November 17th, 2011
01:01 PM ET

Miller: Government as economic savior is decidedly un-American

Heritage Foundation's 2011 Index of Economic Freedom

Heritage Foundation's 2011 Index of Economic Freedom

Editor's Note: Terry Miller is director of the Center for International Trade and Economics at The Heritage Foundation, a right-leaning think tank.

By Terry Miller - Special to CNN

The U.S. has a lot more in common these days with the struggling economies of Europe than we’d like to admit. High unemployment, stagnant growth and government debt that would take an entire year’s GDP to repay are all symptoms we share - symptoms of massively overloaded governments trying to meet the expanding expectations of our populations. For the U.S., at least, it wasn’t always so.

That a population’s prosperity should depend on the actions of its government is a peculiarly old-fashioned and decidedly un-American idea. The historical precedent goes back to the days of monarchs and warlords, the governments of their day, who claimed ownership of all of their society’s assets, controlled all of the wealth, and dispensed largesse as they saw fit.

The United States was founded on a different idea, that of sovereignty exercised by the people with our personal rights and freedoms carefully preserved by the Constitution. Of course, the exercise of individual sovereignty came with a concomitant responsibility: Self-reliance. The concepts of individual sovereignty and personal responsibility came eventually to Europe, but only in modest measure. The autocratic idea of the state as owner, director, and ultimate arbiter of economic decisions and the distribution of wealth still lingers there.

The collapsing governments of Europe, all socialist to one degree or another, are but the most benign examples of a failed ideology that has wreaked havoc around the world. The 20th Century should have taught us better. The Union of Soviet Socialist Republics, the National Socialists of Germany, the Italian Socialist Party and its step child, the Fascists, and, of course, the Communists in China all promised egalitarian utopias. Instead they all delivered human tragedy on a previously unimagined scale. Throw in the stultifying socialism of Nehru’s India, Castro’s Cuba and their imitators throughout the developing world, and you have a record of government intervention and failure that has cost hundreds of millions their lives and countless others the chance for a decent livelihood.

There is a better way, and it’s not the cronyism and rent-seeking regulatory state that have passed for capitalism and the free market in recent years in America. True economic freedom is based on the principles of individual empowerment, non-discrimination and free and open competition on a playing field untilted by government.

For 18 years, the Heritage Foundation has measured economic freedom around the world. No country gets capitalism or the free market completely right, but freer societies tend to share certain characteristics - and enjoy certain benefits as a result.

Freer societies protect private property. They control corruption. They balance their government budgets, or try to, and keep inflation under control. They regulate business and labor markets to promote competition and prevent abuse of employees or the environment, but avoid interference in the basic business decisions like hiring or investment that ultimately determine profit or loss. They open their markets internationally, improving productivity and lowering costs. They avoid subsidies and price controls, letting markets do what markets do best: Allocate resources efficiently.

The benefits are huge. Freer societies are wealthier. They tend to have higher growth rates, and their citizens enjoy much higher incomes. They enjoy longer lives, better standards of health, and higher levels of education. They do a better job of protecting the environment,  and benefit from lower levels of unemployment. They do a much better job of reducing poverty than countries that are less free.

Of course, there are exceptions to these general trends. Central planners are not always wrong, and countries may spurt ahead by exploiting comparative advantages in resource endowments or labor costs. But such gains are rarely sustainable. Overall, the evidence is clear. Societies that are more economically free enjoy, on average, far superior economic performance.

Within the U.S. economy, government has grown steadily in size and influence - a trend that has accelerated sharply over the last three years. Consequently, our economic freedom, as measured in the Index of Economic Freedom, has declined sharply. We no longer rank with the world’s freest economies. So far, we’ve avoided the kind of sovereign debt collapse that afflicts Europe’s debt-riddled welfare states, but the economic stagnation and high unemployment typical among them have arrived at our shores.

