Modern America: Land of the Not-So-Free

Addie Stone

What usually comes to mind when a United States citizen thinks of America? He or she likely recalls the liberty the country is known for, the democracy it operates under, or the capitalism that drives its economy. To sum the description up in one word, many people would call America “free.” In an economic sense, freedom is the ability to “choose how to produce, sell, and use your own resources, while respecting others’ rights to do the same.”[1] However, on the basis of this definition, economist Ludwig von Mises would not count as “most people” and would certainly not consider America as free as many believe. In the United States, whether through the speed limit sign on the side of the road or the sales tax on an article, the government influences citizens’ lives dozens of times a day.  If you think about it, the government regulates everything from the ingredients in the medicine you take to where you get your water supply. Nevertheless, the United States Government has become so integrated into everyday life because its citizens have not just allowed, but voted for it to do so. In Liberty and Property, von Mises outlines his stance that government is the opposite of freedom, and in looking at the extent of government programs and especially government involvement in the economy, one can see that America is not as free as many assume.

Ludwig von Mises, a staunch advocate of capitalism, would likely find fault in the classification of America as “free.” Born in 1881 in Austria and living until 1973, von Mises had first-hand experience of the World Wars, the Great Depression in America, and the rise of Communism.[2] After writing broadly about economics, socialism, and capitalism, von Mises authored Liberty and Property, in which he recounts the history of freedom and society, argues for the influence of the consumer, rebukes communism, and discusses government with regard to liberty. He states that “Capitalism is not simply mass production, but mass production to satisfy the needs of the masses.”[3] In his eyes, the industrial worker that arose with the dawn of capitalism is a consumer as well. Though at one point he or she may labor in a factory mass producing a single commodity, he or she may also go and buy any number of similarly made commodities after work. This constant rotation of roles drives a consumer based market that encourages manufacturers to produce goods “better and cheaper than other people do” if they want to maintain their economic position.[4] In other words, by choosing what and what not to buy, the consumer tells the manufacturer what and what not to make; the consumer helps create the need for his or her job. This ability to both be a willing worker and make choices as a consumer gives rise to the freedom found in laissez-faire capitalism. However, von Mises sees a direct opponent to this freedom of choices in the government. He openly accepts government as “the most beneficial human institution,” but counters that “government is repression not freedom.”[5] How can an institution that takes away freedom be considered beneficial? Well, for example, suppose you wanted to murder a man that had annoyed you, but you do not because you know that you will go to jail. The government has repressed your ability to act how you want, but would society be better off had you been completely free? That man and his family certainly would not be. Therefore to von Mises, government definitely inhibits our range of personal choices, but allows us to be better off as a whole. Nevertheless, he acknowledges that the scope of government can expand to the point that freedom no longer exists in the society as in socialism and communism. Though America is no communist USSR, the reach of the government extends farther into its citizens’ freedom to choose than many recognize.

The United States government influences many aspects of citizens’ lives through a wide variety of channels. If you want to protect a product you invented and manufacture, then you apply for a patent. If you are interested in building a store in a neighborhood that consists mostly of housing, you submit a request for the area to get rezoned. Depending on the location of your home, you pay a certain property tax. The list goes on and on; through these requirements and regulations, the government restricts or at least slows people’s freedom of choice and limits their actions.  How many government programs can you name? Medicare, social security, or the Food and Drug Administration might come to mind, but even though billions are spent on funding for the vast number of programs, not even the government itself knows exactly how many there are.[6] However, what is known is the federal budget for the fiscal year of 2015: $3.8 trillion. The government allocates this money to mandatory spending, discretionary spending, and interest on the debt. Congress decides upon funding for mandatory spending on a less frequent basis than discretionary spending, though some programs such as Medicare receive both.[7] All of these programs were designed to aid the American people in various ways. Nonetheless, they do so through involvement in people’s lives. For example, in order to be aided by social security later in life, a person has to be willing to let the government take away a portion of their income each year, which results in less money for the person to spend freely.  Citizens elect the officials, trusting that they will write and opt to enact laws beneficial to the population; therefore, the citizens, in theory, are the ones that give the lawmakers permission to take away small portions of their freedom.

