David R. Henderson  

The Wonder of Economic Freedom

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Failing Banks... Up in the Valley...

Yesterday my wife and I got on the road early to go to San Jose (we live 75 miles south in Pacific Grove) to help our daughter move her stuff from a storage locker to a shared apartment in San Francisco. After we rented and loaded a U-Haul truck, I drove it behind my wife and daughter, who were in my daughter's car. Carrying a mattress and a box spring and umpteeen boxes up over 50 stairs took it out of me.

On the way home, Rena, my wife, who is an editor, not an economist, told me that she had said to our daughter, Karen, on the way up (I'm paraphrasing):

Isn't it neat that we can call a truck rental place just two days beforehand and rent a truck to haul your things and that there's someone willing to rent us a storage place at a fairly low price?

What my wife was appreciating was the wonder of economic freedom. Economic freedom in this country is not complete and it's diminishing, but there's still a lot left. And think about the first paragraph above. My wife and I drove her car, with 105K miles on it but still going strong, and then my daughter drove her car, with 80K miles on it and still performing well. In other words, each of them has a great car. And I have an even better car with only 27K miles on it. Think of the wealth that we have that our parents, and definitely our grandparents, would not have been able to fathom.

There are negatives. When I had helped move my daughter's things into storage earlier in the month, the person there had insisted that she give her fingerprints. Shocked, I asked why, and if you think about it, I bet you can guess the answer. Hint: the word "Homeland" with a big H is in the answer.

Still, we have a fair amount of wealth left ("we" meaning our family but also most people in the United States) and almost all that wealth is due to economic freedom.


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CATEGORIES: Political Economy



COMMENTS (19 to date)
Right writes:

Hmm, yes you are more wealthier and creating more negative externality.A man of freedom stops and thinks how can I relive myself from infringing the right of the future generation even if they are not able to stand up and bargain with me?

Hmm, every present generation was once a future generation. In economically free places the future generation was better off when they became the current generation than past generations.

Rationalitate writes:

American's transportation network is about the antithesis of economic freedom, and it pisses me off to no end when people use road or highway-related industries to illustrate how economically "free" America is. Americans ought to associate the cars and the suburbs with an entrenched program of state capitalism and/or corporatism, not the workings of the free market in action.

Niccolo writes:

To some extent I agree with Rationalitate.


The suburbs and the international highway system are really just state created things that have no self-sustenance and cost much more than actually deliver. However, I think Professor Henderson's point is well taken if we are just to assume the state as an external creation and look at it from the perspective of how regular people work around it anyways.

dearieme writes:

"Carrying a mattress and a box spring and umpteeen boxes up over 50 stairs ...": the last time I had to do something like this for my daughter she relieved me of the burden by finding a rugby team who seemed willing to do it for just a smile of encouragement. "Practical Economics" I call that.

hacs writes:

It is not that freedom in question now, but a kind of market antinomianism. A discussion based on manichaean antipodal positions do not bear us to pragmatical approaches about the actual economic crisis and the government course of actions.
What are the concrete incentives in the market? How are they related with the actual rules? How are they related with the actions were taken by the government? Why did the rational economic agents act as they did? What do we need to reduce the likelihood that happens again? What are the costs/benefits of each option from the menu (short and long run) to real individuals by category (income, education, ethnical group, political party, profession, economic sector and their subdivisions, etc.)? What and how much regulation by sector/business/proceeding is necessary to achieve each selected option from that menu? What are the costs of implementing those selected measures? Etc...
Those questions are opaque to me at this moment.

Maniel writes:

David,
I happen to like your post. Maybe it's because I've had very similar experiences on the CA freeways moving stuff from south to north and back again for our daughter. I also happen to agree with the economic freedom observation. I do not accept the view that the CA freeway system is "the antithesis of economic freedom." Rather, that system is an indirect result of the will of the citizens of our now impoverished state; indirect because we have a representative state government that acts (for better or worse) on our behalf. It is naive to believe that we could be a car culture without significant investment in our highways. They might better be toll roads - that I would accept - but until the new mass transit system comes west, it's nice to be able to get from SF to SJ on our own terms.

