Posts Tagged ‘Mises Institute’

 

In order to understand the disaster that is unfolding in Venezuela, we need to journey through the most recent century of our history and look at how our institutions have changed over time.

What we will find is that Venezuela once enjoyed relatively high levels of economic freedom, although this occurred under dictatorial regimes.

But, when Venezuela finally embraced democracy, we began to kill economic freedom. This was not all at once, of course. It was a gradual process. But it happened at the expense of the welfare of millions of people.

And, ultimately, the lesson we learned is that socialism never, ever works, no matter what Paul Krugman, or Joseph Stiglitz, or guys in Spain like Pablo Iglesias say.

It was very common during the years we suffered under Hugo Chávez to hear these pundits and economists on TV saying that this time, socialism is being done right. This time, the Venezuelans figured it out.

They were, and are wrong.

On the other hand, there was a time when this country was quite prosperous and wealthy, and for a time Venezuela was even referred to as an “economic miracle” in many books and articles.

However, during those years, out of the five presidents we had, four were dictators and generals of the army. Our civil and political rights were restricted. We didn’t have freedom of the press, for example; we didn’t have universal suffrage. But, while we lived under a dictatorship, we could at least enjoy high levels of economic freedom.

A Brief Economic History of Venezuela

The economic miracle began a century ago, when from 1914 to 1922, Venezuela entered the international oil race. In 1914, Venezuela opened its first oil well. Fortunately, the government did not make the mistake of attempting to manage the oil business, or own the wells. The oil wells were privately owned, and in many cases were owned by private international companies that operated in Venezuela. It wasn’t totally laissez-faire, of course. There were tax incentives and other so-called concessions employed to promote exploration and exploitation of oil. But most industries — including the oil industry — remained privatized.

Moreover, during this period, tax rates in the country were relatively low.

In 1957, the marginal tax rate for individuals was 12 percent. There was certainly a state presence, and the public sector absorbed 20 percent of GDP. But, government spending was used mainly to build the country’s basic infrastructure.

The area of international trade was relatively free as well — and very free compared to today. There were tariffs that were relatively high, but there were no other major barriers to trade such as quotas, anti-dumping laws, or safeguards.

Other economic controls were few as well. There were just a few state-owned companies and virtually no price controls, no rent controls, no interest-rate controls, and no exchange-rate controls.

Of course, we weren’t free from the problems of a central bank, either. In 1939, Venezuela created its own central bank. But, the bank was largely inactive and functioned primarily defending a fixed exchange rate with the US dollar.

Moving Toward More Interventionism

Despite the high levels of economic freedom that existed during those years, government legislation started to chip away at that freedom. Changes included the nationalization of the telephone company, the creation of numerous state-owned companies, and state-owned banks. That happened in 1950. The Venezuelan government thus began sowing the seeds of destruction, and you can see the continued deterioration in the level of economic freedom in the decade of the 1950s.

In 1958, Venezuela became a democracy when the dictatorship was overthrown. With that came all the usual benefits of democracy such as freedom of the press, universal suffrage, and other civil rights. Unfortunately, these reforms came along with continued destruction of our economic freedom.

The first democratically elected president was Rómulo Betancourt. He was a communist-turned-social democrat. In fact, while he was in exile, he founded the Communist Party in Costa Rica and helped found the Communist Party in Colombia as well. Not surprisingly, as president, he started destroying the economic institutions we had by implementing price controls, rent controls, and other regulations we hadn’t had before. On top of that, he and his allies created a new constitution that was hostile to private property.

In spite of this — or perhaps because of it — Betancourt is almost universally revered in Venezuela as “the father of our democracy.” This remains true even today as Venezuela collapses.

Of course, compared to today, we had far greater economic freedom under Betancourt than we do in today’s Venezuela. But, all of the presidents — with one exception — who came after Betancourt took similar positions and continued to chip away at economic freedom. The only exception was Carlos Andrés Pérez who in his second term attempted some free market reforms. But, he executed these later reforms so badly and haphazardly that markets ended up being blamed for the resulting crises.

