On Liberty

Audrey Pietrucha

 Rediscovering the founding virtues

Despite almost fifty years of Great Society programs designed to alleviate poverty, America’s lower class is growing. Why some Americans are poor and increasingly dependent on government for basic needs is one of the most important public discussions we refuse to have. Though much is made of the welfare apparatus that treats the symptoms of the disease, the actual causes of economic despair are ignored.

One reason for this may be a fear that explanations of poverty are, at their core, racially unique and no one wants to walk that road. This is why social scientist Charles Murray’s latest book, Coming Apart: The State of White America, 1960-2010, is an important beginning to the public conversation we need to have. By concentrating on whites Murray shows that contemporary American society divides most sharply by class, not race, and the lines are becoming more distinct. Most importantly, he goes beyond simplistic explanations of why economic disparity is growing and explores the cultural underpinnings of our growing divide. This is especially applicable to a state like Vermont, where racial diversity is virtually absent but class differences can be stark.

Central to this discussion is the recognition that there is a widening gap between the working class and the upper middle class, both of which are growing. These differences are not just economic – they encompass everything from television viewing, eating habits and hobbies to educational choices and civic involvement. Murray examines two mostly-white neighborhoods that encapsulate these economic sub-cultures –Fishtown, an urban neighboraahood, and Belmont, a wealthy suburb. The trends he observes in both areas demonstrate the growing cultural disparity which may also explain, at least in part, their economic divergence.

To summarize Murray’s 400-page book here is impossible but his discussion of America’s founding virtues provides a window into his theories on the changing American culture. Through the writings of our founding leaders and later discourses on the American project by such keen observers as Alexis de Tocqueville and Francis Grund, Murray identifies four traits and institutions that were core to our success as a society and a nation: industriousness, honesty, marriage and religion.

Murray traces the disintegration of these values to the 1960s; he actually establishes the assassination of President John F. Kennedy as a pivotal point in the creation of modern American society. Though both Fishtown and Belmont experienced cultural upheaval related to the four virtues during the 1960s, marriage and religion in particular, Belmont pulled up and righted itself. After a period of decreased marriage and increased divorce and cohabitation, Belmont has now returned to nearly that same levels of marriage stability and religious practice that it had fifty years ago. Belmont’s population also demonstrates high rates of industriousness, especially among males in their peak earning years, and a high degree of trust and security.

Unfortunately, this is not the case for Fishtown. The decline in values, which had been practiced fairly uniformly across all classes in the early 1960s, continued in Fishtown. For instance, today only 48 percent of prime-age whites in Fishtown are married, compared to 84 percent in Belmont, and more than a third of Fishtown men have never been married. Since birthrates have not significantly declined, this can only indicate a similar increase in children born to unmarried women. In fact, Murray estimates 43-48 percent of Fishtown births are to unmarried women. As uncomfortable as it makes the politically correct among us, socials scientists have demonstrated repeatedly that children raised in single-parent homes are negatively affected by the situation. While this is true regardless of socio-economic status, it is also true that single mothers and their children comprise the poorest families.

The difference between Belmont and Fishtown in their observance and practice of the founding virtues is stark in all four categories. Industriousness in Fishtown has taken a nose dive, with 53 percent of households in 2010 having someone who worked at least 40 hours a week compared to 81 percent in 1960. Both property and violent crimes are committed today at far higher levels than they were in 1960. Regular church attendance and the benefits it brings of purpose, connection and community is almost non-existent in Fishtown. Meanwhile, Belmont continues to successfully practice the habits which have produced strong individuals, families and communities for centuries.

Here is where Murray sees a way out of the desperate situation in which Fishtown finds itself. Tolerance of all and any lifestyles is hurting those who should be able to look to the successful and find guidance. It is time, Murray says, for the Belmonts among us to start preaching what they practice.

