Archive | July, 2012

Economic Liberty – July 4th 2012

4 Jul

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.” – The United States Declaration of Independence, July 4, 1776.

We celebrate the 4th of July for a number of reasons – the birth of our nation, the freedoms we enjoy – and we realize (or should realize) that without the courage and bravery of ALL those who came before us, we would not have the freedoms that we hold so very dear.

It is often assumed the “liberties” referred to above are civil liberties.  Indeed our Declaration of Independence and the American War for Independence were a direct response to many civil liberties violations by the British aristocracy (quartering of troops in private homes, imprisonment without trail), but these violations also included restrictions on the economic freedoms of the colonies (taxation without representation – the Sugar Act, the Stamp Act and the Tea Act).  An excellent read on the founding of America is American Creation by Joseph Ellis.  I would argue that these two classes of liberty (civil and economic) are inextricably linked.

Many of the revolutionary leaders had studied major writings of the Enlightenment including those of Thomas Hobbes, John Locke, Jean-Jacques Rousseau and the Baron de Montesquieu. From these writings, the founders gleaned the concepts of the social contract, limited government, the consent of the governed and separation of powers.

An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title, The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith.  First published in March 1776, it is a reflection on economics at the beginning of the Industrial Revolution and argues that free market economies are more productive and beneficial to their societies.

Smith writes largely against the mercantile system (an economic system to increase a nation’s wealth by government regulation of all of the nation’s commercial interests) that existed at the time of writing, but, along the way, gives a complicated but brilliant account of an economic system based in human nature and deeply rooted social dynamics.

In the last book of The Wealth of Nations, Smith describes what he considers to be the appropriate roles of government, namely defense, justice, the creation and maintenance of public works that contribute to commerce, education, the maintenance of the “dignity of the sovereign,” – activities that are to be financed by fair and clear taxation.

A restriction (whether it be by legislation or popular vote) on the civil liberties of any one group of citizens (whether it be to serve, to vote or to marry) also limits their economic liberties and their contribution to the productivity and efficiency of the economy.  Our founding fathers were aware of the impact of civil liberty on a nation’s ability to sustain a viable economy.