, in or der to allow this acti vity, it permits failure as well as success. The dreams which are considered worthwhile become successful in the market; those which are deemed worthless or too costly fail.

Socialism promises what un thinking men desire: equality. But in providing a false equality, it takes away the freedom of the individual. Truly free men are not equal, and equal men are never truly free. There can be no mixture of these two systems, individualism and col lectivism. One cannot be an individualist in one area and a collectivist in another. He is either completely one or completely the other in every aspect. The free market is social coopera tion entered into freely without coercion, i.e., social contract. The freedom philosophy, therefore, nec essarily must restrict government to the protection of the life, liberty, and property of the individuals compris ing society. Government is to act only as an umpire in the interrelation ships of individuals, punishing those who harm or threaten to harm the rights or property of others. It is to insure an atmosphere in which the individual is free to pursue his own desired self-advancement provided he does not in the process harm others.

Henry David Thoreau accented this dual action of the freedom phi losophy when he wrote in Civil Dis obedience, "There will never be a really free and enlightened State until the State comes to recognize the individual as a higher and inde pendent power, from which all its own power and authority are de rived, and treats him accordingly." Whenever government steps be yond this, its legitimate responsibil ity, it damages the economic and moral well-being of the individual and ofthe nation. It can do this in a variety of ways, including excessive taxation, restriction of personal freedoms, or regulation of the econ omy. The best government is the one 504 THE FREEMAN August tha t does not go beyond its protec tive duties or unduly limit the indi vidual. It teaches the individual to govern himself so that government intervention becomes not only un desirable but also unnecessary. Reward for Achievement Second, the free market philoso phy rewards the work ethic.

In Bible times, the apostle Paul commanded that "if any would not work, neither should he eat" (II Thes. 3:10). This principle was trans planted to America and applied by John Smith in Jamestown. As a re sult, the colony overcame its diffi cult first years and prospered. The free enterprise philosophy of fers the prospect of economic success for those who are willing to toil and exert themselves in lawful pursuits. They are free to attempt putting their dreams and ideas into practice and to succeed or fail. Opportunity, not special privilege, is the watchword of the entire system. Workers in a planned economy, however, are mere cogs in the inter meshing of governmental gears, striving for a bureaucratic utopia without the incentives of freedom or personal advancement of self-satis faction. Free enterprise rewards the worker who exhibits initiative and indus try. Workers who give a good day's work are rewarded with a mutually acceptable day's wages. Those who shirk or loaf are soon forced out of their jobs by the more enthusiastic workers. The hard workers are fur ther rewarded with bonuses, pro motions, and raises to the degree they excel or produce. As one wise person put it, the worker who never does more than he is paid for never gets paid for more than he does.

In a truly free market, unemploy ment is strictly a voluntary condi tion. Those who want employment can have it-provided they are will ing to work for the wages the mar ket is willing to pay and provided they can supply the goods and/or services the market demands. There is always a job for one who is willing to work for what the market deter mines he and his product or services are worth. Thrift Encouraged Third, the free market philosophy encourages thrift. The door of economic success swings on the hinges of thrift, the wise use of capital. The individual who is master of his money and re sources succeeds; he who is mastered by them fails. Andrew Carnegie, one of the wealthiest capitalists of the late nineteenth and early twentieth cen turies, said, "The man should al ways be the master. He should keep money in the position of a useful servant; he must never let it be his master and make a miser of him."

1983 THE IMPORTANCE OF THE OBVIOUS 505 Thrift may be simply summarized by five imperatives. 1. Spend less than you receive. Calvin Coolidge once said, "There is no dignity quite so impressive, and no independence quite so important, as living within your means." Much of the poverty and economic diffi culty of our time could be alleviated if individuals and governments had the courage to say , "No, I can't af ford it." 2. Stay out ofdebt. First, one should try not to run up bills. Second, if one cannot avoid debt, he should get out of it again as quickly as possible. A man in debt is not his own master; he is at the mercy of his creditors until his debts are paid in full. 3. Never spend anticipated income before it is actually received. In more quaint terms, "Don't count your chickens before they're hatched!" 4. Keep a regular and accurate ac count of all receipts and expendi tures. Such record-keeping readily reveals unwise or unprofitable spending. It also shows the impor tance of little expenditures to the whole. It insures wise and orderly expenditures and produces a visible and encouraging record of income.

The record-keeping should in time develop into a wise budgeting sys tem. 5. Make every effort to save some of every amount received. "I should say to young men," Carnegie advised, "no matter how little it may be possible to save, save that little.;' It is from such savings that investment is pos sible for the development of busi nesses which produce the goods and services needed and desired in the marketplace. It is from such savings that charity is possible for the assis tance of those less fortunate than ourselves. Philanthropy Increased Fourth, the free market philoso phy encourages philanthropy, the caring for the less fortunate and the rewarding of worthy causes by those who are successful. Charity is the giving of one's own goods to another in need out of the generous desire of one's own heart, i.e., by voluntary contribution. It is not government coerced funding for the support of others.