How can this be accomplished? What would such an effort look like? That is for each community to decide but mentoring, outreach, and both practical and moral instruction would seem important components of any endeavor. Churches and civic organizations should be involved and policy makers need to start crafting programs and legislation that incentivize responsible behavior. Whatever we do, we need to get started – we’re already running fifty years behind.

Vermont should learn from other states

The Moocher index - look familiar?

Audrey Pietrucha         

  

Vermonters are understandably proud when the state appears at the top of a list ranking states according to their success in improving access to education or health care or decreasing violent crime. Positive high rankings are seized upon by government agencies, politicians and newspapers to prove to them and us that, yes, everything is working great.

 But there are a number of ranking polls where Vermont does not fare well. These usually have to do with economic issues and general prosperity. A look at these studies and their conclusions about the general fiscal picture is worth noting.

 For instance, the “Ten worst states to retire to” list recently compiled by TopRetirements.com placed Vermont near the top with a ranking of four.  States were judged on five criteria: fiscal health, property taxes, income taxes, cost of living, and climate. Climate, of course, is a personal preference and helps explain why the top ten was dominated by northern states (the only New England state outside the top ten was New Hampshire) but there is no disputing the high taxation numbers that pushed Vermont near the top.

 Vermont’s top marginal income tax rate is 8.95 percent and state sales tax is 6 percent. Property taxes are high in comparison to other states’, there is an estate tax and Vermont is one of the few states that taxes social security benefits, as well as most pensions. Overall the tax burden in Vermont came in at 8^th highest in the nation at 10.3 percent.  Add that to a relatively high cost of living (partially caused by taxation as well as burdensome land use regulations that push real estate prices upward) and it is understandable why retirees might look elsewhere to enjoy amenities similar to those of Vermont without the higher price tag.

Number four is significant but how about a list where we’re number one? That would be the Moocher index, a list compiled in 2010 by Dan Mitchell of the Cato Institute. Mitchell wondered if the residents of some states are more willing than those of others to sign up for government entitlement programs. Using an earlier study of welfare dependency rates, Mitchell subtracted each states poverty rate and came up with the number of non-poor residents receiving government assistance. Vermont blew the competition away, coming in first by a wide margin over second-place Mississippi, which barely beat Maine.

With a ranking of 31 New Hampshire was once again the only New England state ranked outside the top ten. This measurement of government dependence was dominated by northeastern states with large tax burdens. It would be interesting to see if residents of the moocher states felt less justified in using government programs if they were allowed to keep more of what they earn in the first place. It’s not unfathomable that many see these programs as a rebate on their own hefty tax payments.

Finally, Vermont did rank near the bottom of another recent study but not in a good way. This was the American Legislative Exchange Council’s fifth annual Rich States, Poor States report, which ranks states according to a variety of tax, spending, and regulatory policies. Vermont was not at the actual bottom – our neighbor to the west, New York, earned that distinction – but at 49 it was as close as it could get. Once again Vermont was joined in the bottom ten by all of her New England sisters except New Hampshire. An interesting conclusion of the study is that high-ranking states are attracting people while low-ranking states are losing population.

States are much more than outlines on a map – they consist of living, breathing, working individuals who are looking to make the best lives for themselves and their families. Though Vermonters often seem to regard the state as above the money fray, or is at least worth paying extra for, the truth is the same laws of economics are at work here as elsewhere. Money represents the time, effort, skill and education poured into a job or profession. Those who make that kind of investment are looking for a good return.

When opportunities arise elsewhere people take advantage of them. More and more opportunities appear to be in places outside Vermont. Our standard policy of raising taxes and growing government will backfire as more people vote with their feet and move to more friendly economic climates. As this happens state revenues will fall and the tax burden will land more heavily on remaining Vermonters. At some point, they, too, will leave - or rebel.

The lesson Montpelier should learn from the many comparative economic studies available is that low taxes and less government interference produce living environments where people thrive. This is especially important if we hope to keep our young people, who increasingly seek opportunities outside our state and can easily find them just a few miles to the east. Vermont can reverse that trend by improving its own economic climate and giving them a reason to stay home.

