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22. Essay Contest Winner--Capitalism: The Forgotten American Dream
- Author:
- Deborah B. Sloan
- Publication Date:
- 12-2010
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- When Thomas Edison invented the lightbulb, he knew that he had created something of enormous value with the power to raise everyone's standard of living. What a spectacle it would have been if, upon completing his magnificent invention, Mr. Edison had sheepishly and halfheartedly offered it on the market with little explanation as to exactly what it was or why anyone would want to use it, even as he bent over backward not to challenge the merits of the old, reliable methods of illumination, such as candles and torches.
- Topic:
- Government
- Political Geography:
- America
23. Citizens United and the Battle for Free Speech in America
- Author:
- Steve Simpson
- Publication Date:
- 04-2010
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- The Supreme Court's recent decision in Citizens United v. FEC is one of the most important First Amendment decisions in a generation and one of the most controversial. In it, the Supreme Court struck down a law that banned corporations from spending their own money on speech that advocated the election or defeat of candidates. In the process, the Court overturned portions of McConnell v. FEC, a case in which the Supreme Court, a mere six years ago, upheld McCain-Feingold, one of the most sweeping restrictions on campaign speech in history.
- Topic:
- Government
- Political Geography:
- America
24. The Practicality of Private Waterways
- Author:
- Alan Germani and J. Brian Phillips
- Publication Date:
- 04-2010
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- For centuries, few have questioned the idea that waterways-streams, rivers, lakes, and oceans-are or should be "public property." The doctrine of "public trust," with roots in both Roman and English common law, holds that these resources should not be privately owned but rather held in trust by government for use by all. The United States Supreme Court cited this doctrine in 1892, ruling that state governments properly hold title to waterways such as lakes and rivers, "a title held in trust for the people of the state that they may enjoy the navigation of the waters, carry on commerce over them, and have liberty of fishing therein freed from the obstruction or interference of private parties."1 This "public ownership," however, is increasingly thwarting the life-serving nature of waterways as sources of drinking water, fish, and recreation. Predictably, when a resource-whether a park, an alleyway, or a pond-is owned by "everyone," its users have less incentive to protect or improve its long-term value than they would if it were owned by an individual or a corporation. Users of "public property" tend to use the resource for short-term gain, often causing the deterioration of its long-term value-the well-known "tragedy of the commons." This phenomenon is perhaps nowhere clearer than in the case of waterways. "Public ownership" of waterways has led to, among other problems, harmful levels of pollution and depleted fish populations. Many waterways around the world have become so polluted that they are no longer fit for human use. In 2004, the Environmental Protection Agency reported that one-third of America's lakes and nearly one-fourth of its rivers were under fish-consumption advisories due to polluted waters.2 In 2005, officials in China estimated that 75 percent of that nation's lakes were contaminated with potentially toxic algal blooms caused by sewage and industrial waste.3 And the World Commission on Water has found that half the world's rivers are either seriously polluted or running dry from irrigation and other human uses or both.4 By one estimate, the contaminated drinking water and poor sanitation that result from pollution and low water levels account for five to ten million deaths per year worldwide.5 In addition to containing harmful levels of pollution, many of the world's waterways are being fished in a manner that is depleting fish populations and threatening with extinction fish species such as red snapper, white sturgeon, and bluefin tuna-species highly valuable to human life.6 By 2003, primarily due to fishing practices associated with public waterways, 27 percent of the world's fisheries (zones where fish and other seafood is caught) had "collapsed"-the term used by scientists to denote fish populations that drop to 10 percent or less of their historical highs.7 In 2006, the journal Science published a study that offered a grim prediction: All of the world's fisheries will collapse by 2048.8 Whether or not all of the world's fisheries will collapse in a mere forty years, the data clearly show that current fishing practices are depleting supplies of many species of consumable