The Rise of Hugo Chávez

Over time, the destruction of economic freedom led to more and more impoverishment and crisis. This in turn set the stage for the rise of a political outsider with a populist message. This, of course, was Hugo Chávez. He was elected in 1998 and promised to replace our light socialism with more radical socialism. This only accelerated the problems we had been facing for decades. Nevertheless, he was able to pass through an even more anti-private-property constitution. Since Chávez’s death in 2013, the attacks on private property have continued, and Chávez’s successor, Nicolás Maduro, promises only more of the same. Except now, the government is turning toward outright authoritarian socialism, and Maduro is seeking a new constitution in which private property is almost totally abolished, and Maduro will be allowed to remain in power for life.

A Legacy of Poverty

So, what are the results of socialism in Venezuela? Well, we have experienced hyperinflation. We have people eating garbage, schools that do not teach, hospitals that do not heal, long and humiliating lines to buy flour, bread, and basic medicines. We endure the militarization of practically every aspect of life.

The cost of living has skyrocketed in recent years.

Let’s look at the cost of goods in services in terms of a salary earned by a full college professor. In the 1980s, our “full professor” needed to pay almost 15 minutes of his salary to buy one kilogram of beef. Today, in July 2017, our full professor needs to pay the equivalent of 18 hours to buy the same amount of beef. During the 1980s, our full professor needed to pay almost one year’s salary for a new sedan. Today, he must pay the equivalent of 25 years of his salary. In the 1980s, a full professor with his monthly salary could buy 17 basic baskets of essential goods. Today, he can buy just one-quarter of a basic
basket.

And what about the value of our money? Well, in March 2007, the largest denomination of paper money in Venezuela was the 100 bolivar bill. With it, you could buy 28 US dollars, 288 eggs, or 56 kilograms of rice. Today, you can buy .01 dollars, 0.2 eggs, and 0.08 kilograms of rice. In July 2017, you need five 100-bolivar bills to buy just one egg.

So, socialism is the cause of the Venezuelan misery. Venezuelans are starving, eating garbage, losing weight. Children are malnourished. Anyone in Venezuela would be happy to eat out of America’s trashcans. It would be considered gourmet.

So, what’s the response of our society? Well, it’s the young people who are leading the fight for freedom in Venezuela in spite of what the current political leaders tell them to do. They don’t want to be called “the opposition.” They are the resistance, in Spanish, “la resistencia.” They are the real heroes of freedom in our country, but the world needs to know that they have often been killed by a tyrannical government, and all members of the resistance are persecuted daily.

Nevertheless, a new pro-market leadership must emerge before we can expect many major changes. Our current political opposition parties also hate free markets. They don’t like Maduro, but they still want their version of socialism.

This is not surprising. As Venezuelans, our poor understanding of the importance of freedom and free markets has created our current disaster. We Venezuelans never really understood freedom in its broader dimension because when we enjoyed high levels of economic freedom, we allowed the destruction of political and civil rights, and when we finally established a democracy, we allowed the destruction of economic freedom.

But there is reason for hope. Along with the Mises Institute we do believe that a revolution in ideas can really bring a new era to Venezuela. On behalf of the resistance and millions of people in our country, we thank the Mises Institute for this opportunity to briefly tell the full history of Venezuela. Thank you very much.

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In the 1970’s we heard the earth was going to get so crowded we’d be falling off. Now the panickers have flipped to population decline. They were wrong in the 70’s, so are they wrong again? Is a declining population catastrophic?

Countries from Germany to Japan are investing in mass immigration or pro-birth policies on the assumption that they must import enough warm bodies to stave off economic collapse. I think this is mistaken.

Falling population on a country level is certainly no catastrophe and, indeed, may be positive. I’ll outline some reasons here…

Historically, the first question is why population declined. If it’s the Mongols invading again then, yes, the economy will suffer. Not because of the death alone, but because wholesale slaughter tends to destroy productive capital as well.

On the other hand, if the population is declining from non-war, we have a well-studied natural experiment in the Black Plague. Which is generally credited with the “take-off” of the West. Because if the population declines by a third while capital including arable land stays the same, you get a surplus. Same resources divided by fewer people.