Stella Baskomb writes:

"we can call a truck rental place just two days beforehand and rent a truck"

Yes, but, but, but . . .

How did the rental company know your wife and daughter were going to call them?

And anyway, how did the grocery story know I was coming in yesterday to buy hamburger, and be sure to have enough for me?

What's more, how did the drug store know I was coming in to buy the Post today and have an extra copy for me?

The answers can only be that the state controls these things - and, knowing what I want at all times, makes sure they are there when I want them.

von Pepe writes:

It was a beautiful country, my U.S.A., where companies strove to satisfy consumer demands and entrepreneurs worked tirelessly to satisfy consumer wants.

Today, all you have to do is lever-up, cry like a baby, elect a lawyer, and reallocate.

Jay Chambers writes:

Fingerprints? That sounds more like BS than anything else. I think a lot of companies are making up an excuse that "the government mandates this" for certain behavior it wants on behalf of customers. My bet is that they see it as an extra insurance policy on potential burglars of their premises, etc.

MHodak writes:

I agree, David. And looking at the general trend of life in the U.S., even with all the intrusions we like to complain about, I think we're still better off in our freedom and prosperity than we used to be, and better than any other major nation. All in, I think that our center continues to move 'right' over time, e.g., liberal Democrat Obama has more respect for markets than Republican Nixon, and certainly more than "conservative" Europeans Merkel and Sarkozy.

Martin writes:

"The answers can only be that the state controls these things - and, knowing what I want at all times, makes sure they are there when I want them."

People do prepare in advance. They expect business because they witnessed business the day before, because they're constantly witnessing the exchange of goods, and have been, ever since they were born, familiar with such transactions. Our behavior could be genetically predetermined for all we know. But that's not really important.

It's just nice to know we live in a society where the human "being" isn't being reified to the point of abstraction where "it" is expected to be performing beyond its natural predilection for work and reward. We take it for granted today, but we aren't being mistreated as functional automata, as millions were who lived in the Soviet Union in the early part of the twentieth century and ultimately perished. Our natural individuality is no longer deliberately drowned out by the irrationalist currents of Fascist Italy or Germany, of whose proselytizing was equally comparable in indignity and injustice.

I liked reading this post. I don't think it was supposed to be deeply philosophical. It's just nice to reflect upon and treasure our economic freedom every once in a while. Some might say we're almost at a point where we can finally free ourselves from the politicality of economics altogether.

El Presidente writes:

Stella Baskomb,

The answers can only be that the state controls these things - and, knowing what I want at all times, makes sure they are there when I want them.

Well, they provide roads for your rental truck to drive on, a stable currency with which to purchase the things you desire, agriculture subsidies that make the food in your grocery of better quality and more plentiful than nearly everywhere else, and protect the freedom of the press so you can read whatever rag you prefer. I guess you're right; the state really is useless.

Snark writes:

A quaint little story with a kind of Charles Kuralt “On the Road” charm to it. Perhaps you should consider doing a documentary of your own exploring economic freedom. You could call it David Henderson’s “On the Move” and profile the everyday liberties ordinary Americans tend to take for granted when they choose to relocate.

Stella Baskomb writes:

"I guess you're right; the state really is useless."

And I guess you are imposing your own thinking onto my post. I do not say that, or imply it.

No, el Presidente, my point was - and is - something else entirely. It is not from the beneficence of the state that I can buy hamburger. It is rather from the existence of a market - grocers willing to sell and customers willing to buy. It is not necessary for the grocer to know that "I" will be dropping by later to buy - as other posters recognize. Does the state have a role in setting reasonable market rules and enforcing them - e.g., product integrity, dishonest dealing, etc? Sure. Beyond that the market does not much need the state in order to function. Willing buyers and willing sellers are what it needs.