To the extent that freedom is per mitted in the marketplace, philan thropy increases, for greater suc cesses in the marketplace mean more help for those who are unable to help themselves. Contrariwise, to the ex tent that government restricts free dom in the market, philanthropy de creases, and those unfortunate, needy others suffer. Charity and philanthropy are the duties of private individuals, groups, and churches, not of government. The Bible commands families to care for their own needs and for the churches to care for those who have no fami lies. "But if any provide not for his 506 THE FREEMAN August own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel" (I Tim othy 5:8). A list of the world's great philan thropists sounds like a list from Who's Who in Capitalism: Philip Ar mour of the meat industry; Andrew Carnegie, steel magnate; E. I. Du Pont de Nemours, chemical manu facturer; Henry Ford, automobile manufacturer; J. P. Morgan, finan cier; John Wanamaker, department store pioneer. The list could go on and on. These men were able to give vast sums to worthy causes only be cause the free market permitted them to earn even greater sums.

Each of them forgot himself for a while in order to remember others, and practically everyone in the na tion now remembers their generos ity. In the area of social welfare, as in all other areas of the free market, government only assumes this fa milial and religious duty in direct proportion to the degree this obliga tion is first abdicated by those to whom it legitimately belongs. Moral Attitudes Fifth, the free market philosophy thri ves or founders according to the moral and spiritual condition of the individuals comprising that market. Their moral and spiritual outlook determines the nation's economic outlook. As the evangelist D. L. Moody once said, "Nations are only collections of individuals, and what is true in regard to the character is always true of the whole." Free enterprise encourages, in fact demands, adherence to the Golden Rule: "Whatsoever ye· would that men should do to you, do ye even so to them" (Matthew 7:12). So long as men follow this simple but profound truth, freedom, peace, and prosper ity abound. Only when some at tempt to force, by government au thority, their own desires on the rest do slavery and turmoil occur. When men are bad, society is bad. With such disruption of the market comes economic decline.

Alexis de Tocqueville tried to find the secret of America's greatness, searching· diligently in the fields, in the schools, and in the halls of gov ernment. But he concluded those places, though great, did not hold the key to America's greatness. Not un til he observed the moral strength of her citizens, derived from their reli gious principles, did he understand fully the cause of the nation's great ness. "America is great because America is good," he said. "When America ceases to be good, America will cease to be great." Part of a nation's moral standing is determined by whether its citi zens have the courage to do what is right regardless of the trends around them. The people with a sound moral condition will have an indestructi1983 THE IMPORTANCE OF THE OBVIOUS 507 ble confidence in the ability of truth to triumph over error, good over evil. When men lose this faith in God, they inevitably lose their liberty, for God is the Author of liberty.

"Americans," Calvin Coolidge re minded us, "have not fully realized their ideals. There are imperfec tions. But the ideal is right. It is ev erlastingly right. What our country needs is the moral power to hold to it." Abiding Principles of Success in the Free Market Finally, the principles of economic success in the free market are the same regardless of the size of the op eration, be it a single individual, a family, a multinational corporation, or an entire nation. Statistics and conditions may frequently change, but principles remain forever the same. Collectivist bureaucrats would have us believe that economics is a field larger than the common man, an area into which only the experts dare enter. With their array ofcharts, graphs, and frightening terms and statistics, they quickly convince many that this is exactly the case. What they themselves fail to under stand, however, is that economics is, at the lowest level, merely individ ual human actions, choices and decisions made in the marketplace of goods, services, and ideas.

The common man is deeply in volved in the economy on a daily ba sis. He decides to work or not to work. He chooses to buy or sell or not to buy or sell. He makes trade-offs based on his own needs, wants, and re sources. He takes risks. He succeeds or fails. Multiplied several million times all across the nation, this makes up the bulk of economic ac tion in our country. Granted, much influence is exerted on the economy by large corporations, wealthy capi talists' special interest groups, and even governments. But the princi ples of the free market are always the same regardless of who is in volved. If the free market philosophy was successful, correct, and good in the developmental stages of our nation's history, it remains so even today. If it has worked for America, it will also be practical and successful when applied to other nations. The free market philosophy, re gardless of where applied, is suc cessful because of simple, obvious principles like the ones briefly ex amined above. The greatest com plexities occur whenever these prin ciples are ignored or forgotten. One cannot overemphasize the impor tance of the obvious. ® A REVIEWER'SNOTEBOOK JOHN CHAMBERLAIN PoliticalEconomy and Freedom BEFORE his untimely death Warren Nutter had made a number of timely contributions to economic thought.