Think of zombie movies where dude’s running around with unlimited resources at his disposal — free cars, riverfront penthouses. That, in diluted form, is what a declining population gives us — more land, more highways or buildings, more resources per person.

Now, if the population’s declining not because of a terrible disaster like the Plague, rather because people simply want fewer children, then you don’t even get the massive hit from losing productive people. A worker dying at 40 takes a lot of productivity with him, while a child unborn isn’t actually destroying anything but hopes and dreams.

So if the Plague was a per capita economic bonanza to Europe, having fewer children should be an even larger per capita bonanza.

Take Germany; before recent rises in immigration, Germans averaged 1.25 children per woman. This translates into a 1/3 decline in population per cycle (i.e every 75 years if people are living 75 years). So without immigration, Germany might expect a 1/3 decline by 2100. Is this good or bad?

The question breaks into 2 parts: absolute number of people, and changes in age composition. On numbers alone, it’s great for Germans; same physical capital, same amount of land and air and water. True there are fewer taxpayers to amortize shared costs like defense, but these costs are small and, empirically, often scale to the population anyway. For example Holland’s military budget and population are both about 1/5 of Germany’s.

So on numbers it’s great — more stuff for fewer people.

Now the second question is age profile. The key here is that a declining population means fewer working-adults to pay out pensions, but it also means even fewer kids. Who are very expensive. The number that captures both is “dependency ratio,” which is the ratio of workers to children-plus-elderly.

To take a real-world example, the UN expects Germany in 2100 to have 68 million people, compared to today’s 82 million — about a 20% decline. The age profile shifts so they expect a third more over-65’s — from 17 to 23 million. Meanwhile, children 14 and under fall from 11m to 9m. So total dependents goes from 28 million today to 32 million in 2100. Meanwhile, population age 15 to 64 goes from 54 million today to 36 million in 2100. Upshot is today a single working-age person supports half a dependent — 54 million carrying 28 million. But in 2100 that worker will support a single dependent — 36 million carrying 32 million. So far so bad, right?

Well, there are 2 big caveats here, both based on long-lasting trends.

First, for over a century now people are not only living longer, but living healthy longer. This is called “health expectancy” and, sticking with Germany, is rising by about 1.4 years per decade.

This implies that 65 year-olds in 2100 will be as healthy as 53 year-olds today. While today’s 65-year-olds are as healthy as 2100’s 78-year-olds. This alone would bring the elderly numbers back down to today’s, but the lower number of children means worker burdens actually decline.

Of course, this would require raising retirement ages in line with health expectancy – 1.4 years per decade – which politicians are obviously deeply reluctant to do.

Second caveat is another long-term trend, economic growth. The irony here is that, from a population growth viewpoint, economic growth is actually the worst-case scenario. Because if the economy crashes instead, then historically the population actually soars — kids become your safety net if the welfare state goes bankrupt. So if we fail to grow, the demographic problem actually solves itself anyway. Either we grow, or population decline was a false alarm anyway.

Quantifying this growth, over the past 50 years Germany has grown 1.65% per year, real per capita. That trends puts a 2100 German worker making 4 times what they do today. Keep in mind this is likely underestimating the benefit, because any outperformance makes Germans richer yet, while any catastrophe probably makes them have more kids.

So, summing up, rising health expectancy implies there will actually be fewer dependents in 2100 Germany, while economic growth implies German workers will be 4 times richer, just on growth alone. The demographic burden plunges by 80% or more.

By the way, if you’re freaked out at the prospect of working an extra 1.4 years per decade, that economic growth alone suggests a 50% decline in worker burdens – twice the dependents on four times the income. So even if politicians are spineless, the welfare burden declines even with more dependents.

Bottom line, whether we look at total numbers or demographically, population decline coming from simply choosing to have fewer kids is nothing remotely catastrophic.

Now, a final point: in a worldwide context, more people does tend to increase investment, therefore innovation and economic growth. This is obvious in the aggregate – there wouldn’t be any factories if there weren’t any humans – but people forget. So, on a world-wide level, we should have a bias towards more humans, while recognizing that, on a country level, a shrinking population is certainly no catastrophe.