fish. At best, at the current rate of fish depletion, many fishermen will lose their livelihoods and consumers will have fewer and fewer species from which to choose, species that will become more and more expensive. What solutions have been proposed? Federal and state governments have attempted to remedy these problems through regulation-violating rights and creating new problems in the process. For example, twenty-five states prohibit or severely restrict the use of laundry detergents containing phosphates, substances that harm aquatic life when present in water in high quantities.9 A growing number of state and local governments-including Westchester County, New York, and Annapolis, Maryland-are enacting similar regulations on phosphate-containing fertilizers.10 These laws violate the rights of detergent and fertilizer manufacturers by precluding them from creating the products they choose to create-and they violate the rights of consumers who want to buy such products rather than more-expensive, less-effective alternatives. Further, these rights-violating prohibitions have proven impractical in achieving their purpose: Despite many such regulations having been in effect for nearly forty years,11 an estimated two-thirds of America's bays and estuaries still contain harmful amounts of phosphates.12 Regulations regarding sewage treatment have proven similarly impractical: Since 1972, the federal government has forced water utilities to spend billions of dollars upgrading water treatment facilities, and yet, during the past four years, record numbers of beaches have closed due to pollution from sewage.13 And, for what it is worth, the EPA predicts that by 2016 American rivers will be as polluted by sewage as they were in the 1970s.14 Government efforts to address depleted fish populations have proven similarly impractical. The history of the halibut industry in Alaska is an illuminating case in point. In the 1970s, the International Pacific Halibut Commission (IPHC)-a U.S.-backed intergovernmental regulatory agency-established a five-month fishing season in public waters off the Alaskan coast with the hope of maintaining halibut populations, which had become severely depleted. But forcibly limiting the time during which fishermen could operate did little to improve the fishery's viability: Fishermen simply worked more vigorously during the season, and the halibut population remained at historically low levels. So, in the 1980s, the IPHC attempted to remedy the problem by reducing the five-month fishing season dramatically-to as few as two days.15 During these shortened windows of opportunity, fishermen took extreme risks to maximize their catches, only to be "rewarded" onshore with the plummeting prices of a glutted market. And, in the end, the huge catches brought in by fishermen on these days were still large enough to jeopardize the halibut population.16 So, in 1995, the IPHC dropped the idea of a short fishing season and instead introduced a "catch share program," through which it limits each fisherman's yearly catch to a percentage of what it deems to be a "safe" overall halibut harvest. But neither has this policy helped the situation; today, after more than two decades of shifting regulations, the usable halibut population in Alaskan waters is less than in 1985.17 Although some claim that still more government regulations are required to combat the ongoing problems of pollution and depleted fish populations, any such coercive measures are in principle doomed to failure because they attempt to treat problems in the waterways while ignoring their actual cause: "public ownership." Government force may provide a disincentive for certain behaviors, but this disincentive does not motivate the users of waterways to maintain or enhance the life-serving value of these resources. As a result, America's waterways remain largely and significantly polluted, and fish populations, even where they are stabilizing, remain at levels insufficient to meet the growing demand for seafood. . . . Endnotes The authors would like to thank Craig Biddle, Dwyane Hicks, and Thomas A. Bowden for discussions that aided the authors' understanding of the issues discussed in this article, and Matthew Gerber, Ben Bayer, and Steve Simpson for helpful comments made to earlier drafts. 1 Illinois Central R.R. Co. v Illinois (1892) 146 U.S. 387, 452. 2 Jaime Holguin, "Pollution Overtaking Lakes, Rivers,," CBSNews.com, http://www.cbsnews.com/stories/2004/08/24/tech/main638130.shtml. 3 Antoaneta Bezlova, "China's Toxic Spillover," Asia Times, December 2, 2005, http://www.atimes.com/atimes/China_Business/GL02Cb06.html. When consumed by fish, shellfish, and livestock, such hazardous algae can enter the human food chain. 