Anyhow, I am also writing at the Lawson for Congress website for the blog page. I will often copy posts that I make there to here. Here is my latest entry, of which I am, quite frankly, immensely proud. It came while I was doing some policy research for the campaign, and I stumbled upon this terrific column from the Wall Street Journal. Without further adieu, let it rip.
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It’s time for a little exercise. I’m going to cite a recent article from a couple of months ago, and I’m going to have you all guess the name of the author. Let’s see just how good you guys are. Ready? Go!
Nearly 16 years ago in these very pages, I wrote that “‘one-size-fits all’ rules for business ignore the reality of the market place.” Today I’m watching some broad rules evolve on individual decisions that are even worse.
Under the guise of protecting us from ourselves, the right and the left are becoming ever more aggressive in regulating behavior. Much paternalist scrutiny has recently centered on personal economics, including calls to regulate subprime mortgages.
With liberalized credit rules, many people with limited income could access a mortgage and choose, for the first time, if they wanted to own a home. And most of those who chose to do so are hanging on to their mortgages. According to the national delinquency survey released yesterday, the vast majority of subprime, adjustable-rate mortgages are in good condition, their holders neither delinquent nor in default.
There’s no question, however, that delinquency and default rates are far too high. But some of this is due to bad investment decisions by real-estate speculators. These losses are not unlike the risks taken every day in the stock market.
The real question for policy makers is how to protect those worthy borrowers who are struggling, without throwing out a system that works fine for the majority of its users (all of whom have freely chosen to use it). If the tub is more baby than bathwater, we should think twice about dumping everything out.
Health-care paternalism creates another problem that’s rarely mentioned: Many people can’t afford the gold-plated health plans that are the only options available in their states.
Buying health insurance on the Internet and across state lines, where less expensive plans may be available, is prohibited by many state insurance commissions. Despite being able to buy car or home insurance with a mouse click, some state governments require their approved plans for purchase or none at all. It’s as if states dictated that you had to buy a Mercedes or no car at all.
Economic paternalism takes its newest form with the campaign against short-term small loans, commonly known as “payday lending.”
With payday lending, people in need of immediate money can borrow against their future paychecks, allowing emergency purchases or bill payments they could not otherwise make. The service comes at the cost of a significant fee — usually $15 for every $100 borrowed for two weeks. But the cost seems reasonable when all your other options, such as bounced checks or skipped credit-card payments, are obviously more expensive and play havoc with your credit rating.
Anguished at the fact that payday lending isn’t perfect, some people would outlaw the service entirely, or cap fees at such low levels that no lender will provide the service. Anyone who’s familiar with the law of unintended consequences should be able to guess what happens next.
Researchers from the Federal Reserve Bank of New York went one step further and laid the data out: Payday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy. Net result: After a lending ban, the consumer has the same amount of debt but fewer ways to manage it.
Since leaving office I’ve written about public policy from a new perspective: outside looking in. I’ve come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society.
Why do we think we are helping adult consumers by taking away their options? We don’t take away cars because we don’t like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don’t operate mindlessly in trying to smooth out every theoretical wrinkle in life.
The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.
So, who wrote this article? I’ll give you guys three guesses.
John Stossel, perhaps the most visible libertarian media personality in America? Wrong.
How about Ron Paul? Good thought, but not this time.
How about (insert third guess)? (Most likely) Wrong.
This article, titled “Freedom Means Responsibility” and appearing in the Wall Street Journal on March 7, was written by none other than George McGovern, former Democratic Senator from South Dakota and 1972 Democratic Presidential Nominee. Obviously, this does not quite sound like the same guy who, in his ‘72 acceptance speech, called for Nationalized Health Insurance, enforcing laws against drugs, and guaranteed income for everyone. It certainly appears as though Senator McGovern has had a change of mind on many issues, if not a sea change in philosophy. This is quite welcome from my vantage point, and I of course completely agree with everything that he states in his article.