Authored by Ryan McMaken

We’ve long been told that gentrification is the scourge of many communities, and we’ve become very familiar with the scenario: a stable middle-class community is destroyed when wealthy (usually white) people move in, drive up home prices, and force out the “diverse” population that had been there previously.

There are problems with this narrative of course. Very often, the working-class homeowners who leave the neighborhood experience a windfall from selling their property to the incoming “up and comers” who buy out the aging homeowners. There is an upside.

However, even if we keep all of this in mind, it’s important to remember that there is a fate far worse than gentrification. This occurs when people move out of a neighborhood or city — and no one wants to move back in.

We might call this de-gentrification and it can be devastating for those left behind in these communities.

In a recent interview with KCUR in Kansas City, four other guests and I looked at the issue of de-gentrification in some neighborhoods on the eastern side of Kansas City.

The overall phenomenon is one that’s become somewhat familiar over the past decade. Due to economic decline, lost jobs, and foreclosures — all interrelated phenomena — real estate in some areas of the country have declined in value so much as to be near zero. In many cases, the homes have become white elephants because the cost of maintaining the property has risen higher than what anyone is willing to pay. When that happens, owners often simply walk away.

Empty houses become a magnet for squatters and drug dealers. Wild animals take up residence in the homes. The homes become fire hazards and a threat to nearby structures.

In many cases, as explored in the KCUR piece, local investors and entrepreneurs have attempted to buy these homes and invest in them. These efforts, however, are complicated by legal problems arising from a lack of clarity as to who the current owners legally are.

Once ownership is resolved, even the most savvy investors may continue to run into problems common to de-gentrification situations. Maintaining residential property is costly, and it’s only worth it if the location and condition of the real estate can attract buyers or renters willing to pay enough to cover the costs of maintenance and restoration. As a result, many properties simply sit empty indefinitely. Eventually, the city government ends up bulldozing the property as a health hazard.

 

On the other hand, there are indeed downsides to gentrification.

There are real social costs when a neighborhood disintegrates and the neighbors go their separate ways. As we’ve noted before, communities with a highly mobile population can often experience more crime, stress, and more health problems.

Real Estate Always Goes Up!

The phenomenon of de-gentrification helps to illustrate one persistent myth that has often accompanied discussions of real estate: the myth that real estate prices always go up, and that real estate has intrinsic value.

Economist Peter St. Onge notes:

 

“Buy land — they’re not making any more!” is an old investing chestnut, and a common sense one to boot. Economically, it’s also completely false.

Far from being an asset with some sort of intrinsic, built-in value, land can be rendered worthless or nearly worthless by any number of factors.

We’ve seen this at work in old rustbelt cities where population growth has dramatically slowed, or even reversed. We’ve heard of $100 houses in Detroit, and Rockford, Illinois is demolishing houses. Kansas City recently attempted to sell some abandoned homes for $999.

But, if the real estate in question fails to meet conditions that give real estate its value, then even these measures are unlikely to create demand for the homes in the absence of major demographic or economic changes.

And what are these conditions?

St. Onge explains:

 

 

 

Land’s value comes from its economic usefulness. From the value of things that can be done using that land…

Step back a moment and ask why land has value anyway. Why do people want land? Well, obviously, because you can put stuff there — including yourself — plus buildings, swimming pools, and factories.

Now, anybody who’s visited West Texas knows there is plenty of building space in the world. You could drive for hours and meet nobody. There’s lots of space for that factory of yours. But it’s not really space itself that makes land valuable. It’s location. As in, there’s only so much room in Manhattan. Or Central London.

Once again, though, it’s not the actual space that matters. It’s the access. Put a strip mall on Manhattan surrounded by crocodile-filled moats and snipers and it will have low value. The value is in access. So Manhattan is valuable because it’s easy to get to other parts of Manhattan. And it’s easy for other people to get to you. Customers, partners, and friends can all easily visit you if your apartment or office is in Manhattan, moatless and sniperless.