4 Mary Dejevsky, "Half of World's Rivers Polluted or Running Dry," The Independent, November 30, 1999; http://www.independent.co.uk/news/world/half-of-worlds-rivers-polluted-or-running-dry-1129811.html. 5 http://www.grinningplanet.com/2005/07-26/water-pollution-facts-article.htm. 6 http://www.nmfs.noaa.gov/fishwatch/species/red_snapper.htm , Species l ist from the U.S. Fish and Wildlife Service; http://ecos.fws.gov/tess_public/SpeciesReport.do?groups=E=L=1; http://news.nationalgeographic.com/news/2006/07/060724-bluefin-tuna.html. 7 "Catch Shares Key to Reviving Fisheries," Environmental Defense Fund, http://www.edf.org/article.cfm?contentID=8446. 8 Cornelia Dean, "Study Sees 'Global Collapse' of Fish Species," New York Times, November 3, 2006, http://www.nytimes.com/2006/11/03/science/03fish. 9 http://enviro.blr.com/enviro_docs/88147_9.pdf. 10 Juli S. Charkes, "Board Votes to Ban Phosphate Fertilizers," New York Times, May 1, 2009, http://www.nytimes.com/2009/05/03/nyregion/westchester/03lawnwe.html; Karl Blankenship, "Annapolis to Ban Use of Fertilizer with Phosphorus in Most Cases," Bay Journal, http://www.bayjournal.com/article.cfm?article=3511. 11 Michael Hawthorne, "From the Archives: Banned in Chicago but Available in Stores," Chicago Tribune, April 4, 2007, http://www.chicagotribune.com/news/local/chi-daley-phosphates,0,2871187.story. 12 http://www.grinningplanet.com/2005/07-26/water-pollution-facts-article.htm. 13 http://www.nrdc.org/water/oceans/ttw/titinx.asp and http://epa.gov/beaches/learn/pollution.html#primary. 14 Martha L. Noble, "The Clean Water Act at 30-Time to Renew a Commitment to National Stewardship," Catholic Rural Life Magazine, vol. 45, no. 2, Spring 2003, http://www.ncrlc.com/crl-magazine-articles/vol45no2/Noble.pdf. 15 http://www.fishex.com/seafood/halibut/halibut.html. 16 Halibut populations continued to decline, and the IPHC decreased the allowed catch more than 26 percent between 1986 and 1995. http://www.iphc.washington.edu/halcom/commerc/limits80299.htm. 17 The total catch share for halibut-which is based on "exploitable biomass"-declined between 1985 and 2009. For 1985 limits, see http://www.iphc.washington.edu/halcom/commerc/limits80299.htm. For 2009 limits, see http://www.iphc.washington.edu/halcom/newsrel/2009/nr20090120.htm.
- Topic:
- Government
- Political Geography:
- United States and America
25. Why Are Jews Liberals?
- Author:
- Gideon Reich
- Publication Date:
- 04-2010
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- Norman Podhoretz, Jewish neoconservative and former editor-in-chief of Commentary magazine, attempts in his book Why Are Jews Liberals? to answer the perplexing commitment of American Jews to modern liberalism. Jews, according to Podhoretz, violate "commonplace assumptions" about political behavior, such as that "people tend to vote their pocket books"; they "take pride . . . in their refusal to put self-interest . . . above the demands of \'social justice\'"; and they have consistently sided with the left in the "culture war" (pp. 2-3). According to statistics cited by Podhoretz, 74 percent of Jews support increased government spending and, since 1928, on average, 75 percent have voted for candidates of the Democratic Party. Such political behavior "finds no warrant either in the Jewish religion or in the socioeconomic condition of the American Jewish community" (p. 3), argues Podhoretz; it can be explained only by realizing that Jews are treating liberalism as a "religion . . . obdurately resistant to facts that undermine its claims and promises" (p. 283). Podhoretz traces the prevalent political orientation of present-day Jews to conditions suffered by their Jewish ancestors in medieval Europe and later in the United States. During the Dark and Middle Ages, Christian authorities in Europe placed severe restrictions on Jews, including where they could live and what professions they could practice. In later centuries, as the influence of Christianity declined, liberal revolutions swept much of the European continent, and, in the 19th century, Western European governments began recognizing the rights of Jews and treating them as equal under the law (p. 57). Even so, conservative Christians, who still supported the monarchies, remained opposed to the "emancipation" of the Jews (pp. 55-57). Consequently, Jews entered politics in Europe almost exclusively as liberals, in opposition to the Christian right that had oppressed them and their ancestors (pp. 58-59). Governments in Eastern Europe and Russia, however, continued to persecute Jews well into the early 20th century (pp. 65-67), and, between 1881 and 1924, two million Jews immigrated to America, where they would be treated equally before the law. Most were poor, and few ventured out of Lower East Side Manhattan, where the majority found jobs in the textile industry, working more than sixty hours a week for low wages, and where even "modest improvements in their condition" were achieved only by the efforts of a Jewish labor movement (pp. 99-100). . . .
