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If Only Freedom Had a Price

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IF ONLY FREEDOM HAD A PRICE, we would know what each individual thought it was worth. Each individual could express his own valuation and judgment of what he would pay to maintain or increase his freedom and what he would have to receive in exchange to give up some or all of his freedom.

In the marketplace each and every one of us makes these kinds of decisions concerning a wide variety of tradable goods all the time. Given an individual’s preferences and desires, and given the income and wealth at his disposal, he purchases the variety and combination of goods and services that he considers will most enhance the quality, enjoyment, and purposes of his life.

In the private, free market his decisions and choices do not directly restrict the decisions and choices of others. Each of us enters the marketplace and makes his own purchases, reflecting his own preferences and desires. And sometimes our choices are very different from those of others, both in terms of the things we value enough to buy and in terms of the relative amounts of various things we are willing to pay for.

The entrepreneurs and businessmen on the supply side of the market respond to our different demands by competing against each other for the purchase and hire of the resources, capital equipment, and labor services with which those goods and services can be produced. They are guided by the profit motive in doing so. They each estimate the likely demand that we as consumers might have for the various goods they can manufacture, as well as the prices we may be willing to pay for various amounts of them. And their estimates concerning what we the consuming public want and are willing to pay serve as the basis on which they decide what they can afford to bid and pay for the resources, capital, and labor needed to make those goods. This process determines how scarce means of production will be allocated among competing alternative uses in the economy.

If the entrepreneur or businessman has calculated correctly in making his estimates, using the prices of the market as his guide, he may earn a profit as his reward for satisfying our consumer demands better than his rivals, who are also attempting to capture some of our consumer business. If he fails in this endeavor, or cannot do it as well as some of his more astute supply-side competitors, he may suffer a loss. The successful entrepreneur and businessman will then have earned the financial means to expand his enterprise, while the loss-maker will, over time, lose his financial ability to remain in business if he does not devise a way to do better than his rivals in serving our consumer demands.

This interdependent “loop” of market relationships is “closed” if we remember that we, the consuming public, earn the financial means for demanding goods and services that we want by supplying the resources, capital equipment, and labor services that entrepreneurs and businessmen employ to make them.

Thus, the prices and wages that we earn as suppliers of the means of production employed by the entrepreneurs and businessmen are indirectly a reflection of our own demands as consumers.

It is also important to keep in mind that all of these interrelationships are voluntary and based on mutual agreement. Entrepreneurs and businessmen cannot compel us to purchase the goods and services they bring to market. They must persuade us, on the basis of the qualities and prices of the goods they offer for sale, that it is in our own individual interest and benefit to buy from them instead of someone else. Nor can they force us to work for them, as suppliers of those means of production; they must offer us an income equal to or better than the one offered by one of their rivals who is competing for our services in an alternative production process. Neither are any of these entrepreneurs and businessmen guaranteed to make a profit, or even to break even, unless we freely choose to purchase what they are attempting to sell.

These market relationships and interconnections stand in stark contrast to the functioning of government and the political process. The services provided by government are not open to individual decision-making and choice. We cannot pick and choose among government services in terms of the relative amounts we would like to have.

In many cases, we cannot choose to completely reject those services and not have them at all. Nor do we have the option not to pay for the services we do not want. Government acquires the financial means to supply the things it does through taxation, the compulsory taking of a part of the citizenry’s income and wealth without individual, voluntary consent.

In a dictatorship this taking is determined by the wishes of the ruler and those closest to him on the basis of their need and uses for the resources of the society. This compulsory taking is limited only by the dictator’s belief concerning the extent to which he can plunder his subjects without generating too much unrest, resistance, and outright revolt, all of which would threaten his hold on the society.

In the democratic society, the limits on taxation are dependent on the extent to which those in political power are able to persuade the general population that the forced taking is a legitimate reflection of “the people’s” own will as expressed in the electoral process. It is also influenced by the formation of coalitions of special interests that participate in justifying and pressuring for various schemes — claimed to be in the “national interest” or fostering the “common good” — for redistributing income and restricting markets.

The market and government

Nowhere is the difference and distinction between the market and the government as great as in matters of national defense and foreign policy. National defense and foreign policy are, by definition, socialist enterprises. They are monopolized and “owned” by the government. Private competition is legally prohibited and there are no market prices for actions undertaken and services rendered for the individual members of the society to decide whether they consider what is being done to be worth the cost and to pick and choose what they wish to be done and to what degree.