We see this issue of access at work in many of these old rustbelt cities. Once upon a time, those homes provided relatively easy access to employment centers, shopping, entertainment, and other amenities of value to residents. Once jobs began to move away, and once shops began to close, that real estate began to lose its value. It’s not enough that a house keep the rain off the residents. To build on St Onge’s analogy: if a house is surrounded by dangerous or undesirable conditions, no one will want to live in it.

Moreover, it’s important to keep in mind that the mere presence of employment, shopping, and schools is not sufficient to give a home value. Prospective owners will compare that house and that location to other possible locations. That is, homes in neighborhood Y must compete with homes in neighborhoods Z and X. If a neighboring city or another side of town is seen as more desirable, that land and real estate will be relatively undesirable and will cease to have value.

Ultimately, homeowners in these neighborhoods will be wishing a little gentrification would come their way. Instead, they find themselves in neighborhoods with numerous abandoned houses and all the health and safety hazards those bring. Homeowners will unable to sell their properties at prices that make it possible to relocate to other neighborhoods and maintain a similar standard of living. Having spent years paying for maintenance and upkeep of their properities, they one day find the market price has gone to zero because there are no buyers to be had.

It Could Be Worse: It Could be Rural Real Estate

In the long run, these urban houses are still in a better position than many homes and communities that continue to empty throughout rural America. As rural residents continue to abandon rural areas for metropolitan areas, former owners leave stores and homes behind, and the value begins to disappear.

Housing in rural areas has long been largely a function of demand for workers in agriculture and resource extraction. As fewer and fewer humans are necessary for this work, housing and shopping in rural areas will continue to disappear. Rural America is on its way to becoming a sparsely-populated land of octogenarians.

Not even nostalgia will be enough to save it. Those who inherit

farmhouses built by their grandparents in, say, the old wheat belt of Western Kansas are unlikely to make the multi-hour drives necessary to keep up with maintenance or live in the properties. The remote locations of these properties render them inconvenient in the extreme, and once again we’re left with the issue of access. A farmhouse that’s three hours from the nearest metropolitan area suffers from a severe access problem.

Urban neighborhoods, on the other hand — including those that are currently seen as highly undesirable — at least benefit from being relatively close to urban amenities that many desire. In the long run, even these neighborhoods will gentrify, as we’ve seen happen in Detroit.

So, the next time we’re told we need to be deeply concerned about gentrification, it may be helpful to remember that at least many people displaced by gentrification tend to leave their old neighborhoods with some extra money in their pockets. Victims of de-gentrification tend to end up leaving their neighborhoods with nothing at all.

In a recent Reason-Rupe Survey, 58 percent of Americans ages 18–24 said they viewed socialism favorably. However, when asked if they favored a free market economy or a government-managed economy, 64 percent of Millennials said they favored the free market. How is it possible for Millennials to favor both a socialist government and a capitalist economy? The answer is simple, Millennials simply do not understand what either of these words really mean, especially capitalism.

The word capitalism is generally unpopular on college campuses around the country. In pop culture, it is rare, though not impossible, to find a story where the capitalist ends up being the hero. All day long we are bombarded with anti-free market propaganda. Oddly enough, most of this anti-capitalist rhetoric is available to us through mediums that exist only because of the free market. For example, every time a young, enthusiastic socialist tweets about the injustices of capitalism from his or her iPhone, they are living proof that Millennials love the free market.

If there is one thing the Millennial generation struggles with, it’s patience. We have grown up in a world where everything has been available to us with the click of the button. We have never had to use encyclopedias or spend hours doing research in a library. Instead, we Google whatever it is that we were looking for and in a matter of seconds, we have a plethora of sources. Socialism is not generally associated with quick results. Instead, extreme bureaucracy usually tends to make things take even longer than they otherwise would, much like a government bread line. Likewise, a government-run healthcare system usually results in longer waiting periods even for simple office visits. Millennials hate waiting. I am willing to bet that if these self-proclaimed socialists were to spend some time in a socialist country, they would not last very long.

