Economic Freedom!

This is my magnum opus (in terms of length…as for quality and worth, you decide) on economic freedom. Oh yeah, don’t steal my shit. Seriously. If you want to steal it, then just let me know beforehand. I wouldn’t do it to you, so don’t do it to me. Thanks.

Part One: What role does economic freedom play in the economic development of a country?
Economic freedom is crucial to the general development of countries; furthermore, it’s mutually dependent with political freedom, at least according to the influential Austrian economist Ludwig von Mises. Mises made a great point when he said “everything that a man does must necessarily in some way or other affect the economic or material sphere and requires his power to interfere with this sphere. In order to subsist, he must toil and have the opportunity to deal with some material tangible goods.” Mises is saying that the type of economic system a country employs will certainly impact that country’s political process. A common occurrence throughout American history, at least, has been the notion of economic freedom via neoliberal policies. In 1973 the C.I.A supported a military coup in Chile in the name of economic freedom. The prevailing economic system was Marxist socialism. Milton Friedman, a Nobel economic prize recipient, trained over twenty “Chicago Boys” in the art of laissez faire at the University of Chicago. The “Chicago Boys” used their Friedman branded neoliberal knowledge to advise the military junta headed by Augusto Pinochet. Such a forceful and immediate transition from socialism to capitalism seemed to have undermined economic freedom rather than advance it. The people of Chile didn’t have a choice, but to adhere to the new policies, which proved to be undemocratic. The new economy was hailed as the “Miracle of Chile,” despite the fact that the unemployment rate shot to 34.6% by 1983 (from only 3% in 1972). In terms of human rights abuses, an article on france24.com approximates around 3,000 deaths and disappearances occurred during Pinochet’s regime.ⁱ Although human rights abuse may not be directly linked to economics, it’s safe to assume that many of those who were killed and mistreated disagreed with the junta’s economic-political policies.
Noam Chomsky, a libertarian socialist, argues in his 1999 book Profit Over People (Page 30) that “standard economic history recognizes that state intervention has played a central role in economic growth.” He uses the example of Japan’s thriving manufacturing economy. Chomsky is quick to point out that the free market system isn’t the reason why Japan was doing so great in the 1990s. Instead, he alleges “market mechanisms were gradually introduced by the state bureaucracy and industrial-financial conglomerates” (Page 31, Profit Over People). Is it possible that state intervention is more responsible for economic freedom than private industry?
Governments are often accused of being inefficient compared to independent firms. That claim has a lot of substance, for governments don’t have the same kind of profit motive as corporations and firms. A 1993 study by two economists, Winfried Ruigrok and Rob van Tulder, introduced a challenge to those who swear by private domination. They wrote that the government “has played a key role in the development and diffusion of many products and process innovations…[and has been] an overwhelming force in shaping the strategies and competitiveness of the world’s largest firms” (Page 38, Profit Over People). Many free-market believers have and will continue to dismiss these accusations as “socialist” or “statist.” Even Adam Smith, often portrayed as a foremost advocate for laissez faire capitalism, professed belief in a certain level of statism such as public works according to the Library of Economics and Libertyⁱⁱ. Perhaps there should be no denying that government has played an enormous role in the economic development of nations, but is such an entity necessary once a nation is sufficiently advanced?