The United States still has time to act, to get our budget deficit under control, and to restore the economic freedom on which our prosperity was built. The United States was founded on a truly revolutionary idea - government of the people, by the people and for the people. As a champion of freedom, we have been exceptional, and as a free people we have excelled. To try to solve our current difficulties by emulating European statism is to abandon our identity as a nation, pushing us toward a societal structure whose rejection was at the core of the American revolution.

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Topics: Ideas • Politics

soundoff (10 Responses)
  1. Lorenzo Mila

    Can anybody please tell me where to watch “Restoring the American Dream: Fixing Education” again?? Has CNN any way to watch it through the web?
    Thnaks

    November 17, 2011 at 1:10 pm | Reply
    • CNN watcher

      They are being replayed Sunday late evening. It is worth watching, but it just reconfirms that what we already knew but reluctantly to accept: the continuous decline of educational standard of the country.

      November 17, 2011 at 2:58 pm | Reply
    • CNN watcher

      I met Milton Friedman three decades ago. He used to say that true capitalism can be found only in Hong Kong. When I have change to visit Hong Kong, it was already a few years after it has been converted to a Special Autonomous Zone under China. What Friedman says remain to be mostly true in Hong Kong, which however turns more into government-directed economy. The HK government even used massive tax payer money to invest in stock market to fight hedge fund manager in 1998. Half of the population lives in public housing. Folks in Hong Kong told me that the city is turning more to government-initiated direction. It is going to restart its massive public housing program. (Singapore government provides over 75% of housing stock for the Lion City State.) On the other hand, China is turning from communism gradually to the direction of market-driven capitalism, disguised under the name of "Four Modernizations".

      November 17, 2011 at 3:07 pm | Reply
      • j. von hettlingen

        It just shows that there's no standard formula for growth and success. Each country has to be pragmatic and adopt what's right for its population. Culture, values and fortune determine the outcome.

        November 18, 2011 at 4:08 am |
  2. Napoli

    One man, One Vote....Horse pocky. Today's game is One Dollar, one Vote. Politicians are responsible to the people who funded their campaign, not to those who actually voted for them. Who, exactly, are they supposed to represent!!?? Until, or when government learns or re-learns who the are responsible for things will remain as they are. Government needs to act in the best interest of its People, not just those with the bucks. OWS has said it. I have a hard time backing OWS since they have said way more than makes sense, too.

    The world is a complicated place. The one thing that still holds water is Hard work, perseverance, and good values. Short cuts are not authorized, period. See? Its not that complicated after all.

    Giving 700 Billion to a select few who have proven to be Bad at Business in the name of to big to fail Bail Out was plain B.S. OWS is right to protest. I fear the world will remain as it is until Real Change in the form of Uprisings change it (i.e. Arab spring). Today's Politicians lack Balls (or bucks) to get it done, otherwise.

    November 17, 2011 at 1:49 pm | Reply
  3. j. von hettlingen

    The author failed to differentiate the difference between socialsim and social-democracy. It isn't true that "the collapsing governments of Europe, all socialist to one degree or another".
    He had also an utopia for "freer societies" and didn't realise that pure theories wouldn't get him anywhere and that the economic success relies on the right mix of economic ideas.

    November 17, 2011 at 4:31 pm | Reply
  4. pmcdonald

    Disappointing drivel.

    November 18, 2011 at 12:24 am | Reply
  5. Muin

    U.S politicians are so corrupt. They could care less about freedom. Recent news report suggests money literally dictates U.S politician's life. That's just fundamentally wrong which is supposed to be land of freedom and opportunity.

    November 18, 2011 at 6:40 am | Reply
  6. Me

    Ah, The Heritage Foundation. We can stop right there. This country was also not founded on corporate principles that pretty much run the entire society today, Mr. Miller. It was founded on principles of freedom and yes, that does include the freedom to say that you are a complete idiot.

    November 20, 2011 at 3:45 pm | Reply
  7. Chris

    Interesting that the "Index of Economic Freedom" he uses to justify his argument is created by the same organization he represents. Pretty sneaky sis.

    February 5, 2012 at 2:44 pm | Reply

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