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Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
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Government Bailouts and Government Schooling

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One of the great benefits of public schooling, from the standpoint of government officials, is the power to indoctrinate people with myths and false beliefs. Oftentimes, these myths and false realities retain control over a person’s mind all the way through adulthood. With the government’s bailout of Fannie Mae and Freddie Mac, we have one more example of the power of public-schooling indoctrination.

From the first grade, public-school students (and, yes, many students in government-licensed private schools) are indoctrinated into believing that that are being raised in a “free enterprise” country. People living in such countries as Vietnam, China, and Cuba suffer under socialism, American students are taught, while the American people experience the benefits of a “free-market” economy.

Thus, not surprisingly, conservatives and liberals, as well as people in the mainstream media, are suggesting that the failure of Freddie Mac and Fannie Mae reflect the failures of America’s “free-enterprise” system. We can’t let these two bastions of “free enterprise” fail, they tell us. That would be catastrophic. No, we must reluctantly adopt extraordinary government measures to save the housing market and the economy. Indeed, in the spirit of Franklin Roosevelt’s New Deal, we need to adopt such measures to “save free enterprise.”

One of the primary reasons that conservatives and liberals dislike and even fear libertarians is that we bring an element of truth and reality to this process. Unlike so many of our counterparts who also attended government schools or government-approved schools, we have broken through the years of indoctrination and see reality for what it is. Franklin Roosevelt’s New Deal didn’t “save free enterprise.” It rejected and abandoned free enterprise in favor of socialist and fascist principles that were emanating from the socialist Soviet Union and fascist Italy. Moreover, libertarians recognize that it wasn’t free enterprise that failed in 1929. Rather, it was the monetary socialism emanating from the Federal Reserve that failed.

Thus, one of the distinguishing characteristics of libertarians, as compared to conservatives and liberals, is how we view the nature of America’s economic system. Conservatives and liberals honestly believe that America has a “free enterprise” system while countries like Cuba, Vietnam, and China have socialist and interventionist economic systems. Never mind that all these countries have such programs as Social Security, Medicare, Medicaid, public schooling, income taxation, occupational licensure, welfare, subsidies, economic regulations, equalization of wealth, trade restrictions, and immigration controls. All that matters is that Americans continue believing what they’ve been taught to believe — that those other countries are socialist and interventionist while America is “free enterprise.”

Having broken free of the indoctrination they received in government schools, libertarians view the situation differently. We know that during the New Deal era, Americans rejected and abandoned the laissez-faire philosophy of our American ancestors and adopted an economic system of socialism and interventionism. The difference between the economic systems of the United States and Cuba, Vietnam, and China is simply one of degree, not one of principle. There is more socialism and interventionism in those countries than in the United States, but the underlying philosophy is the same.

Not surprisingly, Fannie Mae and Freddie Mac have their roots in FDR’s New Deal socialist and interventionist programs. Since those in the mainstream political parties and the mainstream media have been indoctrinated into believing that the New Deal “saved free enterprise,” it is perfectly natural for them to conclude that America’s “free enterprise” system has failed once again. The plight of these people is best summed up with the words of Johann Goethe: None are more hopelessly enslaved than those who falsely believe they are free.

Libertarians, having a grip on truth and reality, see things for what they are. We recognize that with the Fannie Mae and Freddie Mac bailout, it is once again socialism and interventionism that have failed. That’s why we hold that the solution to America’s economic woes lies not with more socialism and interventionism but rather with the full embrace of economic liberty and free enterprise.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.