One of the most noticeable government interferences in United States citizens’ total freedom to make choices comes from the direct manipulation of the economy. Everyone knows about the government’s ability to tax; among income taxes, import taxes, business taxes, “sin” taxes, and many others, taxation is prevalent in the nation. In order to raise revenue to fund the programs discussed previously, all of these taxes put a slight barrier in place to the use or purchase of a commodity, whether it is the money you have earned or the cigarettes you want to buy at the store. However, not all people are aware that the government also has the ability to encourage production and consumption through subsidies, money paid to a business to help them cut their costs in making a specific product, and other government spending. In other words, as much as consumers have the ability to influence what they consume, the government can limit or increase the availability of certain commodities in order sway our choices, and thus the economy, both ways through its use of fiscal policy. In fact, one aspect of the government intrudes even further in citizens’ ability to buy and sell as they please: the Federal Reserve. The Federal Reserve, better known as “the Fed,” was founded in 1913 to “provide the nation with a safer, more flexible, and more stable monetary and financial system.”[8] If the national economy is not in the best place, whether that is because it is operating over or under full capacity, the Fed can use contractionary or inflationary monetary policies to return the economy to the equilibrium. For example, if there is too much currency in circulation, the Fed can sell bonds to local banks which causes interest rates to rise because the banks have given some of the money they had available to lend to the Fed. In doing so, they have the ability to drive citizens to purchase or discourage them from doing so. Thinking about buying a car with your well earned money? High interest rates could easily make you change your mind about spending. Thinking about saving your check for retirement? Low interest rates tell you that you are crazy not to spend at this point. Through fiscal and monetary policy, the government and the Fed has control the United States economy and influence consumer choices much more than many recognize.

This article may have left you asking: Where did all my freedom go? Do consumers in America really make as much of a difference as von Mises believed? Would we be better off if the government was not as involved in our choices? As von Mises says in Liberty and Property, “Liberty is always freedom from the government”, but that the goal of creating a government is “to make possible the operation of a definite system of social cooperation under the principle of the division of labor.”[9] So yes, the government may have taken away some of its citizens’ freedom over the years by removing or influencing their choices in the economy, but the reason humans establish governments is so that our economies and our world can work. We might not be as free in America as we’d like to think, but maybe we do not need or even want complete freedom in the end.

 

[1] Charles Koch Institute. “What Is Economic Freedom?” Economic Freedom. Last modified 2011. Accessed November 28, 2015. http://www.economicfreedom.org/about/what-is-economic-freedom/.

[2] Mises Institute. “Ludwig Von Mises.” Mises Institute. Last modified 2015. Accessed November 28, 2015. https://mises.org/profile/ludwig-von-mises.

[3] Von Mises, Ludwig. “Liberty and Property.” 1956. In How to Find Happiness without a Free Lunch, compiled by Bernardo Apparicio. N.p.: n.p., 2015.

[4] Von Mises

[5] Von Mises

[6] Peterson, Josh. “The Government Has No Idea How Many Agencies It Has.” The Daily Caller. Last modified May 3, 2013. Accessed November 28, 2015. http://dailycaller.com/2013/05/03/the-government-has-no-idea-how-many-agencies-it-has/.

[7] National Priorities Project. “Federal Spending: Where Does the Money Go.” National Priorities Project. Last modified 2015. Accessed November 28, 2015. https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/.

[8] Federal Reserve. “The Structure and Functions of the Federal Reserve.” Federal Reserve Education. Last modified 2015. Accessed November 28, 2015. https://www.federalreserveeducation.org/about-the-fed/structure-and-functions.

[9] Von Mises

 

 

Works Cited

Charles Koch Institute. “What Is Economic Freedom?” Economic Freedom. Last modified 2011. Accessed November 28, 2015. http://www.economicfreedom.org/about/what-is-economic-freedom/.

Federal Reserve. “The Structure and Functions of the Federal Reserve.” Federal Reserve Education. Last modified 2015. Accessed November 28, 2015. https://www.federalreserveeducation.org/about-the-fed/structure-and-functions.

Mises Institute. “Ludwig Von Mises.” Mises Institute. Last modified 2015. Accessed November 28, 2015. https://mises.org/profile/ludwig-von-mises.

National Priorities Project. “Federal Spending: Where Does the Money Go.” National Priorities Project. Last modified 2015. Accessed November 28, 2015. https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/.

Peterson, Josh. “The Government Has No Idea How Many Agencies It Has.” The Daily Caller. Last modified May 3, 2013. Accessed November 28, 2015. http://dailycaller.com/2013/05/03/the-government-has-no-idea-how-many-agencies-it-has/.

Von Mises, Ludwig. “Liberty and Property.” 1956. In How to Find Happiness without a Free Lunch, compiled by Bernardo Apparicio. N.p.: n.p., 2015.

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