Friday, March 21, 2014

Core Value: Free Markets

Complementing the Tea Party Movement's core value of Constitutional Government is its passion for the free market.

The founders assumed the existence of a free market in which individuals and associations of individuals engaged in production and commerce for profit without direction of the general government. Alexander Hamilton, in Federalist 12, noting the prospect of financial reward, observed that "the assiduous merchant, the laborious husbandman, the active mechanic, and the industrious manufacturer, all orders of men look forward with eager expectation and growing alacrity to this pleasing reward of their toils."

As we launched our new government, the founders directed their concerns to two main issues:  the free flow of goods and services across state lines and a unified commercial policy vis-a-vis Europe.

Under the new Constitution, the federal government enjoyed the right to regulate interstate trade. For the founders this meant eliminating barriers and taxes that the individual states erected against their neighbors. According to Hamilton in Federalist 11:

"An unrestrained intercourse between the states themselves will advance the trade of each, by an interchange of their respective productions, not only for the supply of reciprocal wants at home, but for exportation to foreign markets."

The opening of foreign markets appeared to be the greatest opportunity in the eyes of Hamilton.

In Federalist 11 he noted how the diverse foreign trade rules of the different states enabled European nations to discriminate and even manipulate commerce to their advantage. The new Constitution empowered the government to address this issue. He wrote:

"Under a vigorous national government, the natural strength and resources of the country, directed to a common interest, would baffle all the combinations of European jealousy to restrain our growth. This situation would even take away the motive for such combinations, bu inducing an impracticability of success. An active commerce, an extensive navigation, and a flourishing marine would then be the inevitable offspring of moral and physical necessity. We might defy the little arts of little politicians to control, or vary, the irresistible and unchangeable course of nature."

Seeing the virtually unlimited potential of American labor, he concluded:

"Let Americans disdain to be the instruments of European great! Let the thirteen states, bound together in a strict and indissoluble union, concur in erecting one great American system, superior to the control of all trans-Atlantic force or influence, and able to dictate the terms of the connection between the old and thew new world!"

Now from the very beginning, the new government periodically and judiciously  provided incentives for the development of particular industries. It rarely regulated economic activity. It NEVER assumed the risks for economic enterprise.

Today, however, the government  routinely regulates economic activity of businesses large and small. For the powerful corporations, they assist in writing the laws that will regulate them and restrict new competitors. And in return for funding for their reelection campaigns, the politicians will assume on behalf of the taxpayers the risks for their economic and financial activities. If the economic or financial activities prove to be a bust, the politicians will flatulate about the corporations, create new regulations (with the assistance of those intended to be regulated), and give them taxpayer money.

That's not free markets. That's crony capitalism.

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