Freedom

“Where the Spirit of the Lord is there is liberty“

Last night I spoke to a large gathering of young people in Hong Kong–a new generation with a longing for freedom. Half of the audience was from mainland China.

This Asian generation understands the need for liberty and is ready to pursue it in the nations of the world. They also understand that freedom comes through Christ (2 Corinthians 3:17) and his principles being taught and lived out in government, education, economics and culture.

The Heritage Foundation puts out an excellent annual report on the state of freedom in the world. Where I am in Asia, freedom is rising. Back home in the North America and Europe, liberty is eroding and corruption is increasing through the tyrannical ascendancy of big government.

Ed Feulner’s article below paints the picture well. May we wake up and see a rebirth of freedom. RB

A Step Backward for Economic Freedom
 
Ed Feulner – Heritage Foundation

The world economy is in trouble, and governments are making things worse. Here’s the story, right out of the pages of the 2012 Index of Economic Freedom, published Thursday by the Heritage Foundation and The Wall Street Journal:

“Rapid expansion of government, more than any market factor, appears to be responsible for flagging economic dynamism. Government spending has not only failed to arrest the economic crisis, but also—in many countries—seems to be prolonging it. The big-government approach has led to bloated public debt, turning an economic slowdown into a fiscal crisis with economic stagnation fueling long-term unemployment.”

The new index documents a world in which economic freedom is contracting, hammered by excessive government regulations and stimulus spending that seems only to line the pockets of the politically well-connected. Government spending rose on average to 35.2% of gross domestic product (GDP) from 33.5% last year as measured by the 2012 index.

Most of the decline in economic freedom was in countries in North America and Europe. Canada, the United States and Mexico all lost ground in the index, and 31 of the 43 countries in Europe suffered contractions. They ought to know better. These are the very countries that have led the world-wide revolution in political and economic freedom since the end of World War II. But now, weighed down by huge welfare programs and social spending that is out of control, many governments are expanding their reach in ways more reminiscent of the 1930s than the 1980s.

How about the U.S., historically the country more responsible than any other for leading the march of freedom? Under President Barack Obama, it has moved to the back of the band. Its economic freedom score has dropped to 76.3 in 2012 from 81.2 in 2007 (on a scale of 0-100). Government expenditures have grown to a level equivalent to over 40% of GDP, and total public debt exceeds the size of the economy.

The expansion of government has brought with it another critical challenge to economic freedom: corruption. The U.S. score on the index’s Freedom from Corruption indicator has dropped to 71.0 in 2012 from 76.0 in 2007. That’s not surprising, given the administration’s excessive regulatory zeal. Each new edict means a new government bureaucracy that individuals and businesses must navigate. Each new law opens the door for political graft and cronyism.

There are some bright spots. Economic freedom has continued to increase in Asia and Africa. In fact, four Asia-Pacific economies—Hong Kong, Singapore, Australia and New Zealand—top the Index of Economic Freedom this year. Taiwan showed impressive gains, moving into the index’s top 20. Eleven of the 46 economies in sub-Saharan Africa gained at least a full point on the index’s economic freedom scale, and Mauritius jumped into the top 10 with the highest ranking—8th place—ever achieved by an

The 2012 index results confirm again the vital linkage between advancing economic freedom and eradicating poverty. Countries that rank “mostly unfree” or “repressed” in the index have levels of poverty intensity, as measured by the United Nations’ new Multidimensional Poverty Index, that are three times higher than those of countries with more economic freedom.

Countries with higher levels of economic freedom have much higher levels of per capita GDP on average. In Asia, for example, the five freest economies have per capita incomes 12 times higher than in the five least free economies. Economic growth rates are higher, too, in countries where economic freedom is advancing. The average growth rate for the most-improved countries in the index over the last decade was 3.7%, more than a point-and-a-half higher than in countries where economic freedom showed little or no gain.

Positive measures of human development in areas such as health and education are highly correlated with high levels of economic freedom, and economically free countries do a much better job of protecting the environment than their more regulated competitors. When you actually look at the performance data, it turns out that the “progressive” outcomes so highly touted by those favoring big government programs to address every societal ill are actually achieved more efficiently and dependably by the marketplace and the invisible hand of free economies.