Audrey Pietrucha is a member of the executive board of Vermonters for Liberty. She can be reached at vermontliberty@gmail.com.

The High Cost of Higher Education

The United States seems to be breaking trillion dollar barriers on a fairly regular basis these days, so often that many such milestones go unremarked.  Our latest post-trillion dollar status achievement in the area of student loan debt is worth noting, however, as it signifies a trend that shows no signs of reversing itself.  Indeed, with $100 billion in education loans being taken out last year alone, the numbers are only getting higher.
Higher education costs have increased at a rate three times that of inflation over the last two decades, with average increase in college tuition hovering over four percent annually. Reliance on government-backed higher education loans has likewise increased. With more young people being encouraged to pursue higher education we seem caught in an expensive upward supply and demand cycle.

Yet many of the premises on which this cycle spins are faulty, starting with the idea that more formal education is always a good thing. There is no question that college degrees, in the long run, produce higher earnings. However, with college graduates swelling the work force ranks and taking jobs for which they are over-qualified, we could soon see these earnings disparities begin to close. According to the Associated Press, fifty percent of college graduates aged 25 and under are either unemployed or working in jobs that do not require a college degree. One-third of those of all ages who hold bachelor’s degree are in jobs that do not require their credentials.

Even more worrisome are estimates put out by the Bureau of Labor Statistics for the coming years. Only three of the top twenty occupations BLS projects to grow between 2010-2020 - registered nurses, elementary school teachers and post-secondary teachers – require four years or more of post-high school education.

We could be seeing the results of massive over-consumption of higher education, which, it turns out, is really not for everyone and sometimes can be downright harmful. Students who were not necessarily suited to college in the first place often find themselves saddled with student loan debt but no degree to show for it. An astounding eighty percent of first-time community college students will not finish their two-year programs within three years while forty percent of first-time students in four-year programs will not finish within six years. The majority of these students will never finish, period. They will, however, still have the debt accumulated while funding their educational explorations.

In this they are very much like their college-educated peers. The average college graduate carries a debt burden of around $25,000, not an outrageous investment in one’s own human capital. But for every student who went through on a sports or academic scholarship or whose parents paid for school there are students who borrowed far more than the cost of a new car. Stories abound of art majors who owe $100,000 in student loans or social workers who attended schools where the tuition was twice what they now make in a year. These young people may well spend the rest of their lives paying for their educations and be forced to put off buying homes and starting families.

Help in keeping young people out of debt is not likely to come from educational institutions, which make a hefty profit of about forty-one percent off of each student. Advocates of higher education are more likely to pressure the government to make more funds available and at lower interest rates. In fact, President Obama and his presumptive Republican challenger, Mitt Romney, both support the continuation of the 3.4 percent government-backed student loan interest rate.

This seems a hair of the dog solution that encourages more consumption of that which caused the problem in the first place. Anything that is subsidized increases in cost and there is a strong argument that the abundance of low-cost student credit has contributed significantly to the upward spiral in tuition and other college costs that make it nearly impossible for students to follow the traditional path of working their way through. Cheap loans also often lead to borrowing more than is needed. Yesterday’s starving college student has been replaced by today’s bar-hopping partier. How much of the comfortable college lifestyle currently enjoyed will have to be paid for tomorrow?

Fortunately, students and their parents have more control over this situation than they have been led to believe. There are many options in both educational programs and directions and all deserve consideration. Community colleges and technical and professional schools may provide reasonable alternatives more in line with some young adults’ talents and interests. High school grads might also reasonably take a couple of years off to get a better idea of what they want from life and education. Spending some time in the working world can have the two-fold benefit of teaching them what they do or do not want to do with the rest of their lives as well as allowing them to save some money toward college costs and lower the amount they might need to borrow.