- Topic:
- Government
- Political Geography:
- Russia, America, and Europe
26. Israel and America's Flotilla Follies (and How To Avoid Them in the Future)
- Author:
- Craig Biddle
- Publication Date:
- 07-2010
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- On May 31, 2010, a flotilla of six ships manned by alleged "peace activists" motored toward Gaza, which, since 2007, has been controlled by the Iranian-sponsored terrorist group Hamas. But because Hamas openly seeks to destroy Israel and has already fired "more than 4,000 rockets and mortar shells [into the state] from Gaza," Israel has imposed a blockade on the region. The "peace activists" ostensibly sought to breach the blockade and reach Gaza to deliver "humanitarian aid." Their real goal, however, was revealed by their own words and actions.
- Topic:
- Government and Islam
- Political Geography:
- America, Iran, Israel, Palestine, and Gaza
27. How to Protect Yourself Against ObamaCare
- Author:
- Paul Hsieh
- Publication Date:
- 07-2010
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (known colloquially as "ObamaCare"), declaring that the law would enshrine "the core principle that everybody should have some basic security when it comes to their health care."1 But, for reasons I have elaborated in previous articles in TOS, far from establishing security regarding Americans' health care, this new law will make quality health care harder to come by and more expensive for everyone. Unfortunately, until our politicians rediscover the principle of individual rights, choose to uphold it, and reverse this monstrosity of a law, we Americans are stuck with it and will have to cope the best we can.
- Topic:
- Government and Health
- Political Geography:
- United States and America
28. Energy at the Speed of Thought: The Original Alternative Energy Market
- Author:
- Alex Epstein
- Publication Date:
- 06-2009
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- The most important and most overlooked energy issue today is the growing crisis of global energy supply. Cheap, industrial-scale energy is essential to building, transporting, and operating everything we use, from refrigerators to Internet server farms to hospitals. It is desperately needed in the undeveloped world, where 1.6 billion people lack electricity, which contributes to untold suffering and death. And it is needed in ever-greater, more-affordable quantities in the industrialized world: Energy usage and standard of living are directly correlated. Every dollar added to the cost of energy is a dollar added to the cost of life. And if something does not change soon in the energy markets, the cost of life will become a lot higher. As demand increases in the newly industrializing world, led by China and India, supply stagnates-meaning rising prices as far as the eye can see. What is the solution? We just need the right government "energy plan," leading politicians, intellectuals, and businessmen tell us. Of course "planners" such as Barack Obama, John McCain, Al Gore, Thomas L. Friedman, T. Boone Pickens, and countless others favor different plans with different permutations and combinations of their favorite energy sources (solar, wind, biomass, ethanol, geothermal, occasionally nuclear and natural gas) and distribution networks (from decentralized home solar generators to a national centralized so-called smart grid). But each agrees that there must be a plan-that the government must lead the energy industry using its power to subsidize, mandate, inhibit, and prohibit. And each claims that his plan will lead to technological breakthroughs, more plentiful energy, and therefore a higher standard of living. Consider Nobel Peace Prize winner Al Gore, who claims that if only we follow his "repower American plan"-which calls for the government to ban and replace all carbon-emitting energy (currently 80 percent of overall energy and almost 100 percent of fuel energy) in ten years-we would be using fuels that are not expensive, don't cause pollution and are abundantly available right here at home. . . . We have such fuels. Scientists have confirmed that enough solar energy falls on the surface of the earth every 40 minutes to meet 100 percent of the entire world's energy needs for a full year. Tapping just a small portion of this solar energy could provide all of the electricity America uses. And enough wind power blows through the Midwest corridor every day to also meet 100 percent of US electricity demand. Geothermal energy, similarly, is capable of providing enormous supplies of electricity for America. . . . [W]e can start right now using solar power, wind power and geothermal power to make electricity for our homes and businesses. And Gore claims that, under his plan, our vehicles will run on "renewable sources that can give us the equivalent of $1 per gallon gasoline." Another revered thinker, Thomas L. Friedman, also speaks of the transformative power of government planning, in the form of a government-engineered "green economy." In a recent