Unfortunately, most of the world’s people still live in countries where economic freedom is heavily constrained by government control and bureaucracy. India and China, with about one-third of the world’s population, have economic freedom scores barely above 50 (a perfect score would be 100). In a globalized world, both countries are benefiting from the trade and investment liberalization that has taken place elsewhere. But sustained long-term growth will depend on advances in economic freedom within each of these giants so that broad-based market systems may develop.

The Index of Economic Freedom has recorded a step back over the last year for the world as a whole. It was only a small step, with average scores declining less than a point, but the consequences have been severe: slower growth, fiscal and debt crises, and high unemployment. The biggest losers have been the economies in North America and Europe, regions that have led the world in economic freedom over the years.

The 2012 results show the torch of leadership in advancing freedom passing to other regions. Whether this is a long-term trend remains to be seen, but it is clear that if America and Europe do not soon regain trust in the principles of economic freedom on which their historical successes have been built, their people, and perhaps those of the world as a whole, are in for dark days ahead.

(Please also check out a good prescription for change at Solutions for America.)

I was tempted to use a different head-line on this one:

“It’s Not the ATMs, Stupid!”

That would be a take-off on Bill Clinton’s famous slogan against President George H.W. Bush during the 1988 presidential campaign when he remarked, “It’s the Economy, Stupid!” while trying to frame the most important issue of that presidential campaign cycle.

But I don’t want to be be disrespectful to the president of the United States. I don’t believe he’s stupid and I greatly respect the office.

Yet, he sure said a dumb thing on the NBC Today Show on on June 15, 2011 that will come back to haunt him during the 2012 presidential campaign.

It also revealed a lack of understanding of basic economics.

Here’s what he said…

In a Today show interview with Ann Curry, President Obama talked about one of the reasons he thought employment numbers have been slow to rebound–self-service automation–specifically kiosks and ATMs.

In the interview, he said, “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate. All these things have created changes in the economy. “

According to the Washington Examiner’s Philip Klein, ATM Industry Association CEO Mike Lee sent him an email response that said, in part, that “President Obama should never use ATMs as an example of how technology replaces human labor because ATMs today play a critical role in providing extensive employment in the ATM and cash-in-transit industries.”

Economics 101: Innovation multiplies jobs–it doesn’t shrink them.

No, it’s not the ATMs, Mr. President!

It’s bad economic policies. In the past three years we have done all the wrong things to try and create jobs. Government intervention and growth doesn’t do it.

And it’s pretty scary that at the highest levels of our current government, they just don’t seem to understand how wealth is created, how jobs are made, and what economic drivers are essential for prosperity.

Now I will be the first to admit that economic theory in its various forms can be hard to understand. That’s why so many people call it an imperfect science.

But for the past twenty-five years, Shirley and I have home-schooled our kids on the tenets of modern free enterprise capitalism. Those basics include:

• It is individuals, and the businesses they start, that create wealth. Government doesn’t create wealth. It only distributes it according to its goals and desires.
• Tools are essential to increasing productivity. The more-and-better tools that man creates (including  ATMs), the more wealth (capital) can be generated.
• Over the past five hundred years, the creation of the middle class–which has grown exponentially worldwide–has been due to the wonderful development in technology which has increased jobs– never taken away opportunities to get ahead.

Yes, it is true, whenever man innovates, or new technologies are created, then older jobs and trades go away. Certain jobs are lost when new technologies are introduced.

For example, there are millions of people in America today named “Smith.”  They wear that surname because many of their ancestors were “back smiths” who worked with metals that were essential to an agricultural society. They made horseshoes, plows, and other metal objects that were vital for industry for hundreds of years.

But machines eventually took their place–did a better job of making metal objects–and all the “smiths” of the world had to move on to other professions.

Did the “Smith Family” suffer from these changes in technology? Maybe for a time. But I can guarantee that there are more wealthy, employed and prosperous “Smiths” in America today than in any other historical period. Innovation didn’t create long-lasting job loss. It actually became a vehicle for greater wealth among the Smith clan.

