There have been two conflicting visions in American history that have shaped our nation. As conditions in the United States continue to worsen, it is important that Americans engage in serious soul-searching to determine which vision should be embraced going forward.
The original vision
The first vision was that which characterized the American people from the founding of the United States to the early part of the 20th century. There are various labels that we can put on this particular vision: a free-market system, a capitalist system, a free-enterprise system, and a limited-government republic. Regardless of which label is used, there is no disputing that this was the most unusual political-economic system in history.
Just think: There once existed a society in which there was:
No income tax and no IRS. Americans were free to keep everything they earned and do whatever they wanted with their own money: save, spend, hoard, donate, or invest it.
No government-mandated charity, including Social Security, farm subsidies, welfare, education grants, or any other type of government-provided philanthropy. Charity was considered an entirely voluntary action.
No education grants, foreign aid, corporate bailouts, SBA loans, government grants, or other types of welfare.
No Medicare or Medicaid. No Centers for Disease Control. No FDA. No medical licensure laws. Hospitals were privately owned. Essentially, no government involvement in healthcare.
No immigration controls. People from around the world were free to come to the United States, with almost no questions asked. There were no limits on numbers. There were no required credentials or educational background. There were no literacy tests. Even knowing English was not a prerequisite for entry. As long as one didn’t have tuberculosis or some other infectious illness and wasn’t an “imbecile,” entry was automatic.
Few economic regulations. No minimum-wage laws and price controls.
No gun-control laws. Americans understood that the right to keep and bear arms was a key to a free society. They would never have permitted government officials to enact gun-control laws.
No public-schooling systems. No compulsory school-attendance laws. Education was private and based on free-market principles.
No Pentagon or military-industrial complex. Americans opposed “standing armies.” That’s why there was only a basic, relatively small army throughout the 1800s.
No empire of domestic and foreign military bases.
No CIA. No state-sponsored assassinations. No coups or foreign regime-change operations. No torture.
No NSA. No secret mass surveillance schemes.
No FBI. Crime was considered a state and local matter. Americans didn’t want what President Truman referred to as a Gestapo-like entity.
No wars in European, Asian, or African countries. No foreign aid, foreign interventions, and wars of aggression.
No Federal Reserve System. No fiat (i.e., paper) money. Gold coins and silver coins were the official money of the American people.
No U.S. Departments of Education, Commerce, Labor, Health and Human Services, Housing and Urban Development, Transportation, Energy, and Homeland Security.
No U.S. Securities and Exchange Commission, Environmental Protection Agency, Federal Trade Commission, Occupational Safety and Health Administration, Federal Communications Commission, Federal Deposit Insurance Corporation, Interstate Commerce Commission, National Labor Relations Board, and many other regulatory commissions.
America once had the finest healthcare system in history, one based on free-market principles. Healthcare prices were so low and stable that hardly anyone had or needed major medical insurance. Going to the doctor was like going to the grocery store. Moreover, doctors and hospitals treated the poor on a purely voluntary basis.
I’m not suggesting, of course, that this was a 100 percent libertarian society. There was slavery. Women didn’t have the right to vote. There were tariffs. There was the Sherman Antitrust Act in 1890 and the Chinese Exclusion Act of 1882.
I am suggesting, though, that 19th-century Americans proved that it is possible to achieve all those libertarian principles listed above.
The result of this unique way of life was one of the most phenomenal occurrences in history. By the late 1800s and early 1900s, the standard of living of the American people was skyrocketing. No one had ever witnessed anything like this in history. People were going from rags to riches in one, two, or three generations. Thousands of penniless immigrants were flooding into America to partake in this “American Dream,” many of whom couldn’t even speak English.
At the beginning stages of U.S. history, the standard of living was relatively low for most everyone. Many people struggled just to survive. In each generation though, families would save a portion of their income. Those savings would go into banks. The banks would lend it out to employers who, used it to make their businesses more productive.
As productivity increased, so did the firm’s revenues and profits. That enabled businesses to pay higher wages to their workers. Employers were raising wages not because they were motivated by charity but rather by competition. Employees would go to those businesses that were paying the best wages.
