I was asked by a journalist recently what voters should understand as they pick a presidential candidate – which led me to think about the stark difference between the Democratic and Republican tickets. President Obama has a fundamental belief in central planning and what Plato called the benevolent dictator in The Republic. Romney, on the other hand, has a fundamental belief in individual freedom and responsibility and the market process as the mechanism to determine what goods and services are produced.
We would, for example, not purchase the right amount of health care services, or we would not buy battery-powered cars. So we get Obamacare, where the Secretary of Health and Human Services determines what should be in health insurance policy, and corporate average fuel economy standards that force automobile companies to make electric cars.
Governor Romney and Congressman Ryan are on the side of those who believe in individual liberty, at least as defined by Nobel Laureate, Friedrich Hayek. That is, the ability to act according to your own plan. As Ludwig von Mises pointed out 85 years ago, the free market is the only system that is capable of creating wealth for the masses. Both Romney and Ryan understand this. The market system relies on individuals choosing what to offer each other, what services to provide, what to do with their labor. In other words a free people.
Hayek also pointed out 60 years ago that a free society requires more than any other that people be held responsible for their actions. If you suffer the losses from your failures and gain the benefits from your successes, you are apt to behave in a way that results in the best outcome for society. If you are notheld responsible, then not only will you behave in an inefficient manner, but those who are responsible will coerce you.
If the government guarantees that it will cover any losses from flooding, then government will preclude you from building in certain areas – or dictate the house you should build. If the government says it will pay for your health care, it will tell you what kinds of foods you should eat.
The difficulty facing the Romney-Ryan ticket is that few people ever take the time to sit down and think how market capitalism actually works – or what the fundamental beliefs are behind the founding of this nation. They might think that we need someone in charge to ensure that things turn out right, and that government serves as a countervailing power against corporate America.
Hayek wrote that we need to determine our fundamental governing beliefs – and restate them for future generations. This presidential campaign may determine whether the American electorate is up to the task. It would be useful if every voter read the Declaration of Independence before walking into the polling place, and made their choice simply upon which candidate most closely reflected those beliefs.
The Romney-Ryan ticket will be elected if every voter observed that 9 million people woke up today in New York City, and there was just the right amount of Starbucks coffee, and dental floss, and toilet paper – yet no one is in charge of making it happen. The same thing is going to happen tomorrow and every day. How does this happen? Because markets are what Adam Ferguson, a contemporary of Adam Smith, called a spontaneous order.
The market system is certainly orderly. When you travel to Chicago you don’t wonder whether there will be hotels or restaurants for you to frequent. Or whether you should bring extra toothpaste because there might not be a store where you can buy more. But they are spontaneous in that no central planner makes this happen—the price and profit system ensure it happens.
The Soviet Union relied on central planning and it collapsed, even though it was a place with enormous resources and an educated populace. If voters realize that they are facing a choice in November between an administration that plans and regulates every corner of the economy, and an administration that will foster an economy based on individual liberty and free markets – then we can look forward to a brighter American future.
(Dr. Gary L. Wolfram is the William E. Simon Professor in Economics and Public Policy at Hillsdale College. Find him on Facebook at www.facebook.com/GaryWolfram. And on Twitter at @Gary_Wolfram. Originally posted on The Michigan View.)