There are two classic examples of economic change–producing more jobs not less jobs–in the past few hundred years. The first was the Industrial Revolution.

The Industrial Revolution

The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the economic and cultural conditions of the times. It began in England, then subsequently spread throughout Europe, North America, and eventually the world.

The Industrial Revolution was a major turning point in human history; almost every aspect of daily life was influenced in some way. Most notably, average income and population began to exhibit unprecedented sustained growth. In the two centuries following 1800, the world’s average per capita income increased over 10-fold, while the world’s population increased over 6-fold. In the words of Nobel Prize winner Robert E. Lucas, Jr., “For the first time in history, the living standards of the masses of ordinary people have begun to undergo sustained growth. … Nothing remotely like this economic behavior has happened before.”

In other words, using machines to do more for human beings did not decrease jobs or prosperity. It greatly multiplied job opportunities for billions of people. World population actually exploded because it was easier for people to live and work.

Starting in the later part of the 18th century, there was a transition in parts of Great Britain’s manual labour and animal–based economy towards machine-based manufacturing. It started with the mechanization of the textile industries, the development of iron-making techniques and the increased use of coal. Trade expansion was enabled by the introduction of canals, improved roads and railways.

The introduction of steam power produced dramatic increases in production capacity. The development of all-metal machine tools in the first two decades of the 19th century facilitated the manufacture of more production machines for manufacturing in other industries. The effects spread throughout Western Europe and North America during the 19th century, eventually affecting most of the world, a process that continues as industrialization. The impact of this change on society was enormous.

What are those impacts? More wealth, a higher standard of living, more jobs, and greater opportunities for all.

The Information Revolution

The second great quantum leap in job creation and increased prosperity has been the Information Revolution that has taken place in our lifetime–in the past thirty or forty years. Much of it took place through the invention of one tiny object: the micro-chip.

Arthur Laffer, Stephen Moore and Peter Tanous share the amazing benefits of that little innovation in their groundbreaking book, The End Of Prosperity: How Higher Taxes Will Doom the Economy If We Let It Happen:

“The dawning of the age of the microchip and all the attendant, fabulous technological advances have played a vital role in this wild and wonderful ride. Ingenious and daring entrepreneurs from Bill Gates to Fred Smith (there’s that name again!) to Larry Ellison to Google founders Sergey Brin and Larry Page launched whole new industries and made billions of dollars for themselves and billions more for workers and society. More wealth was created in the United States in the past twenty-five years than in the previous two hundred. In 1967 only one in 25 families earned an income of $100,000, whereas now, almost one in four families do.”

And millions of new jobs were created as a result of the Information Revolution. The tiny machines didn’t take jobs away–they exploded the opportunities for people to create wealth.

I sometimes wonder what many men and women did a hundred years ago when there was no such thing as hardware and software–or electronics. Think how many “geeks” have come into their own because one little mechanical innovation allowed them to use some God-given abilites that the hoe and plow never offered. 

The lesson is extremely clear: Improved technology grows jobs if you’re willing to look for the possibilities.

And here’s where we get down to the troubling aspect of President Obama’s comments. Producing jobs and prosperity is really the result of a worldview–a “faith” that is always dreaming of more opportunities and improvements in life, family, and human culture.

Because what is really multiplied when technology enhances human life, even taking away some short-term job occupations in the process, is that it gives human beings a greater opportunity to be creative–to think through how the latest innovation can be enhanced and expanded. Greater leisure through better tools produces more time for creative thinking–and that valuable activity greatly multiplies human activity (i.e. jobs).

Better tools–like ATM machines–give us the time to use our creative imaginations to explore new ideas, make new applications, and create more products. We’re not enslaved to the ancient technologies or limitations.

Machines multiply creativity–if we believe there’s a Creator to follow and a world to improve.

That’s where the worldview is crucial: God. Man made is His creative image. A mandate to improve the world. Faith to do so by his power and grace. Innovation. Improvement. Jobs. Prosperity.

We need to say to ourselves “It’s the worldview, stupid!”

Then have faith and imagination to keep improving that world for our benefit and his glory.