Those who do head right to college have a moral obligation to choose their majors wisely, live frugally and take their educations seriously. Much of an individual’s college education is subsidized by the public through taxes which help fund public institutions, provide federal grant money and underwrite discounted loan rates. In addition to their parents, who usually sacrifice much of their own convenience and comfort in order to support their children’s educational aspirations, college students owe a debt to the public at large. Under those circumstances fewer parties and more Ramen noodle dinners seem a fair exchange.

Audrey Pietrucha is a member of the executive board of Vermonters for Liberty. She can be reached at vermontliberty@gmail.com

Mutual Aid: Historic Solution for Modern Problems

Audrey Pietrucha                   

One of most troubling aspects of the growth of government is how it has limited our creativity in response to challenges of all kinds. This is especially apparent when financial difficulties confront us today. Instead of brainstorming as a society for fresh approaches to age-old difficulties, we pass the problems along to elected officials whose solutions usually involves forcing one group of people to pay for the needs or wants of another group. Is it any surprise that Americans increasingly look at each other with resentment and suspicion?

Ironically, some of the solutions we seek may be found in the past. Before the welfare state was created, before either employers or government took or were given responsibility for insuring us against every conceivable difficulty, people themselves came together in Mutual Aid or Friendly Societies. These voluntary organizations, the remnants of which still exist, formed under the premise that there is strength in numbers. These community-based associations required a small investment of time and money but provided great returns. They also showed individuals can work together without government interference to prepare for the future and provide comfort and security to each other in times of need.

Mutual Aid Societies consisted of people who banded together for a common financial and sometimes social purpose. The idea was that regular and widespread contributions to a mutual fund would build a community nest egg which could be used on behalf of members in times of need.  In England, where these groups were called Friendly Societies, the purpose was mainly financial: insurance, pensions, and savings or cooperative banking. In America, where these groups were usually called mutual aid or benevolent societies or fraternal organizations, they often combined to fill both financial security and social needs. Group events included regular meetings, dances and sporting events. Sometimes there were even ceremonies involved – Think Fred Flintstone and Barney Rubble and the Loyal Order of the Water Buffalo lodge with its silly hats, passwords and convoluted handshake.

Typically, members of these organizations paid a regular membership fee and in return received an allowance to cover their financial obligations when they were sick or disabled. Many societies contracted “lodge doctors,” often newly-trained physicians looking to establish their practices, whom members could consult free of charge. During illness fellow society members would also provide emotional support by visiting regularly - this also helped ensure benefits were not being abused. When members died their funerals were paid for by their lodge mates and often there was some money left over for widows or other dependents.

Some mutual aid societies formed around common religious, ethnic or trade affiliations. There were female societies and African-American societies. In fact, these societies were often the only place where single women and blacks could build their own financial security. An unanticipated benefit of the use of lodge doctors was the opportunity it provided females and non-whites to become doctors. Medical colleges were created to train women and blacks for service to their benevolent societies. Unfortunately, these colleges fell victim to established medical practitioners who saw lodge doctors in general as competition and a threat to the dignity of their profession. One way these established professionals used the government to eliminate competition was by pushing for accreditation for medical schools, which put many small medical colleges out of business.

Some familiar organizations with us today are examples of mutual aid societies, most notably the American Association of Retired Persons and the Knights of Columbus. Credit unions and other financial services companies such as USAA, which serves retired and active-duty military personnel and their families, are also present-day equivalents. Unfortunately, the modern welfare state and the labyrinth of rules and regulations it has constructed around what once were mutually agreed upon and beneficial private interactions makes a revival of mutual aid societies on a small scale difficult if not impossible.

It is regrettable that proven community-based solutions such as mutual aid societies are no longer considered practicable. There are many who would chalk this up to the complexity of modern society but I would remind them that people themselves have not changed, only the construct within which they operate. We have the power to rectify that, if only we would.