Millennials love quality, one-of-a-kind products. Platforms like Etsy have served the Millennial generation as a sort of online farmers’ market where strangers from around the world buy and sell handmade goods from each other. Whether you’re looking for a beard warmer or craft BBQ sauce, Etsy has it. Likewise, we live in a world fueled by Amazon Prime. Not only do we have access to almost anything we could possibly need or want, we are also having these items shipped to our door in two days. Both Etsy and Amazon are wonders brought to us by the free market. So, as Millennials login to Amazon to purchase a copy of The Communist Manifesto, they might want to consider the fact that the book is delivered to them in 48 hours all thanks to capitalism.

Millennials are entrepreneurs. We are using technology to our advantage and making the world run quickly and efficiently. Though some might speak loudly in favor of unions and collective bargaining, on a late night when no cabs can be found, a Millennial knows that a safe ride will be available to us in minutes by opening our Uber App. Apps like Square, Venmo, and PayPal have allowed us to start small businesses and collect payment with ease. Sites like YouTube allow us the opportunity to gain exposure and promote whatever it is we are working on or selling without ever leaving our homes. We have the potential to be the most entrepreneurial generation our country has ever seen.

Millennials love to actively participate in the market process. Active participation is one of the fundamental principles of the free market. If we are not willing to give feedback and review our purchased consumer goods, we will not get the most innovative processes or the best quality products available. Millennials have grown up in a world where every thought and opinion is shared on social media. Platforms like Yelp have become important tools in the hands of young consumers who are either pleased or completely outraged about the goods or services they received. As a result, Millennials, more than any other generation, are reading online reviews of a company or product before making the decision to buy. According to Forbes, 33% of Millennials said that they read reviews of a product before deciding to buy.

Millennials love to learn and have more access to the market of ideas than any other generation that preceded us. Khan academy, YouTube, and Wikipedia offer us a chance to become experts in almost any field we desire. Millennials are using these free market mediums to educate themselves in a way that has never been seen before in our world. We are not relying solely on the opinion of college professors or our parents. We are doing the research and finding new ways to learn. Along those same lines, we also have a natural distrust for authority. We have seen the economy crumble as a result of the poor decisions made by the baby boomer generation. We do not trust others to make our decisions for us. We are coming up with entrepreneurial solutions to government-created problems and we are doing this through online learning.

Yet, in spite of all of these aspects of the Millennial mindset, Millennials still claim to identify with socialism. Growing up in a post-cold war era has jaded our perception of what a pure welfare state really looks like. We have not grown up hearing first-hand accounts of the woes of socialism in the Cold War era. We are living in a technological world brought to us because of the free market’s perpetual triumph over socialism. However, we don’t understand history well enough to realize how fortunate we are to live in a society where the free market is allowed to flourish. Millennials see large unemployment statistics, a struggling economy, and high costs of living and attribute it to the very system that gave us our iPhones, Amazon, Spotify, and Netflix.

The problem at hand is not that too many Millennials are socialists; the problem is that too many Millennials don’t understand that in almost every aspect of their lives, they are capitalists. If Millennials truly want to dedicate themselves to the ideals of socialism, they will have to surrender their iPhones, their Amazon accounts, their Uber accounts, their craft beer, the hipster beard accessories, and pretty much every other aspect of their daily lives.

By Shawn Ritenour via The Mises Institute

When I was a boy, one of my favorite holidays was Independence Day. I was an enthusiastic student of the War for Independence. My favorite book was the How and Why Wonder Book of the American Revolution by Felix Sutton. I spent a lot of my childhood reading about the colonial era, the lives of people like Sam Adams, Paul Revere, Thomas Jefferson, Patrick Henry, and George Washington. I learned all about our American forefathers’ struggle for liberty against a king who merely treated them as revenue-generating pawns. I was nine years old when the US celebrated its bicentennial and my mother wallpapered my room with a red, white, and blue colonial American themed paper and I had various prints of famous revolutionary war scenes hanging on the walls. I looked forward every year to the day celebrating the signing of the Declaration of Independence.

Over the years, alas, my enthusiasm became dampened so that now, if I am exposed to any mainstream media celebrations of Independence Day, I do not feel the joy I once did. Instead I feel more like Charlie Brown at the beginning of A Charlie Brown Christmas. Remember in that childhood classic how, when Christmas approaches, Charlie Brown tells Linus that he knows he should be happy, but instead he always ends up feeling depressed. I increasingly get the same feeling as people gear up for 4th of July celebrations.

