American Dream Dependent on Economic Freedom

Daniel Garza
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Posted: Feb 08, 2016 12:37 PM
American Dream Dependent on Economic Freedom

Editor's note: This column was co-authored by Vance Ginn, Ph.D., an Economist at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. He may be reached at vginn@texaspolicy.com.

In the last seven years, the United States has tumbled from 6th place to 11th place in The Heritage Foundation’s annual Index of Economic Freedom. This scale is a loose measure of the federal government’s burden on us in the form of taxes, debt, and opaque regulations that dictate how we must spend “our” money.

Under the current administration, government spending has increased to nearly $30,000 per household, and our national debt now exceeds $19 trillion, or about $125,000 per tax-filing household. We’ve seen bank bailouts, taxes that depress hiring, and mandates that force working Americans to cough up their hard-earned money to buy products of questionable value.

Simultaneously, the burden of regulation is exploding, as Washington imposes new rules on companies that force us to spend more on energy, health care, food, and education.

Bottom line: The American people are paying more and more of their hard-earned dollars to satisfy government at all levels, and they’re not getting value in return.

That’s not what backers of big government promise, of course. They claim that other people will pay these costs, not the working families who are struggling to achieve their hopes and dreams. However, middle-income Americans are always the ones who foot the government’s bill.

Although government officials often vow to enact a raft of new government programs, they conveniently don’t talk about the massive tax increases associated with such a plan that would substantially lower incomes. And when the current administration finally won the massive tax increase on “the wealthy” that the president promised for years, it ended up hitting 77 percent of American households instead.

Still, our youth clamor for increased government intervention because, they’ll tell you, they are tired of the greed, the cronyism, and the increasing income inequality. They see government as a benevolent force untainted by a profit motive.

However, they ignore that inequality has been aggravated precisely because of excessive government spending, quantitative easing measures by the Federal Reserve that centralize capital in Wall Street, and government cronyism that only favors the few well-connected. They overlook the need to focus on alleviating poverty as a priority over inequality, which is a natural outcome of economic growth supported by free markets that rewards talent, hard work, and comparative advantage.

The youth ignore that economic freedom makes funding social programs possible, and is now sustaining the highest quality of life in human history.

Some see “economic freedom” as a complex idea, or one that doesn’t affect them. But, at the most basic level, it means protecting our rights as workers and entrepreneurs to earn, spend, and save without unnecessary interference from the government.

It means that if you’re a young Latina trying to pay for college, you shouldn’t be hurt by poorly-managed government programs that increase the cost of tuition. If you’re a worker trying to save for a home, the government shouldn’t tax you for programs that will go bankrupt before you can benefit from them. It means that if you’re a senior on a fixed income, the cost of basic necessities shouldn’t rise just because decision makers in Washington want to protect their political supporters.

The plain truth is that the vast majority of Americans do a better job caring for themselves than government officials in Washington ever could. If taxes and regulations didn’t inflate the cost of health care or stifle job growth, millions would be better off than they are now.

Daniel’s family immigrated to the United States not because of government programs aimed at helping them. That was the false promise they rejected at home, in favor of the chance to build a life for themselves in the most dynamic economy in the world. To fulfill that destiny, Vance took it upon himself to earn a doctorate in economics as a first generation college student from a low-income household instead of following the potential path of being supported by taxpayer dollars.

Millions of immigrants and disadvantaged people have proved throughout our nation’s history that success comes not from government taxes and mandates smoothing the bumps along the road. Quite the opposite. We have done well because government was limited, leaving room for people to create, build, and prosper.

Government has a role—a critical role—in protecting our security and ensuring the care of those who truly cannot help themselves. But when it tries to do too much, as is the case today, it winds up doing more harm than good. When government protects economic freedom and individual liberty with policies that limit taxes, spending, and regulation, it helps everyone succeed.

Author's note: The Texas Public Policy Foundation (TPPF), The LIBRE Initiative, and the Southern Methodist University’s O’Neil Center will host a policy primer titled, “Economic Freedom vs. Government: Which Provides the Best Opportunity for Prosperity?” on Tuesday, February 9, 2016 at 11:30 am CDT in the Joe B. Hogsett Theater at the Texas Public Policy Foundation.