Free enterprise: the cure for hunger, poverty and disease, HowNow.org

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HowNow.org advocates free enterprise and limited government.

The free enterprise system is the only effective way to combat hunger, poverty and disease and to promote a peaceful and prosperous world.

No economic system has ever been proven a more magnificent success or been more unfairly and unjustly condemned.

World hunger

U.N. estimates of malnutrition.

View a 42 second video.

The cause of poverty

Why are some countries rich and others poor? Every country that has adopted the principles and policies of free enterprise has become prosperous.

The Fraser Institute in Canada has produced annual reports for many years meticulously documenting the correlation between the wealth of each nation of the world and that country's adoption of free enterprise policies.

View a 2 minute, 55 second video on the Economic Freedom of the World Reports.

What is free enterprise?

Thomas Jefferson, in his First Inaugural Address, advocated "a wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government..."

Free enterprise is an economic and political system that (1) protects individual rights including property and contract rights, (2) has a sound monetary system, (3) allows free trade with no tariffs, (4) allows people to work at any trade or profession they wish without education or licensing barriers, (5) has low taxes, and (6) has minimal environmental, safety and other regulations of business.

The government is essentially limited to three functions: (1) a military to protect against foreign attack, (2) police to protect citizens from crimes such as assault, theft, arson, fraud and other common-law crimes, and (3) a court system to enforce civil and criminal laws.

See a 53 second video on the functions of government in a free country.

USA free enterprise before 1937

The U.S. Constitution incorporated the principles of limited government advocated by Thomas Jefferson, James Madison and the Scottish economist Adam Smith.

For 150 years from 1788 to 1937 the U.S. Supreme Court enforced the Doctrine of Enumerated Powers by limiting federal powers to treaties, military defense and the other specific powers granted in Article 1, Section 8 of the Constitution.

See a 1 minute, 19 second video on the Doctrine of Enumerated Powers.

By effectively limiting the power of the state for the first time in human history, the founding fathers unleashed the competitive genius of the free market. The result was greater advances in transportation, communication, construction and agricultural production than in all of prior human history.

For the first time in history farmers could produce enough to allow the majority of their children to reach adulthood. Today's U.S. farmer can feed over 125 people. One of mankind's oldest and deadliest enemies, famine, has been eliminated in countries that have adopted the free enterprise system.

The growth of government since 1937

Thomas Jefferson wrote: "The natural progress of things is for liberty to yield and government to gain ground."

On August 12, 1937 FDR nominated Hugo Black, a former KKK member, to the Supreme Court. After Black's appointment, constitutional limits on the power of Congress to regulate the economy were no longer enforced. The original intent of the founders to limit federal power over the economy was abandoned.

In 1941 FDR in his State of the Union address introduced what he called a second bill of rights, a so-called economic bill of rights, including a right to a good education, a remunerative job, adequate food, clothing and recreation, a decent home, medical care and protection from the economic fears of old age, sickness, accident and unemployment.

As Ayn Rand pointed out in Capitalism: The Unknown Ideal, a right to housing, education, medical care and other economic goods, entails a duty for others to supply those goods. A right to the work of others means a right to enslave, making socialism not only an inefficient system but an immoral one as well.

See a 1 minute, 51 second video about political versus economic rights.

A constitutional republic vs. a democracy

The word democracy does not appear in the U.S. Constitution, the Bill of Rights or the Declaration of Independence.

While leaders were selected by voting rather than heredity or armed takeover, the founders opposed democracy in the modern sense of the right of voters to vote themselves benefits from the public treasury. The founders feared mob rule and allowed only wealthy landowners who paid taxes to vote.

John Adams wrote that there "was never a democracy that did not commit suicide." Alexander Hamilton said: "We are a republican government. Real liberty is never found in ... democracy." James Madison, the primary author of the Constitution, wrote that "democracies ... have ever been found incompatible with personal security, or the rights of property."

Democracy as the path to socialism

Many socialists have advocated democracy as the way to destroy free enterprise and establish socialism.

Mikhail Gorbachev, former Soviet leader, wrote: "According to Lenin, socialism and democracy are indivisible ... We want more socialism and, therefore, more democracy."

According to Mao Tse-tung, "the democratic revolution is the necessary preparation for the socialist revolution, and the socialist revolution is the inevitable sequel to the democratic revolution."

Karl Marx wrote: "Democracy is a form of government that cannot long survive, for as soon as the people learn that they have a voice in the fiscal policies of the government, they will move to vote for themselves all the money in the treasury and bankrupt the nation."

While the economic policies advocated by Marx have led to the death of millions of people in the Soviet Union, China and elsewhere, the size of the U.S. national debt (approaching 10 trillion dollars) shows that Marx was right about the ability of people to vote themselves public benefits leading towards national bankruptcy.

National defense

The United States has moved from being the leading example of liberty and free enterprise (the right to lead one's life and conduct one's business free of governmental interference) to the leading advocate of democracy (majority rule including the right to vote oneself benefits from the public treasury).

The U.S. has fought global and regional wars to make the world safe for democracy and is now at war to establish democracy in Iraq. It makes no sense to fight wars at vast expense for the principle of majority rule.

