AMERICA’S ECONOMY/ Two Principles for Reform: Limited State and Subsidiarity

This essay is part of the Public Discourse symposium on “Liberty, Justice, and the Common Good: Political Principles for 2012 and Beyond.”

More than one scholar has observed the almost providential symmetry between the American Revolution’s outbreak in 1776 and the publication that same year of the book that revolutionized the way the world thinks about the economy: Adam Smith’s The Wealth of Nations.

In their own way, both events were about human freedom. The American revolutionaries were fighting for independence from a government that, in their view, kept violating a hard-won principle: no taxation without representation. Likewise, Smith’s Wealth of Nations severely criticized mercantilism—the dominant economic system of eighteenth-century Europe that routinely undermined economic liberty in the name of extensive, state-driven economic development.

Two hundred thirty-five years later, many Americans remain acutely aware of economic freedom’s moral and political significance. This is partly because, in the last ten years, we’ve seen state intervention expand into American economic life in ways that seem far removed from the vision of America’s Founders. Among other things, this has been reflected by increases in the state’s share of GDP, the steady devaluation of our currency, “stimulus” packages funded by deficit spending, the explosive escalation of public debt, the bailing out of politically connected industries, the remorseless growth and duplication of welfare programs, and the government’s extension of its control over healthcare.

The causes of these unhappy developments are many: several generations of politicians, public officials, and economists who have distrusted (and sometimes disdained) Americans’ ability to take responsibility for their own economic future; businesses that prefer to lobby for corporate welfare instead of creating goods and services that people actually want; and, perhaps most troubling, the many citizens who have gradually started to see the state as the primary means of securing their livelihood.

We can see signs everywhere of the damage wrought by economic freedom’s decline in America. Few people, however, speak of this decline’s moral and cultural consequences.

The economist Arthur Brooks is exactly right when he notes that the end-game of America’s free enterprise culture is not the endless acquisition of wealth. The goal is human flourishing. This idea is as old as Aristotle, but it is deeply integral to the American experience and the aspirations contained in the immortal phrase, “Life, Liberty and the Pursuit of Happiness.”