I also think it's cool that the grocer does not sell me hamburger because she wants my family to eat, but because she wants her family to eat. And when I buy from her, we both benefit. There's a real quote disguised in this clumsy little paraphrase - you must recognize it.

El Presidente writes:

Stella Baskomb,

Does the state have a role in setting reasonable market rules and enforcing them - e.g., product integrity, dishonest dealing, etc? Sure. Beyond that the market does not much need the state in order to function. Willing buyers and willing sellers are what it needs.

Then I suppose you and I would agree that the private (market) and the public (government) must be complementary for both to work well. Good to know there is a reasonable Libertarian (I presume) out there. You are very rare and very useful, so you must be very valuable. =)

There's a real quote disguised in this clumsy little paraphrase - you must recognize it.

There is, and I do. I've read the original text more than once. He wrote other books too, ya know, and good ones.

The funny thing is that when a person gets on here and genuflects before the virtuous market they are embraced as a free thinker, a breath of fresh air, and a moral Stalwart (capitalized on purpose). If they said the same things about government they would be deplored as fascists. Can't we meet in the middle like reasonable people who don't feel any compulsion to worship either, but only to make both work well?

MikeL writes:

Can't we meet in the middle like reasonable people who don't feel any compulsion to worship either, but only to make both work well?

El Presidente, I'm afraid that your argument from utility will fall on deaf ears. Most libertarians, at least those in the Rothbardian tradition, find moral reasoning more compelling than utilitarian justification. That is, just because a system is efficient doesn't make it morally just. Where will you side when morals and utility are in conflict?

lizWCU0966 writes:

Today's news constantly informs us about how bad the state of the economy is. In David Henderson's article it is clear to see how much better off we are than our grandparents and great grandparents. Compare his three car family to our great grandparent's one car existence. Each member in his family has the freedom to go in his or her own direction at any given time. In our grandparent's generation most households owned one car and one car only.
The women worked at home, maybe in part because the men drove the car to work and they had no other choice. Getting the kids to school - that was what buses were for. A trip to the grocery store was a family outing. Today we climb into our cars equipped with the latest GPS systems and if we can afford it, we have the freedom to drive anywhere in the US we choose. All the while, still staying connected to our homes by cellphones and internet.
It is a different time we live in. I'm sure our ancestors could have never fathomed life as we know it.
Yes the economy is bad, But I agree with Mr.Henderson. Most families are much richer and better off than they realize.

laurenWCU writes:

Today’s economic freedom is different than it was in the past. Today, we enjoy freedoms that past generations could have never dreamed of, granted they are the ones who thought these ideas up. Our economic freedom today, is being challenged because of the recession that the United States and therefore, the rest of the world is experiencing. This change in policy is frightening but past generations have had to deal with it just the same. Each change in policy has been different, but remember history repeats itself, so this is no new phenomenon.

Our economic freedom today has developed over time because of recessions and the free market. Overtime, we have come to expect these events and certain policies to fix these events. This is why we can expect to get out of this recession, just like we have every time throughout the past when we have experienced such conditions.

Events like helping your daughter move to a new place and heaving boxes upstairs are what keep us sane. They are everyday activities that one can hate, but events such as these take our minds off of the economy and on our family. Events like these can help our minds realize just how lucky we are to live in this country. To take into consideration how much “wealth” one does have. For instance my 1993, Volvo has 183,000 miles on her, but I am lucky to have this luxury. Yet, I experience implications from keeping my old car like the unreliability factor.

All in all, David Henderson makes an excellent observation about how our world is constantly changing. This change get infinitely better for each successive generation, which is why it is practical for one to want better for their children. We can already see the changes that kids are experiencing today for example, a four year old that can use a computer better than I can. Yet, we can depend on the upcoming generations to form new technologies that can benefit us. This is why our economy works through recessions.

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