As Americans celebrated Labor Day and the freedom to provide for their families, let’s hope they didn't spoil the holiday yesterday by pausing to consider whether government today is making their lives easier or more difficult.
To wit, the 2014 Index of Economic Freedom, published by the Wall Street Journal and the Heritage Foundation, which ranks countries based on four main factors – rule of law, limited government, regulatory efficiency, open markets – has the US is headed in the wrong direction. “The U.S. is the only country,” the survey states, “to have recorded a loss of economic freedom each of the past seven years.”
As ordinary Americans toil to put food on the table and provide for their families, most “cling” to the idea that the highest aim of our leaders is to leave a legacy of greater freedom our children, not less. Americans don’t believe in a monarchy, and they actually believe everyone should live by the same set of rules, not one set of rules for them and another set for the political class when circumstances or political arguments fail.
Needless to say, many Americans are outraged to see laws being re-written midstream, whether in health care, taxes, immigration or in government grants to political cronies. They are discouraged to learn of the secret 2012 decision by the Treasury Department to confiscate the profits of the mortgage guarantors Fannie Mae and Freddie Mac. With that decision, the federal government thumbed its nose at transparency, flaunted the basic rule of law and property rights, and put the government deeper into the mortgage market. It moves our country in the opposite direction of where it should be headed.
Ordinary Americans understand that our system of freedom, bolstered by a strong foundation of contract enforcement, property rights and the rule of law works better than any other system in the world, but they also know those liberties cannot be taken for granted.
Working families, through their personal accounts, pension funds including those managed on behalf of public employees, and retirement plans hold sizable investments in Fannie Mae and Freddie Mac. These large funds also often employ private professional money managers to make choices and take risks on their behalf, and through those managers ordinary Americans are invested in a broad swath of the economy, including Fannie and Freddie.
During the financial crisis, the US government, after years of policies that promoted their excesses, chose to move the mortgage packaging giants into conservatorship to manage the entities on behalf of its investors. In doing so, they agreed to a 10% dividend, a figure reminiscent of White House confidant Warren Buffett’s deal with Goldman Sachs when it was running into trouble in 2008.
That was the deal, and it sent signals to the market at that time, including to foreign investors. Some investors held on as they had for years, some sold, some came in with new capital. Treasury then secretly changed the rules and started taking 100%, leaving those who stuck with their investment, or committed new capital to the market , with nothing.
The Wall Street Journal/Heritage study confirms the slow erosion of freedoms, however imperceptible to the modern liberal eye. That erosion occurs bit-by-bit, with each instance of a grab for greater government power, crony capitalism, lack of transparency, and evidence of disdain for private property rights and rule of law.
Having celebrated Labor Day, Americans must go to the polls this November, and vote for political leaders who will advance liberty, limited government, the rule of law and job opportunities.