The Rally for Real Change

By Audrey Pietrucha

It is always humbling to look back on the choices and decisions that have brought us to where we are now in our lives and, in a way, I guess I have to thank George Bush, Hank Paulsen and all those other “too big to fail” guys because they brought me to Montpelier and the “Rally for Real Change” on Saturday.

Three years ago in October I joined the Campaign for Liberty out of frustration with what was happening in Washington D.C. and on Wall Street. It was a presidential election year and Ron Paul was the only candidate addressing my concerns, which chiefly revolved around my three kids’ future and what little would be left of it after the politicians and the bankers got through mortgaging it. By this point Dr. Paul had dropped out of the race but the organization that had grown out of his run for the nomination, the Campaign for Liberty, was the only organization I knew of to join. What would become the Tea Party movement was just starting to simmer – Rick Santelli had not yet had the famous rant from which it would take its name - but I had to do something – anything! So I sent in my $30 and became Bennington County coordinator for the Vermont C4L.

Now, three-plus years later, I was in a room full of people I never would have had the privilege of knowing were it not for Ron Paul. Many of these people have become quite dear to me – it is amazing how a core belief in individual liberty and the necessary respect and esteem for our fellow citizen required by such a political philosophy can cut through superficial differences and help hearts hold on to one another.


On this particular Saturday we were there to further Dr. Ron Paul’s bid for the Republican presidential nomination and commit to real change, the kind of change that can only come when citizens become informed, committed, active and energetic. We were there to reach out to people of all political philosophies, personal persuasions and lifestyle choices. We were farmers and lawyers and housewives and entrepreneurs and musicians and computer geeks. We were from the Northeast Kingdom and the Banana Belt, the ski towns and the small towns. We were Vermont and we were there to try to take our state and our fellow Vermonters back to when we were strong and self-reliant, when we cherished independence and respected each other and ourselves.

Anti-progressive? No, the push against human progression was applied by those who sold our citizenry back into a form of serfdom in which we are all dependent on our governmental masters either for crumbs or permission to produce those crumbs. The call to change this degrading relationship was the first one issued as organizer Steven Howard opened the Rally for Real Change after a rousing round of politically-charged songs from the band Oneoverzero.

“We demand change and we are willing to work for it,” Howard said. As citizens of Vermont and the United States, he said, we can no longer accept the status quo and the two political parties which perpetuate it. We must demand accountability from elected officials, the media and the financial powers-that-be. Most of all, we must change the way our neighbors and friends look at political institutions. Too many accept the huge role government has come to play in their lives. We need to reach out to them, talk about liberty and how it sweetens and enriches our lives. We must convince them to search out and support the people who are talking about the changing the relationship between the people and their government. People like Ron Paul.

“There are no promises,” Howard said, “except that if we do nothing we won’t get the change we want.”

Speaker Jessica Bernier, founder of the Vermont Coalition for Food Sovereignty, reminded us that frugality and ruggedness are essential components of the true Vermont character.

“The Vermonter knows how to make do or do without,” Bernier said.

One thing Vermonters would like to do without, Bernier said, is the constant state of war the United States is in. She reminded the crowd that 18-year-old voters today have lived more than half their lives with their nation at war.

Bernier said issues of import to Vermonters have been taken over at the federal level even though people know better than government officials what is best for them. She called for returning authority to people and local institutions and urged us to use ideas to fight for liberty.

Dick Tracy of the Central Vermont Tea Party Coalition said the three core principles of his group are fiscal responsibility, limited constitutional government and support for free markets.  He illustrated the federal government’s inability to retrain its spending by pointing to our nation’s 15 trillion dollar debt.

“Fiscal Responsibility – we know it when we see it and we know when we don’t” Tracy said.

Tracy spoke of limiting government to the powers enumerated in the Constitution and pointed to the Federal Reserve as an example of the harm an extra-constitutional institution can do.

