Today, the average American enjoys a standard of living that is virtually unmatched in history. For centuries, the majority of human civilization lived a basic hand-to-mouth existence; gathering, hunting, or farming the goods needed for survival. In many parts of the world this is still the case. What then have been the major contributing factors for economic progress in America? What makes our high standard of living possible?
American prosperity was not the result of an edict from a king, decree from a pope, or redistribution of some static wealth from the haves of the Old World to the have-nots of a new nation. American prosperity was created; created by individuals homesteading new land, producing to the best of their ability, and exchanging goods and services voluntarily to mutual benefit. American prosperity was created by hard work and real savings. The availability of real savings allows for capital investment which enables an economy to exponentially augment its production capabilities.
It is important to note the reasons why Americans were able to amass real savings and invest capital at an unprecedented rate. Perhaps most importantly, the political and economic system in America has been largely structured in such a way that the rights of the individual have been respected. While not perfectly applied, the concept of individual liberty flourished in America and led to the abolition of slavery and advancements toward the equal treatment of races, religions, sexes. There is no question that we still have a long way to go. The concept that each and every man and woman has a right to his or her life, liberty, and property is still very new to human history and is far from being fully understood and upheld by most.
While the protection of individual rights has never been upheld in full consistency, having a sense of security that the fruits of labor would not be confiscated by the masters and feudal lords allowed the American entrepreneur to flourish. The American system has traditionally respected the individual's right to justly acquire, use, and dispose of private property (at least to a relatively high degree). The rule of law provides stable expectations, minimizes fear of unjust seizures, and helps to enforce contracts in an evenhanded manner. When people are left free to produce, trade, and innovate then limited resources are directed towards the fulfillment of the needs and preferences of the people in society. As Murray N. Rothbard explains:
American prosperity was not the result of an edict from a king, decree from a pope, or redistribution of some static wealth from the haves of the Old World to the have-nots of a new nation. American prosperity was created; created by individuals homesteading new land, producing to the best of their ability, and exchanging goods and services voluntarily to mutual benefit. American prosperity was created by hard work and real savings. The availability of real savings allows for capital investment which enables an economy to exponentially augment its production capabilities.
It is important to note the reasons why Americans were able to amass real savings and invest capital at an unprecedented rate. Perhaps most importantly, the political and economic system in America has been largely structured in such a way that the rights of the individual have been respected. While not perfectly applied, the concept of individual liberty flourished in America and led to the abolition of slavery and advancements toward the equal treatment of races, religions, sexes. There is no question that we still have a long way to go. The concept that each and every man and woman has a right to his or her life, liberty, and property is still very new to human history and is far from being fully understood and upheld by most.
While the protection of individual rights has never been upheld in full consistency, having a sense of security that the fruits of labor would not be confiscated by the masters and feudal lords allowed the American entrepreneur to flourish. The American system has traditionally respected the individual's right to justly acquire, use, and dispose of private property (at least to a relatively high degree). The rule of law provides stable expectations, minimizes fear of unjust seizures, and helps to enforce contracts in an evenhanded manner. When people are left free to produce, trade, and innovate then limited resources are directed towards the fulfillment of the needs and preferences of the people in society. As Murray N. Rothbard explains:
“The productivity of the private sector does not stem from the fact that people are rushing around doing "something," anything, with their resources; it consists in the fact that they are using these resources to satisfy the needs and desires of the consumers. Businessmen and other producers direct their energies, on the free market, to producing those products that will be most rewarded by the consumers, and the sale of these products may therefore roughly "measure" the importance that the consumers place upon them.”
If the consumer behavior directs resources to their most preferred use through the process of the free market, then any interference in the market necessarily diverts resources away from their highest and best use leading to a relatively lower standard of living than would otherwise be enjoyed. Unfortunately, market interference has become the new American standard. Onerous taxes, regulations, subsidies, bailouts, and handouts are now the norm. Political pull has become more important than ability to serve customers on the market.
If the consumer behavior directs resources to their most preferred use through the process of the free market, then any interference in the market necessarily diverts resources away from their highest and best use leading to a relatively lower standard of living than would otherwise be enjoyed. Unfortunately, market interference has become the new American standard. Onerous taxes, regulations, subsidies, bailouts, and handouts are now the norm. Political pull has become more important than ability to serve customers on the market.
Many Americans today have incorrectly inverted the cause of prosperity with the effect. They believe that prosperity is not something that is to be created, but rather something to be redistributed. Most all Americans support policies of taking from the earned and giving to the unearned in one form or another. This primitive, irrational ideology of the Old World is still deeply ingrained in American culture. If we wish to avoid returning ever closer to the hand-to-mouth existence of our ancestors, it is a political system that tolerates violations of individual rights that must be fought.
Finally, we should recognize that the freedom of the market does not deliver some kind of perfect utopia, however in the span of a few generations enough real wealth has been created in America to allow even the poorest citizens to enjoy luxuries not available to kings a short time ago. We are able to enjoy these luxuries because we produce. The degree of economic progress is highly correlated to the degree that individual rights are protected.
The only social system that is conducive to a prosperous society is one that respects people as free and morally equal. The only economic system that respects individual human rights is one that operates by mutually beneficial voluntary exchange; not the compulsive force of government. We have flourished despite the onslaught of market interventions. It can only be imagined what level of prosperity would be possible to a free people liberated from the yoke of the political class.
In Liberty,
Jason Riddle
Finally, we should recognize that the freedom of the market does not deliver some kind of perfect utopia, however in the span of a few generations enough real wealth has been created in America to allow even the poorest citizens to enjoy luxuries not available to kings a short time ago. We are able to enjoy these luxuries because we produce. The degree of economic progress is highly correlated to the degree that individual rights are protected.
The only social system that is conducive to a prosperous society is one that respects people as free and morally equal. The only economic system that respects individual human rights is one that operates by mutually beneficial voluntary exchange; not the compulsive force of government. We have flourished despite the onslaught of market interventions. It can only be imagined what level of prosperity would be possible to a free people liberated from the yoke of the political class.
In Liberty,
Jason Riddle