Part Two: Discuss any two economies of the world to support your ideas.
To me personally, economic freedom has always meant, at the minimum, sound monetary policies. The United States with its Federal Reserve System has done more harm than good in the monetary sphere. The Fed is a central planning agency that controls the economy of the United States. It was created in 1913 to protect against inflation and volatile markets. Since 1913, the purchasing power of the U.S Dollar has dropped significantly, most especially since the Great Depression of the 1930s. From looking at this graph (http://www.aier.org/images/stories/research/ch_p5.pdf) it’s easy to see the continuous drop. Congressman Ron Paul of Texas puts it bluntly in his book End The Fed: “the government and its banking cartel have together stolen $0.95 of every dollar as they have pursued a relentless inflationary policy” (Page 25, End The Fed). Moreover the Fed is in the business of printing money in secrecy when it needs it, which isn’t something the average citizen can get away with. In a recent interview with talk show host Jon Stewart, Paul said “temporarily [the Fed] helps. If any individual borrows $1,000,000 a month, they can live beyond their means until they have to pay the bills. When a government does it, they pay their bills through financial crises, inflation, unemployment.”ⁱⁱⁱ I know that I don’t want to have to suffer through a financial crisis, inflation, and going without a job. My economic freedom is reduced in that case because a central bank has decided to manipulate money. A country that doesn’t have a central bank is Panama. Since its independence in 1903, Panama has not experienced a financial collapse or currency crisis. Unlike the United States, Panama can’t just put more money into supply. It only obtains US dollars (the defacto currency) from producing and exporting goods and services. ^iv The unemployment rate according to the CIA World Factbook is at 5.6% in Panama. The United States’ unemployment rate according to the U.S Bureau of Labor Statistics is 10.2%, almost double that of Panama. In terms of spending, Panama had a budget surplus of nearly $98,000,000 in 2008^v whereas the United States had a deficit of $962,000,000,000 in 2008. I believe that this is an important difference to take note of, at least in terms of government interference. By running up such a large deficit, the United States is allowing its government to play an active role in the economy. That said, it takes longer to start a business in Panama. The United States is very open to new ideas and immigrants, even as accusations of “bureaucracy” loom. Taxes aren’t as burdensome in Panama as they are in the United States. The top income tax rate is 27% there, whereas it is 35% in the United States.^vi After examining these two economies, I will say that I am more impressed by Panama. I think it is remarkable that their government is able to keep a balanced budget and their economy is able to operate without a group of planners controlling it. The United States, on the other hand, has always spent a great deal of money and resources on controls which inhibit personal liberty. Ultimately, economic freedom comes from allowing citizens to make their own monetary and fiscal decisions. Rankings are subjective and tend to focus on a variety of performance indicators even when there are major components of economies that tend to clearly show whether economic freedom exists or not. Next, I am going to be discussing the type of economic system that I would love to live and work in.

Part Three: Which economic system would you like to live in? Why?
For quite some time I was a big fan of the current mixed economic system in United States. I didn’t know of any alternatives. I didn’t know what central banking was. I didn’t understand how evil the corporation is. I’ve done a lot of research in the past few years and since then I’ve been attracted to agorist anarchism. Basically, I want the government to go away. Individuals should be fully responsible for their own decision making. The corporation as we know it today (with legal “person” status and government sponsored limited liability) would cease to exist. Help for the needy wouldn’t be a procedure of seeking government benefits. It wouldn’t be applying for food stamps or for unemployment. Help would come in the form of people and organizations that are voluntarily in place to provide services and guidance immediately and effectively. The economic system that I want to have would put wealth in the hands of many entrepreneurs. In essence, big business would no longer have an excessive and anti-democratic influence on society, because everyone would be their own contractor. As far as monetary police goes, my economic system would eliminate central banking and instead have a system of free banking in place, in which competing entities print their own gold-backed money. There are many other issues surrounding an agorist economic system. For right now, the biggest challenge is getting rid of the current corporate state in the United States. Auditing the Federal Reserve and then abolishing it all together would be an initial step in the right direction. Secondly, the corporation would need to be made illegal. Thirdly, government mingling in and sponsoring of business affairs would have to be halted. After that, the income tax would need to repealed. It’s immoral to rob one person to pay another person. All earners would be able to keep their entire paycheck and personally decide how to spend or save it. Also, if the income tax was repealed, the government would no longer be able to fund such a large military. It, too, wouldn’t have enough money to cover its many social programs. For right now, the best citizens can do to overthrow the current state of affairs is to participate in counter-economics. Some methods of peaceful counter-economics are introduced by Roger Miller in the Macroeconomics textbook Economics Today: The Macro View. Miller says that these “transactions should not and do not get included in the measure of GDP.” Buying used goods, giving gifts, purchasing prostitution services or drugs, and gambling illegally are all counter-economic. Other worthy counter-economic practices include tax evasion (by employers and employees), self-sufficient production, and bartering. The main objective of engaging in these illegal or economically frowned upon activities is to get people to wake up and recognize that our economic system doesn’t simulate a genuinely free-market; instead, it lessens economic freedom.