book, he enthusiastically quotes an investor who claims: "The green economy is poised to be the mother of all markets, the economic investment opportunity of a lifetime." Friedman calls for "a system that will stimulate massive amounts of innovation and deployment of abundant, clean, reliable, and cheap electrons." How? Friedman tells us that there are two ways to stimulate innovation-one is short-term and the other is long-term-and we need to be doing much more of both. . . . First, there is innovation that happens naturally by the massive deployment of technologies we already have [he stresses solar and wind]. . . . The way you stimulate this kind of innovation-which comes from learning more about what you already know and doing it better and cheaper-is by generous tax incentives, regulatory incentives, renewable energy mandates, and other market-shaping mechanisms that create durable demand for these existing clean power technologies. . . . And second, there is innovation that happens by way of eureka breakthroughs from someone's lab due to research and experimentation. The way you stimulate that is by increasing government-funded research. . . . The problem with such plans and claims: Politicians and their intellectual allies have been making and trying to implement them for decades-with nothing positive (and much negative) to show for it. For example, in the late 1970s, Jimmy Carter heralded his "comprehensive energy policy," claiming it would "develop permanent and reliable new energy sources." In particular, he (like many today) favored "solar energy, for which most of the technology is already available." All the technology needed, he said, "is some initiative to initiate the growth of a large new market in our country." Since then, the government has heavily subsidized solar, wind, and other favored "alternatives," and embarked on grand research initiatives to change our energy sources-claiming that new fossil fuel and nuclear development is unnecessary and undesirable. The result? Not one single, practical, scalable source of energy. Americans get a piddling 1.1 percent of their power from solar and wind sources, and only that much because of national and state laws subsidizing and mandating them. There have been no "eureka breakthroughs," despite many Friedmanesque schemes to induce them, including conveniently forgotten debacles such as government fusion projects, the Liquid Fast Metal Breeder Reactor Program, and the Synfuels Corporation. Many good books and articles have been written-though not enough, and not widely enough read-chronicling the failures of various government-sponsored energy plans, particularly those that sought to develop "alternative energies," over the past several decades. Unfortunately, the lesson that many take from this is that we must relinquish hope for dramatic breakthroughs, lower our sights, and learn to make do with the increasing scarcity of energy. But the past failures do not warrant cynicism about the future of energy; they warrant cynicism only about the future of energy under government planning. Indeed, history provides us ample grounds for optimism about the potential for a dynamic energy market with life-changing breakthroughs-because America once had exactly such a market. For most of the 1800s, an energy market existed unlike any we have seen in our lifetimes, a market devoid of government meddling. With every passing decade, consumers could buy cheaper, safer, and more convenient energy, thanks to continual breakthroughs in technology and efficiency-topped off by the discovery and mass availability of an alternative source of energy that, through its incredible cheapness and abundance, literally lengthened and improved the lives of nearly everyone in America and millions more around the world. That alternative energy was called petroleum. By studying the rise of oil, and the market in which it rose, we will see what a dynamic energy market looks like and what makes it possible. Many claim to want the "next oil"; to that end, what could be more important than understanding the conditions that gave rise to the first oil? Today, we know oil primarily as a source of energy for transportation. But oil first rose to prominence as a form of energy for a different purpose: illumination. For millennia, men had limited success overcoming the darkness of the night with man-made light. As a result, the day span for most was limited to the number of hours during which the sun shone-often fewer than ten in the winter. Even as late as the early 1800s, the quality and availability of artificial light was little better than it had been in Greek and Roman times-which is to say that men could choose between various grades of expensive lamp oils or candles made from animal fats. But all of this began to change in the 1820s. Americans found that lighting their homes was becoming increasingly affordable-so much so that by the mid-1860s, even poor, rural Americans could afford to brighten their homes, and therefore their lives, at