Now, much older and perhaps wiser, when I hear the popular media gushing about our freedoms, the Declaration of Independence, the Liberty Bell, Celebrate America concerts, and all the rest on the Fourth of July, instead of being happy, I feel a tinge of sadness. I like celebrating the Fourth of July by, say, gathering with friends, teaching my children about the Founding Fathers, reading the Declaration, and watching fireworks, but when I think about where we started and what we have become, like Charlie Brown I end up melancholy. This is because the politicians and the media talking heads clearly have no idea what they are talking about. Most seem to not even know what liberty really is. The only politician at the national level who spoke about freedom and the Constitution with actual conviction was Ron Paul and they laughed him off the stage. Instead, popular journalists and pundits try to make us believe that we are free because we are allowed to have other people vote away our liberties.

At the beginning of every major sporting event, Americans pay lip service to “the land of the free and the home of the brave,” but everywhere they are in economic chains. Last year total government spending was $6.4 trillion. That is $6.4 trillion with a t. That number amounts to over 36 percent of GDP. The Federal budget deficit the past fiscal year was $438 billion. Over the past eight years, our government debt has skyrocketed. By the end of this fiscal year, gross Federal government debt is expected to be over $19 trillion. That will be 106 percent of GDP.

Now, the important point to remember with respect to our freedom is that every single penny of government spending represents government control. When you spend money to purchase a loaf of bread, a tank of gas, or a pair of pants, you become owners of these economic goods and can use them as you see fit. When the government spends money, its bureaucrats gain control of economic resources. And the more of our resources under their control, the less free we become.

Additionally, government control of our society is greatly bankrolled by the central money creating machine, the Federal Reserve. It has maintained a monetary base in the stratosphere as the money supply increased $880 billion over the past year. That is an 8 percent increase over 12 months. It is all too obvious to the man on Main Street that such monetary inflation provides no social benefit, but sows much economic harm. It decreases the purchasing power of the dollar, and especially hurts the most vulnerable of our citizens who live on fixed incomes. At the same time it rewards cronies — not for producing goods that are actually profitable, but for going to the right parties and exerting the right influence on members of the ruling class. Inflation also generates the business cycle which always results in recession and unemployment. Perhaps you’ve heard of the real estate and derivative bubbles of 2008?

The Leviathan state’s control goes beyond dollars, however. In fact, our rulers seem to want to control as much of our lives as possible. The 2013 Code of Federal Regulations had a near-record 178,277 pages. And these laws regulate virtually every area of our lives. Government bureaucrats simply do not trust buyers and seller to voluntarily agree on acceptable goods at acceptable prices. Did you know that the federal government regulates the production of battery chargers, ceiling fans, central air conditioners, clothes dryers, clothes washers, clothing itself, computer and battery backup systems, dehumidifiers, dishwashers, furnaces and boilers, kitchen ranges and ovens, lawn mowers, microwave ovens, swimming pool heaters, refrigerators and freezers, window air conditioners, televisions, cable and satellite TV boxes, water heaters, commercial ice makers, industrial clothes washers, compressors, electric motors, fans and blowers, refrigerated beverage vending machines, refrigeration equipment, walk-in coolers and freezers, ceiling fan light kits, lamps, fluorescent lamp ballasts, illuminated exit signs, light bulbs, flash lights, faucets, showerheads, and flush toilets? And this is not even an exhaustive list. Exhausting yes, but exhaustive, no. The USDA regulates the marketing of cotton, milk and dairy products, fruits and vegetables, and livestock, poultry, and feed. Government bureaucrats even have detailed instructions mandating the cornbread-to-meat ratio required in a commercial corn dog! The state will not even let us produce and sell corn dogs on our own! In the land of supposedly free enterprise, a full 38 percent of workers employed in 2008 needed a government license or certification just to do their job. In the 1950s the number was about 5 percent.