The purpose of a country's foreign policy should be to protect the country from attack, not to force other countries to adopt democracy, a system that socialists advocate and the authors of the U.S. Constitution considered dangerous and tyrannical.

View a 49 second video on national defense.

Free market competition

To succeed in a free market, a business must constantly improve its product or service in order to offer the best value. If customers can find a better value elsewhere, the business may fail. This is great for customers looking for the best value but hard on producers.

Producers love free markets for every industry except their own. Almost all industries--teachers, doctors, lawyers, accountants, real estate brokers, farmers, barbers, taxi drivers, steel and car manufacturers--form lobbying groups to petition the government for tariffs, subsidies, design and legal regulations, and educational and licensing requirements to protect their members from competition.

In Free to Choose, Milton and Rose Friedman suggest the following constitutional amendment: "No State shall make or impose any law which shall abridge the right of any citizen of the United States to follow any occupation or profession of his choice."

The stated goal of industry lobbies is consumer protection. The real goal and the actual result is to increase the income of businesses in the industry by reducing competition. With government ownership (e.g., schools and post offices) or extensive controls (lending, energy and health care), prices skyrocket. In freer markets (clothing, calculators and televisions), there is much better value.

Government schools

Prior to the U.S. Civil War, parents would join together to hire a teacher for their children, usually without state involvement. Under this system of private education, the United States may have achieved the highest literacy rate in the world, estimated at 90% at the time of the American Revolution.

Since the Civil War, government control of education has increased. Government school teachers are now almost impossible to fire no matter how incompetent. Government schools that fail their students are not closed but rewarded with more funding.

The National Education Association, the nation's largest and most powerful labor union, has successfully opposed allowing parents a choice of schools through school vouchers.

Free enterprise in school

Government teachers often teach a version of U.S. history that condemns free enterprise as a system of greed, exploitation and robber barons and that praises the so-called Progressive Movement and government regulation of the economy.

Generations of U.S. students have been taught the government version of free enterprise history by government employees in government owned schools. Teachers should, of course, be free to teach the version of history they believe in, but parents should be free to choose their children's schools.

The battle for school vouchers is critical if the United States is to return to a system of free enterprise and to become an advocate for the only economic system that offers prosperity to an impoverished world.

Government health care

Since 1847 the American Medical Association has lobbied state legislatures for ever higher educational requirements to practice medicine. These licensing requirements, promoted as protections for patients, reduce competition, raise prices and compromise quality. In some cases the result is highly paid surgeons with superb test passing skills but poor or average manual dexterity, a skill critical for surgery but rarely tested for in medical schools. A free market would mean more competition, more innovation and a wider choice of doctors.

In 1795 James Madison warned of "the old trick of turning every contingency into a resource for accumulating force in the government." Since the adoption of Medicare and Medicaid in 1965, government control of health care has exploded. As bureaucratic inefficiency and amazing levels of fraud have replaced market competition, health care prices have skyrocketed. Politicians, masters of "the old trick of turning every contingency", are now calling for more government control of medical care as the solution for rising prices.

The Food and Drug Administration

Thousands of babies were born with deformities from 1957 to 1961 as a result of sleeping pills containing thalidomide sold by the German company Grunenthal. Grunenthal paid 114 million Deutsche Marks to the victims.

In response to this disaster the U.S. Congress removed time limits on new drug approvals, authorized increased safety testing and added a proof-of-efficacy requirement. As a result the time and cost to develop a new drug increased from 7 months and $500,000 to over 7 years and $800,000,000(!). These amazing costs and delays prevent the development of innovative new drugs at an incalculable cost to people with heart disease, cancer, diabetes and other diseases.

Well-intentioned FDA employees, weighing the costs to themselves and their agency of approving an unsafe drug against the incalculable cost of discouraging new drug innovation by delaying approval or requiring more tests, err on the side of caution and delay. Milton Friedman and others who have done a careful analysis of the costs and benefits advocate abolition of FDA regulation of new drugs.

People's Republic of China

Gross Domestic Product--1952-2005

China's Market Reforms

The economic growth of China is one of the most dramatic illustrations of the effectiveness of free enterprise. In the late '70s and early '80s China replaced its system of collectivized agriculture with a system in which fields were contracted to private families and the produce allowed to be sold in free markets. These reforms increased agricultural productivity 15 times in a decade and transformed China from a land of widespread starvation to a country that could feed its population.

Free market policies were continued and expanded in the '90s under the leadership of Deng Xiaoping with the privatization of many state-owned enterprises. Special economic zones (SEZs) were set up to increase foreign trade and foreign investment. Since 1990 China's economy has grown at 10% a year, the highest growth rate in the world.

We need your help

Too much foreign aid is wasted or ends up doing more harm than good. Too often gifts of grain to developing countries bankrupt the farmers of the country to which the donations are given. Too often gifts of money end up in the bank accounts of despotic leaders.

Too many charities, with the best of intentions, advocate socialist policies which are disastrous for the countries that adopt them. Property rights, sound money, free markets and limited government are the proven road to prosperity for developed and developing countries alike.

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