night, adding hours of life to their every day. What made the difference? Individual freedom, which liberated individual ingenuity. The Enlightenment and its apex, the founding of the United States of America, marked the establishment of an unprecedented form of government, one established explicitly on the principle of individual rights. According to this principle, each individual has a right to live his own life solely according to the guidance of his own mind-including the crucial right to earn, acquire, use, and dispose of the physical property, the wealth, on which his survival depends. Enlightenment America, and to a large extent Enlightenment Europe, gave men unprecedented freedom in the intellectual and economic realms. Intellectually, individuals were free to experiment and theorize without restrictions by the state. This made possible an unprecedented expansion in scientific inquiry-including the development by Joseph Priestly and Antoine Lavoisier of modern chemistry, critical to future improvements in illumination. Economically, this freedom enabled individuals to put scientific discoveries and methods into wealth-creating practice, harnessing the world around them in new, profitable ways-from textile manufacturing to steelmaking to coal-fired steam engines to illuminants.
- Topic:
- Government
- Political Geography:
- United States, China, America, and India
29. The Rise of American Big Government: A Brief History of How We Got Here
- Author:
- Michael Dahlen
- Publication Date:
- 10-2009
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- Nineteenth-century America was the closest thing to capitalism-a system in which government is limited to protecting individual rights-that has ever existed. There was no welfare state, no central bank, no fiat money, no deficit spending to speak of, no income tax for most of the century, and no federal regulatory agencies or antitrust laws until the end of the century. Consequently, total (federal, state, and local) government spending averaged a mere 3.26 percent of Gross Domestic Product (GDP). The Constitution's protection of individual rights and limitation on the power of government gave rise to an economy in which individuals were free to pursue their own interests, to start new businesses, and to create as much wealth as their ability and ambition allowed. This near laissez-faire politico-economic system led to the freest, most innovative, and wealthiest nation in history. Since the beginning of the 20th century, however, capitalism and freedom have been undermined by an explosion in the size and power of government: Total government spending has increased from 6.61 percent of GDP in 1907 to a projected 45.19 percent of GDP in 2009; the dollar has lost more than 95 percent of its value due to the Federal Reserve's inflationary policies; top marginal income tax rates have been as high as 94 percent; entitlement programs now constitute more than half of the federal budget; and businesses are hampered and hog-tied by more than eighty thousand pages of regulations in the Federal Register. What happened? How did America shift from a predominantly free-market economy to a heavily regulated mixed economy; from capitalism to welfare state; from limited government to big government? This article will survey the progression of laws, acts, programs, and interventions that brought America to its present state-and show their economic impact. Let us begin our survey by taking a closer look at the state of the country in the 19th century. Total (Federal, State, and Local) Government Spending America's Former Free Market The Constitution established the political framework necessary for a free market. It provided for the protection of private property (the Fifth Amendment) including intellectual property (Article I, Section 8), the enforcement of private contracts (Article 1, Section 10), and the establishment of sound (gold or silver) money (Article I, Sections 8 and 10). It prohibited the states from erecting trade barriers (Article I, Section 9), thereby establishing the whole nation as one large free-trade zone. It permitted direct taxes such as the income tax only if apportioned among the states on the basis of population (Article 1, Sections 2 and 9), which made them very difficult to levy. Finally, it specifically enumerated and therefore limited Congress's powers (Article I, Section 8), severely constraining the government's power to intervene in the marketplace. Federal regulatory agencies dictating how goods could be produced and traded did not exist. Rather than being forced to accept the questionable judgments of agencies such as the FDA, FTC, and USDA, participants in the marketplace were governed by the free-market principle of caveat emptor (let the buyer beware). As historian Larry Schweikart points out: merchants stood ready to provide customers with as much information as they desired. . . . In contrast to the modern view of consumers as incompetent to judge the quality or safety of a product, caveat