Chapter 8 of W. Cleon Skousen's book is titled Prosperity Economics. I have read thirteen chapters out of thirty-one, but I feel compelled to write this diary before I finally finish the book.
The Founding Fathers made this country a land of fantastic economic opportunity because they wrote a Constitution with the free market principles set forth in the book Adam Smith wrote in 1776, The Wealth of Nations. There are four fundamental economic freedoms which the constitutional structure of this Nation provide to perpetuate an economic system that works efficiently.
1. The freedom to try.
2. The freedom to buy.
3. The freedom to sell.
4. The freedom to fail.
There are four situations where governmental intervention is legitimate.
1. To prevent criminal invasion of the market.
2. To prevent invasion of the market with deceptive trickery.
3. To prevent destruction of free trade of the market.
4. To prevent exploitation of the vices to the detriment of the community.
The fourth situation should be local instead of Federal government intervention.
The profit system is the key to success under the free market system because profits make it worthwhile for somebody to do things or make things better and cheaper.
While the Founding Father’s’ greatest fear was big government, they did not extend that fear to the private sector free market. They believed Adam Smith’s realization that true wealth is not an accumulation of silver and gold but the development of farms, factories, homes, clothes, cheap fuel, good streets, good schools, hospitals, efficient transportation, and universal access to various types of communications. How we get these things is develop a free market system that makes everything abundant and cheap. Market competition is the most frugal and economical way to provide a product or a service. In the field of economics, they were striving for bigness. If it takes bigness to make a product abundant and cheap, so be it.
The fear of bigness did not clearly emerge in the US until after the Civil War. By the end of the nineteenth century the formula for economic opportunity from the Founding Fathers was beginning to give Americans the highest standard of living in the world. With less than 6 percent of the earth’s population, they were producing more than half of just about everything. So how did this happen that this formula would be abandoned, according to W. Cleon Skouser?
The beginning of the twentieth century saw many prominient and influential leaders losing confidence in the system. These included wealthy industrialists, heads of multinational banking institutions, leaders in the academic world, and some of the innovative minds in the media. The same feverish restlessness was taking hold in similar circles in Europe.
It was true, as it is with all systems, that the free-market economy was in need of some adjustments and fine-tuning, but these leaders were getting ready to throw the entire system over-board. The problems of the day included a number of large-scale strikes, the rise of powerful trusts, the mysterious recurrence of boom and bust cycles, and the rise of a new Populist movement in which certain agriculture and labor groups were demanding that the government get involved in the redistribution of the wealth.
If I had to sum up how did this happen in just one word, that word would be ENVY.
The author concluded this chapter with this conclusion...and please bear in mind that he wrote this book in 1985:
The western world was astonished when the Red Chinese leaders suddenly abolished their bare-subsistence communes and invited the peasants to “get rich’ as private property farmers. Of course the Chinese communists did not dare call their new policy “free-enterprise capitalism.” They called it “enriched Marxism.”
But regardless of the name, if people are allowed economic freedom it will tend to gradually open up the channels for political freedom in the years to come. This is why the the message of freedom - both economic and political - should become America’s greatest export.
I heartily agree with this author in the context of President Ronald Reagan’s America.
I heartily reject President Obama's statement in his inaugural address:
Starting today we must begin the work of remaking America
I reject the plans and intent that Tim Geithner gave to Charlie Rose about regulation and legislation.
ROSE: Whatever you can do in terms of regulation and legislation will take place during the next three years?
GEITHNER: Yes, within that period of time. Within that period of time. But, again, these things are about preventing the next boom.
I especially reject Robert Reich's prediction that this economy can never recover because we must have a new economy.
My prediction,then? Not a V, not a U. But an X. The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't "recover" because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin.
Instead of remaking America I want America restored to the Prosperity Economics upon which it is founded.