“Today the purchasing power of the U.S. dollar is five-percent what it was when the Fed was created,” Tracy pointed out. He said under those circumstances claims that the Federal Reserve is necessary to “control inflation” are laughable.

Tracy cited Ron Paul and his support for free markets, which he described as nothing more complicated than willing buyers and willing sellers. He expressed concern about healthcare legislation which ignores the economic reality that healthcare is a limited commodity and seeks to subvert market forces.

New Hampshire liberty activist Chris Lawless talked about the methods employed in New Hampshire to earn Ron Paul a second place finish in that state’s January primary and urged us to get off our computers and go out and talk to people in Vermont.

“You can’t let Romney get fifty percent,” Lawless said. He said Ron Paul needs to win a minimum of twenty percent of the votes cast March 6 in order to gain delegates and that translates into at least 8,000 votes. To reach that number, he said, we need to see through crude stereotypes, form coalitions of people from diverse backgrounds and viewpoints, find commonalities and reach out and get more people involved. Common sense, Lawless said, is our common ground.

“We are on the cusp of the next revolution,” He said. “We, the people, need to make the decisions to take back our towns, our states – take back what is ours.”

Civil Libertarian Maurice Kinney opened his remarks with a description of the gravesites in Maine where his Revolutionary War veteran ancestors lay. He said he has been aware since childhood that these men had risked their lives to give Americans the civil liberties they cherish.

Kinney then cited the USAPATRIOT act as a “systematic effort to deprive us of our civil liberties” and said Ron Paul was the only candidate talking about this dangerous law.

Kinney said Ron Paul’s support continues to grow as those of us who cherish liberty see there are many Americans who agree with us. Essentially, he said, there is strength and courage to be found in numbers and civil liberties are a natural point of consensus around which we can form coalitions.

Kinney also spoke out against the unconstitutional way by which the United States has entered wars for the last seven decades. He called the preemptive wars in which we now engage a waste of lives and resources that are counterproductive to their stated goal of keeping us safe. Today’s wars, Kinney said, are not national defense but offense.

Kinney said the liberty movement has arisen in recognition that we have problems which need to be faced and encouraged us to keep at it. Quoting Samuel Adams he said, “It does not take a majority to prevail... but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men.” He then urged us to be pyromaniacs for freedom.

Keynote speaker Robin Koerner, a blogger at the Huffington Post, publisher of WatchingAmerica.com and coiner of the phrase “Blue Republican,” converted to the Austrian economics viewpoint in his early thirties. He looked around the Vermont State legislative chamber at the more than 80 people in attendance and said “This is what a state capital looks like when it is actually filled with people who love liberty,” for which he received a resounding round of applause.

Koerner began his remarks with some instruction on winning arguments with those of different political ideologies. He said persuasive arguments need to start from our opponents’ points of view.

“Libertarians are good at talking to each other,” Koerner said. We’re not so good at persuading others to our positions, he said and that is something we need to work on.

Moving on to the current state of the nation, Koerner said Obama is Bush-plus and the only course for principled liberals and democrats is to support Ron Paul. He reeled off a list of abuses by the federal government, including corporations and lobbyists writing federal legislation, violations of the fourth amendment and due process laws, the National Defense Authorization Act and the lack of financial privacy. Some laws, he said, actually make it illegal to tell the truth. For instance, banks are required to file suspicious reports on their clients but cannot tell clients that the government is accessing their records, even if asked.                           

Koerner urged us to get past the old left-right animosity and see the synergy between movements like Occupy Wall Street and the Tea Party, who don’t even realize how much on which they agree. He said government overreach, not neglect, is the cause of the majority of our problems today. He also blamed fear-driven policies and politics.

“America is not a scared country,” said Koerner, a native of Great Britain who hopes to gain American citizenship within the next three years. Love, he said, is the opposite of fear and is at the core of the Ron Paul revolution.

“Ron Paul’s politics say to the nation ‘As you wish,’” he said. Put in place, he added, they have the potential to unleash a torrent human potential.

