In Jim Cook's Archive


The purpose of our Constitution and Bill of Rights was to limit government. The founding fathers knew that we must be protected from our own government. People seem to forget that. Throughout the twentieth century, liberals did all they could to broaden the role of the state and put government in charge of all aspects of our lives. They bear responsibility for constructing a massive centralized bureaucracy. Now both parties endorse big government. What our founding fathers tried to prevent from happening, the politicians have managed to override.

The freedom philosopher, Leonard Read, explained why America became great. “The Constitution and the Bill of Rights more severely limited government than government had ever before been limited.” Two benefits occurred. “…individuals did not turn to government for security, welfare, or prosperity because government was so limited that it had little on hand to dispense…” and this limited power did not “permit taking from some citizens and giving to others.”

So, “The American people gained a world-wide reputation for being self-reliant.” And since the government did not much interfere, tax away income or force people to do what they otherwise wouldn’t do, “There was a freeing, a releasing of creative energy on a scale unheard of before.”

An economic system evolved in which trade was based on the voluntary exchange of goods and services. People were free to buy, sell, trade and produce on mutually agreed upon terms. This highly individualistic system of economic freedom was capitalism. It was responsible for making America an economic powerhouse.

However, big government has changed that. For example, business invests enormous energy in complying with laws and regulations. Regulators are a police force intent on tripping up errant businesses, levying fines or worse. A single regulation can exterminate an entire industry. Too much of management’s attention given to regulators detracts from a company’s efficiency and profits. Every time the government lays down a new law or a regulation, it has the potential for serious damage.

Taxes are a penalty on progress. They eat up almost half of a worker’s earnings. Individuals and corporations could invest the money that goes to taxes far more efficiently than the government, who transfers it to ne’er-do-wells, special interests, bailouts of federally guaranteed losers and runaway debt service. As the economist, Ludwig von Mises pointed out, “What the government spends is entirely taken from the pockets of the individual citizens and corporations. The spending and investing capacity of the public is curtailed to the same extent to which the spending ability of the government expands.”

Business pays for all or part of health care costs, unemployment benefits, workman’s compensation insurance, product liability insurance, Social Security benefits and Medicare. When you add this to non-productive legal costs, licensing fees, property taxes, sales tax, income tax and excise taxes, you have a thoroughbred carrying a 300-pound jockey. In other parts of the world they don’t have to carry this much weight.

Government programs such as welfare benefits, unemployment benefits and other subsidy programs weaken the work force. Certain workers will sluff off, report late, miss work or abuse chemicals if they know a government check will replace their paycheck should they be fired. The government provides incentives to goof off.

Our low national savings rate is, to some extent, caused by the easy availability of subsidies. People would save more if it weren’t for the wide spectrum of programs from cheap loans, to unemployment, to Social Security. Low savings means we spend more and invest less. The Government’s social safety net helps kill savings.

The government has fostered a national ethic of getting something for nothing. This burdens business with phony lawsuits, employee theft, trumped up medical claims, insurance fraud and an explosion of bad character. For example, generous workman compensation benefits, legislated by state governments, have caused an astronomical increase in disability claims for back injuries.

Legal barriers to starting a business such, as permits, bonds, licenses or regulations, help big companies fend off competition. Government subsidies to certain businesses favor their success against competitors. Government intervention stifles startups and competition that benefits consumers.

U.S. business spends too much time and money defending itself against litigation. Suits emanating from the government can paralyze a company for years. Government condones product liability lawsuits that make innovation less likely, and wipes out whole segments of commerce. America desperately needs Tort Reform, but liberal lawyers and segments of the government fiercely resist any such initiative.

The government’s monetary policy wreaks havoc on enterprise. Inflation, artificially low interest rates, currency fluctuations, the boom and bust cycle, and dollar devaluations all make doing business more difficult. Furthermore, inflation tends to make investment in production less rewarding than financial assets.

The sentiments of most government employees, and the multitude who enforce the rules, are fiercely anti-business. They have little or no knowledge of how the market system works. They see business as greed driven, and profits as an evil that government should control. They constantly push for higher taxes.

Most politicians and government employees don’t understand wealth creation. They fail to see that profits come from meeting the needs of others by providing products and services that improve living standards. They don’t realize that consumers are the rulers of the free market because their buying choices determine the success or failure of the companies competing to serve them. They are unaware that to serve one’s self-interest, the successful capitalist must first serve the self-interest of others. This is the moral underpinning of free enterprise. But rather than notice the unassailable high moral ground of free-market capitalism, they prefer to see greed and inequality.

Too much government is bad for business, bad for the economy and bad for the citizenry. It’s the reason countries fail. In other parts of the world they are lowering taxes and cutting back on government. As a result, they are prospering as never before. Russia, China and India are all going to pass us unless we find a way to reduce the big drag our government puts on our economy. What a shame.

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