emptor treated consumers with respect, assuming that a person could spot shoddy workmanship. Along with caveat emptor went clear laws permitting suits for damage incurred by flawed goods. To be sure, 19th-century America was not a fully free market. Besides the temporary suspension of the gold standard and the income tax levied during the Civil War, the major exceptions to the free market in the 19th century were tariffs, national banking, and subsidies for "internal improvements" such as canals and railroads. These exceptions, however, were limited in scope and were accompanied by considerable debate about whether they should exist at all. Alexander Hamilton, Henry Clay, and Abraham Lincoln supported such interventions; Thomas Jefferson, Andrew Jackson, and John Tyler generally opposed them. These interventions (except for tariffs) were, as Jefferson, Jackson, and Tyler pointed out, unconstitutional. But history shows that they were also impractical. Tariffs were initially implemented, beginning with the Tariff Act of 1789, as a source of revenue-the main source in the 19th century-for the federal government. Pressure from northern manufacturers, however, to implement tariffs for purposes of protection led to the "Tariff of Abominations" (1828), which was scaled back by 1833 due to heavy opposition from the South. Tariff rates then remained relatively low-about 15 percent-until the Civil War. By 1864, average tariff rates had risen to 47.09 percent for protectionist reasons and remained elevated for the remainder of the century. As to national banking, the Second Bank of the United States' charter expired in 1836, thereby paving the way for the free banking era-which lasted until a national bank was reinstituted during the Civil War. By virtually every measure of bank health, this free banking era was the soundest in American history. In terms of capital adequacy, asset quality, liquidity, profitability, and prudent management, national banking proved to be inferior to free banking. As to subsidies for internal improvements, although private entrepreneurs financed and built most roads and many canals, state governments intervened in the 1820s to subsidize canal building-amending their constitutions to do so. However, most state-funded canals either went unfinished, generated little to no income, or went bankrupt. As a result, by 1860 most state constitutions were amended again to prohibit such subsidies. After the Civil War, federal subsidies for the transcontinental railroads caused similar problems-as well as corruption. Further, they were proven to be a hindrance to rather than a precondition of a thriving railroad industry: James Jerome Hill's Great Northern was the most successful of the transcontinental railroads, yet was built without any subsidies or land grants. The foregoing interventions, though impractical, were motivated in part by a desire to help promote the development of business and industry. But lurking in the periphery, growing in popularity, and poised to fuel further government interference in the marketplace, was the ideology of collectivism-the notion that the individual must be subordinated to the collective or the "common good." This idea was stated by economist Daniel Raymond in his 1820 textbook: "it is the duty of every citizen to forgo his own private advantage for the public good." And as the 19th century progressed, this idea was increasingly cited as a justification for government intervention. One of the most important instances of this was the Supreme Court's decision in Munn v. Illinois (1876). In the majority opinion, Chief Justice Morrison Waite declared: Property does become clothed with a public interest when used in a manner to make it of public consequence. . . . When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good. . . . Although the case applied only to the states, Munn undermined the sanctity of private property rights by establishing the precedent that property "clothed with a public interest" (i.e., any property related to business) is subject to government regulation and control. As a result, Munn helped pave the way for the two major assertions of federal control over the economy-the Interstate Commerce Act and the Sherman Antitrust Act-that would come in the Gilded Age.
- Topic:
- Government and History
- Political Geography:
- America
30. Letters and Replies
- Author:
- Craig Biddle
- Publication Date:
- 12-2009
- Content Type:
- Journal Article
- Journal:
- The Objective Standard
- Institution:
- The Objective Standard
- Abstract:
- Michael Dahlen's article "The Rise of American Big Government" [TOS, Fall 2009] is a clarifying survey, in essentials, of the interventionism that has eroded freedom in America for more than a century. But as to the alleged economic successes of Reagan and Clinton, weren't these funded with deficit financing and inflation? I'd like to hear Mr. Dahlen's thoughts on this.
- Topic:
- Government
- Political Geography:
- America
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