Koerner said we don’t ask those on the left to give up their principles but to look at the results of decades of top-down government interference in our lives and society.

“Have the goals of social justice and economic justice been reached?” he asked. Our friends on the left, he said, need to start separating the means from the ends. No taxes are high enough to solve our problems because we need to understand the source of our problems, not just treat the disease. He believed the root of our problem is that we have strayed from our nation’s, “sublime document,” the U.S. Constitution, which leans neither left nor right but toward human liberty.

So that's how I spent last Saturday - how was your weekend?

The Morality of Capitalism

By Audrey Pietrucha

For some time now capitalism has served as the world’s favorite piñata. The blame is misplaced since most of our economic troubles are not the result of laissez-faire economics but the antithesis: market intervention and manipulation. In reality, capitalism and free markets are responsible for and supportive of much of what we value in our lives, our relationships and our society. For those who love freedom, capitalism is the highest moral ground on which they can stand. 

The most obvious evidence of capitalism’s constructive influence is the cooperation free markets produce among participants. When people engage in commerce there is an inclination to get along. Both parties want something from the other and both believe that exchange will somehow improve their lives. When I visit the Crazy Russian Girls bakery and buy a scone, I give them a couple of dollars because that scone is more valuable to me than the money. They accept my money because it is more valuable to them than the scone. We have both freely given to each other and the interaction has added value to our lives.

That peaceful exchange, like millions that are engaged in by people throughout the world every day, was prescribed by Thomas Jefferson as a good on the international level as well. "An exchange of surpluses and wants between neighbor nations is both a right and a duty under the moral law,” he said. He often linked peace and free commerce between nations, recognizing trading partners seldom declare war on one another.

Free markets also promote competition, which is nothing more or less than the pursuit of excellence. Competition encourages individuals and businesses alike to improve, grow and flourish. In the market this striving for excellence transpires in the service of others. Businesses are more successful when they please their customers so they compete with each other to provide the best goods and services. Pioneering businesses and cutting-edge entrepreneurs use competition to push themselves and their products forward. Consumers are the biggest winners in these contests.

Emulation is another positive component of free markets. Remember when you were a kid and your best friend went out and bought the same baseball cap you had but then dressed it up with some stickers? You complained to your mom, who told you when someone copies you they are paying you a compliment. Free market innovators copy each other all the time and they keep adding stickers to the original baseball cap until it is almost unrecognizable. They use free information garnered by both those who have come before and contemporaries to see what succeeds and what fails, and then act accordingly. This is how the goods and services we use evolve and improve. The key board I’m typing on was not invented by the same person who invented my laptop. It isn’t even the same one that first appeared on a typewriter decades ago. My laptop was not invented by one person but by many people building on ideas and inventions that came before them – and so on and so on.

This idea of emulation reveals the miracle of the free market. Many years ago it was expounded in a wonderful essay called“I, Pencil.” Written by Leonard E. Read, founder of the Foundation for Economic Education, “I, Pencil” is the autobiography of a pencil. What appears to us to be a simple object is actually the culmination of hours of labor and centuries of innovation and discovery. As Read succinctly concluded:

I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human masterminding! Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree.

No, no one man or even a committee of men could create a pencil. This is why planned economies always fail. No group of people, no matter how smart they or we think they are, is smart enough to anticipate what Austrian economist Murray Rothbard described as the “highly complex, interacting latticework of exchanges” necessary to produce and distribute the goods and service human beings demand.

 

Capitalism is not without flaws, but then no system is because it is engaged in by people and people are imperfect. Still, a system that encourages voluntary cooperation and peaceful exchange must be considered morally superior to one in which force and coercion are necessary components, as is the case with any system that relies on confiscation and redistribution of wealth. Just as Winston Churchill said of democracy, capitalism is the worst economic system - except for all the rest.