To change the course of national defense and foreign-policy strategies and activities requires changing the elected representatives and the political parties in office who represent particular ideologies and philosophies concerning the role and responsibilities of government in society. The individual who wishes to see a change in national defense and foreign policy must persuade a large number of his fellow citizens to see things differently and get them to care enough about such a change that they will join with him in voting the incumbent politicians and parties out of office. And he only gets to try to bring this about every few years, depending on the electoral cycle of the democratic system under which he lives.

This is the dilemma for the advocate and friend of freedom in the present national crisis of the government’s “war on terrorism.” Under the “central plan” for homeland security, the individual’s privacy is invaded by wider latitude for federal law-enforcement agencies to search and wiretap the residences and workplaces of the American people. Records and files relating to individuals’ educational and work histories can more easily be accessed by government investigative organizations. Through the pressure of federal regulatory oversight, the television media are “influenced” to take a more “patriotic” perspective in reporting the news. Civil liberties of noncitizens are abridged when they are taken into custody and indefinitely detained without there being brought formal charges. All air travelers are subject to invasive searches and delays because of apparent intensified security measures.

In the name of defeating the perpetrators of terror, a huge military expedition is sent to Afghanistan, tens of millions of dollars are spent on bombing raids, multimillion-dollar funding is undertaken to financially support new allies, and billions of dollars in aid are earmarked to remake the political and social structure of an entire foreign country.

As part of the campaign against terror the government asserts the authority to shut down organizations labeled — without public evidence — as funding terrorist activities, and tens of millions of dollars of private people’s money are “frozen” or confiscated.

To interdict the flow of such funds, the U.S. government applies various kinds of visible and invisible pressures on foreign governments to intrude into the financial and banking affairs of their own citizens. To stop the infiltration of possible terrorists into the country, border crossings are tightened and the free movement of people between other parts of the world and the United States is made more difficult or even stopped.

Costs and benefits

Are these effective ways to prevent acts of terror? Are they worth the cost in terms of a loss or weakening of traditional civil and economic freedoms? The answer is, there is no way of knowing. Since the government monopolizes policing and security, competition is prevented from demonstrating whether or not more effective and less intrusive and less costly methods could be devised to prevent threats to the life and property of the ordinary American citizen.

Do these government policies represent the costs in terms of loss of personal freedom that you are willing to bear to feel more secure? The answer is, again, that we have no way of knowing. The monopoly provision of this security and its coercive funding through taxation prevent each of us from deciding whether we personally consider the price too high or not.

The national defense and foreign-policy central planners in Washington have decided those issues for us. They decide what freedoms we shall forfeit so they can implement their policies and strategies. They decide the costs they think we must bear to have the degree of heightened security they think all Americans should have. They decide the amount of money we must pay and how many others must lose their lives to defeat the “enemy.”

And if you, the individual, do not want to see your freedom forfeited, if you do not think the cost in terms of your increased inconvenience and possible humiliation is worth the supposedly greater security, if you do not think that your honestly earned and hard-earned income is worth the expense and the results of these foreign military expeditions, and if you do not think other people’s innocent lives or freedoms should be sacrificed in a global war on terrorism, you do not have any way to opt out. We are all reduced to cogs in the monopoly machine of government national defense and foreign policy. We are all made to fit into one centrally planned national defense and foreign-policy strategy.

All that has been said is not meant to open the door to the controversial and probably insoluble question whether or not there is a private alternative to government provision of defense and law enforcement. Historically governments have monopolized these activities and will most likely continue to do so for the furthest foreseeable future.

But at moments of national crisis such as America is going through at the present time, it is crucial to remind ourselves of the fundamental and unbridgeable differences between the market institutions of individual choice and freedom and the political regime of monopoly government control and coercion.

The Founding Fathers of the American Republic were intensely aware of the potential abuses and intrusions from unrestrained government. They attempted to design a constitutional order that limited the government’s power and authority to invade our personal and private affairs and peaceful, voluntary relationships with others. They constructed a system of checks and balances meant to prevent any one branch of the government from overstepping its constitutional boundaries and concentrating control within its hands.

We are witnessing in America today the consequences from a weakened appreciation of the purposes and importance of this constitutional order under the emotional shock of a terrible and evil act on September 11, 2001. Our fear and anger are clouding our reason, a reason that should guide us first to think whether the individual costs in lost freedom and personal privacy will have seemed worth it when our minds calm and we look back on the actions of the government today from the perspective of a few years from now.

If we do not try to think about the implications of forfeiting our freedoms today, when we do look back at these events in the future we may only then realize we have lost something very precious that may be very difficult to regain.

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    Richard M. Ebeling is a professor of economics at Northwood University. He was formerly president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).