Senator McGovern’s column, more broadly speaking, demonstrates that the concept of individual liberty isn’t just a libertarian idea, as I’m sure that Senator McGovern would not define himself as a libertarian (he did support Hillary Clinton for President, after all). Freedom is a desire that we all have as individuals and, as such, is the concept that unites us all across the boundaries of political affiliation, religion, race, and sexual orientation. It’s the principle that united us in forming this country and repelling the tyranny of King George I. It is the ideal that united us when we repelled and defeated fascism in World War II. It is the desire that unites, through our history, the slaves and abolitionists who toiled to end this oppression, the women who struggled for their right to vote, and the courageous protester who refused to yield her seat on the Montgomery City bus. It is when the discussion turns to taking away liberty that we become divided, as the coercion of that fundamental human desire necessitates that one exercises it (through freedom of action in government) while another loses the ability to exercise it. We are never as divided as we are when we tax income and argue over how the revenues should be allocated; take away people’s freedom of speech and association with whom they want, or to do with their bodies as they wish; start wars without aggressive provocation; or to directly subjugate people.
But as Senator McGovern states, freedom means that we all as individuals are responsible for the consequences of our own choices. We are not responsible for making choices for others in how to spend their money and live their lives or for saving people from themselves, and even if try, transactions costs are so high that we would never be able to enforce this code of conduct on the entire society. Even within small private associations, it is nearly impossible to control the actions of others, be it a friendship, a marriage, a business partnership, or a team. We have all had experiences in which our friends, family, and loved ones have made decisions which have hurt them, and it is a natural human reaction to feel pain for them. But people are people, and people have free will; they exercise it to their benefit and to their detriment. We must understand this, accept the consequences of our own actions and others’ actions, and learn from them if we are to progress as individuals and as a society.
Furthermore, given the imperfection of human nature and the fact that we will all make mistakes during our lives, we are hardly qualified to determine through the central planning mechanism of government what are the “good” choices we should impose on others and the “bad” choices we should prevent others from making. This does not mean, as Senator McGovern suggests, that we do not try to educate people and give them advice about their choices. Certainly we should do this, and a education system, both private and public as well as academic and non-academic, is a vital precondition to successful lives , economic growth, and the functioning and maintenance of a free society. We gain experience from life and expertise in whatever field of industry we pursue, and this is valuable information we should pass on to others and to future generations so that they may have models of success and failure on which they can base their actions. But we cannot be so sure about our own thoughts about what decisions are right and what decisions are wrong that we mandate them as law for everyone.
Freedom also means that pursuing our own actions means that we are also responsible for the consequences of our actions that coerce others’ liberty. When firms and individuals pollute, they damage the private property of others through direct physical property damage, decreasing property values, and harming individuals’ health (thus decreasing their productivity and garnishing their incomes). When one party in a contract violates the terms of it, they violate the right of others to enter into and participate in an associate with trust and honor. When someone smokes a cigarette, the second-hand smoke from the action often leads to others’ developing lung cancer. In cases such as these, it is our responsibility through the government’s enforcement of property rights and contracts to punish the violation of other peoples’ liberty and establish justice, which can be accomplished through the mechanisms such as statutory financial penalties, property and contract law, and litigation in the court system.
We are at a crossroads in the history of this country. While the government could always have afforded and preserve more liberty for the people throughout our history, there has been a very disturbing and gradual trend over nearly a century toward a society where freedom is not only coerced more and more by government, but it is understood and appreciated less and less by people. With the arrival of the internet and other new mass communications technologies, we now have the ability to disseminate information in a matter of fractions of a second and to communicate and organize with others. If we are fully prepared to understand and cherish the tremendous benefits of liberty as well as accept the responsibilities it entails, then we can join the likes of Ron Paul and George McGovern to reclaim the path toward living the dream of our founding fathers that inspired them to sacrifice so much give us this great country of ours. If we do not act now, this dream may forever be lost.
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