One of the great intellectual errors that drive such despotism is the view that the independence we celebrate is primarily about egalitarianism. After all, the most famous phrase in the Declaration does say, “All men are created equal.” Hear this statement in context, however. The passage in question reads, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.” What the Declaration affirms is every person has the divine and natural right to liberty. The common way of stating the doctrine at the time was that each person has a natural right to life, liberty, and property. He has the right to not be murdered, the right to use his mind and body without restraint by others, and the right to the fruits of his labor.

That one of “the unalienable rights” asserted by the signers of the Declaration was the right to property makes it clear that the principles of the Declaration of Independence are antithetical to our current government’s policy of confiscation and control. Missing the connection between freedom and property is a tap root of our nation’s interventionist culture­­ — a culture that yields the bitter fruit of social and economic destruction.

The lesson of economic theory and practice is clear. As the institution of private property goes, so goes society. This was recognized by the great nineteenth century pastor and college president Francis Wayland. He noted in his Elements of Moral Science that

 Just in proportion as the right of property is held inviolate, just in that proportion civilization advances, and the comforts and conveniences of life multiply. Hence it is, that, in free and well-ordered governments, and specially during peace, property accumulates, all the orders of society enjoy the blessings of competence, the arts flourish, science advances, and men begin to form some conception of the happiness of which the present system is capable. And, on the contrary, under despotism, when law spreads its protection over neither house, land, estate, nor life, and specially during civil wars, industry ceases, capital stagnates, the arts decline, the people starve, population diminishes, and men rapidly tend to a state of barbarism.

This insight was also significantly recognized by Ludwig von Mises:

 All civilizations have up to now been based on private ownership of the means of production. In the past civilization and private property have been linked together. Those who maintain that economics is an experimental science and nevertheless recommend public control of the means of production, lamentably contradict themselves. If historical experience could teach us anything, it would be that private property is inextricably linked with civilization. There is no experience to the effect that socialism could provide a standard of living as high as that provided by capitalism. (Human Action, pp. 264–65)

Thus, when a society rejects the right to private property, which is the bedrock of all of our freedoms, it is committing suicide. And yet that is what too many in our culture seemed primed to do.

A couple of years ago, when the darling of the left, Massachusetts senator Elizabeth Warren seemed to be flirting with a presidential campaign, she wowed a convention of liberal bloggers and activists with 11 tenets of progressivism. They included calls for increased regulation of financial markets, the environment, the internet, and labor markets, a higher minimum wage, and subsidies for higher education, increased Social Security, Medicare, and pensions. Now, we surely have serious social ills that need addressing. However, they are consequences of government aggression against private property in all its variety. And what is the suggested solution? More of the same: increased regulation, more government spending, higher taxes on the productive, more monetary inflation. In short — the destruction of private property. And with that, the destruction of freedom and the selling of our American economic birthright for a mess of socialist pottage.

Nevertheless, we must not give in to despair as the enemies of freedom would have us do. We must, instead, proceed ever the more boldly against the evil. We must jump once more into the breach to defend our American tradition of liberty, property, and the free society. And this requires that we refuse to be duped by our politicians. Remember that the Psalmist says, “It is better to take refuge in the Lord than to trust in princes” (Ps. 118:9). We need, instead, to hold their feet to the fire. We should not put up with their mere sloganeering about freedom. It is too easy for politicians and their intellectual supporters to champion “markets,” all the while finding reasons to curtail private property in their efforts to regulate the economy. They praise freedom and then expand the welfare-warfare state. Such empty rhetoric results in little except angry cynicism fostering an anti-capitalistic mentality that believes that the persistence of our economic problems is the result of a free market, instead of the consequences of the obstacles that hamper it.

We must also champion private property to ourselves and to our neighbors. Each of us needs to be willing to turn away from the Leviathan State and any goodies it promises us. And then we need to explain to our fellow man why prosperity and human flourishing is able to abound only in a free society undergirded by private property. Only a change in reigning social ideology can accomplish the sea change necessary for a free society to survive. Surveying our contemporary cultural horizon, the vista is clear and the battle lines are starkly drawn. What Patrick Henry said about himself over two centuries ago, is sadly true about our contemporary society, culture, and the American tradition “Give me liberty, or give me death.”