Audrey Pietrucha hosts The Catamount Room on public access television. She can be reached at vermontliberty@gmail.com.

Economics in one short lesson

Audrey Pietrucha

“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”- Henry Hazlitt

This is the one economic lesson taught in Henry Hazlitt’s aptly named classic, Economics in One Lesson. It is a lesson that has not been learned by either the ruling or the chattering classes, who continue a short-sighted, group-focused approach to economic policy in this country. The examples on our current economic landscape are myriad – repeated stimulus programs, the housing loan crisis, “Cash for Clunkers”- yet their lessons continue to be ignored even as the consequences of mistaken and harmful actions manifest themselves in an economy that refuses to improve.

Hazlitt upheld the theories of his philosophical predecessor, Frederick Bastiat. This 19th century French political economist challenged the moral and practical right of government to intervene in financial transactions between free people, as well as its effectiveness in creating prosperity. He observed that economic intervention is most commonly proposed by one group in society trying to gain for themselves at the expense of everyone else.

Bastiat also famously warned of the unintended consequences inherent in such intervention. Unintended consequences are the economic equivalent of Sir Isaac Newton's third law of motion, which states "for every action there is an equal and opposite reaction" and they abound. The “Great Society” programs were not intended to increase out-of-wedlock births and broken families nor were extended unemployment benefits meant to discourage employment searches but these are partial results nonetheless. Guaranteeing loans to banks is not supposed to make them more reckless in their lending practices but often does. Social Security was not meant to nearly eliminate personal planning for retirement but has.

“Depth in economics consists in looking for all the consequences of a policy instead of merely resting one’s gaze on those immediately visible,” Hazlitt said in his economic treatise. Bastiat put it thus: “The bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”

Too many of today’s economists fit Bastiat’s definition of bad, and too many of our leaders and opinion-makers rely on their incomplete prognoses. That politicians are also shortsighted is not surprising but one could wish for more depth from some of the experts who advise them as well as the media which report and comment on their doings.

That we even accept the role of government in fashioning our economy is a sad statement on how far we have strayed from the laissez-faire model under which our nation thrived during its first few decades. There is a strange belief that politicians and bureaucrats know better how to spend our money they we ourselves do and, therefore, the more of our money that ends up in their control, the better. It is as though money that avoids being deposited in government coffers disappears when, in fact, the opposite is true. Money that remains in private hands is distributed more immediately and efficiently to others through trade or philanthropy.

Keeping more of our money in the private sector might also have a positive unintended consequence: it might minimize the politicians’ proclivity to be constantly seen as doing something when often the best thing they could do is nothing at all. Perhaps congressmen and presidents would not need to prove their worth so much and would stop tinkering since they cannot possibly understand, control and anticipate all that produces a thriving economy. Maybe as they saw the American people participate in mutually beneficial financial transactions without their help and interference they would gain some much-needed humility, as well as trust in people to conduct their own lives and financial affairs.

Our current economic situation is the result of actions taken by short-sighted and narrowly-focused policymakers who came long before us and worked their dark magic over many years. It is not the fault of Barack Obama or even George W. Bush, though both have contributed and both are blamed by their political adversaries. It is the result of intervention in the free economy by progressives and industrialists, bankers and champions of social justice. Financially powerful individuals will always try use government to steer economic policies in directions beneficial to themselves while the politically powerful will always try to use government to achieve social and financial goals beneficial to their favored groups. Unfortunately, government itself is a willing player in this game.

Our leaders should learn Hazlitt’s lesson and put it in practice. Their vision should extend beyond their next self-important sound-bite on the evening news or the upcoming re-election campaign. They should have the strength of character and the wisdom to resist special interests of all stripes and make decisions that will benefit the American people over the long haul. They should admit sometimes the best decision they can make is no decision at all and let the American people be about their business. We can take it from here.

Audrey Pietrucha helps coordinate the Vermont Liberty Alliance. She can be reached at vermontliberty@gmail.com.