Sound money played a role in the process as well. People were no longer concerned with the possibility that government would wipe out the value of their savings through the debasement of paper money. That’s because the Constitution required the federal government and the state governments to use only gold coins and silver coins as the official money of the nation. Government couldn’t print gold like it could paper money. People were willing to invest in 100-year corporate bonds because they were repayable in gold.
In a nation in which people were free to accumulate wealth, there was the greatest outburst of charitable activity that mankind had ever seen. This was how the churches, hospitals, museums, and colleges and universities got built — with the money that multi-millionaires were making in a society where people were free to accumulate unlimited amounts of wealth. As the rising standard of living began providing people with the luxury of leisure time, many people used it as an opportunity to participate in philanthropic activity. After Alexis de Tocqueville visited the United States in the 1830s, in his book Democracy in America, he marveled at the enormous amount of voluntary associations and philanthropic activity in America.
Sometimes, I have thought that if I could choose where and when I wanted to live, my choice would be the United States from around 1880 to 1910. It must have been a phenomenally exciting time in which to live. Yes, I know — no air conditioning, computers, GPS, and cell phones. But new inventions were coming into existence every day. The standard of living of people was soaring. Most important, it was the period of time in which economic liberty reached its apogee.
The growth of statism
In the late 1800s, however, a segment of Americans began agitating for change — toward socialism, empire, and government management and control over economic activity. They saw all that wealth coming into existence and wanted government to confiscate it and distribute it to the poor and needy. They saw women and children working in factories and wanted government to put a stop to it. They saw other nations have overseas colonies and believed that that was the way to national greatness.
In 1890, they succeeded in getting the Sherman Antitrust Act enacted under the rationale that big, successful businesses were a danger to consumers. In 1882, based on racial grounds, they got the first immigration control act enacted — the Chinese Exclusion Act. In 1898, they embroiled the United States in the Spanish American War, which became the turning point toward empire and intervention. That’s when the United States acquired its torture and prison center at Guantanamo Bay in Cuba. In the early 1900s, interventionists induced some states to enact minimum-wage laws and maximum-hours legislation.
In 1913, they succeeded with two major statist achievements: the enactment of the 16th Amendment and the Federal Reserve system, both of which would provide the engine for confiscation of wealth, both directly through income taxation and indirectly through debasement of the currency.
They got the United States into World War I and enacted a conscription law to force American men to fight in it. They also enacted laws providing for the criminal prosecution of people who spoke out against the draft or the war. The intervention established the conditions for Hitler’s rise to power.
After the Federal Reserve caused the 1929 stock-market crash and resulting Great Depression, President Franklin Roosevelt used the crisis to complete the transformation of America to a welfare state and a government-managed and government-regulated economy. In the process, he nationalized gold, ordering all Americans to turn in their gold coins to the federal government. Declaring that irredeemable paper money was now the nation’s official money, Roosevelt opened the floodgates to future decades of out-of-control federal spending and monetary debauchery.
The crown jewel of Roosevelt’s welfare state was Social Security, a socialist concept that had been imported from German socialists. It was based on the concept of using the government to take money from Peter in order to give it to Paul. Over time, generation after generation of Americans became psychologically dependent on this political narcotic, convinced that people would die in the streets without it.
Early in the 20th century, public schooling started to come into existence, accompanied by compulsory-attendance laws. Americans become accustomed to having their children indoctrinated by the state. Over time, they became convinced that without government schooling, children would not become educated. Public schooling succeeding in attaining a deferential, obedient, regimented, and passive citizenry.
In the 1960s, President Lyndon Johnson brought Medicare and Medicaid into existence, which destroyed the finest healthcare system in history. These two socialist programs are the root cause of America’s ongoing, perpetual healthcare crisis. They are the reason for soaring healthcare costs. As with Social Security, many Americans are convinced that without these two socialist programs, people would be dying in the streets.
After World War II, interventionists succeeded in converting the federal government from a limited-government republic to a national-security state. That conversion brought into existence a vast, permanent, voracious, and vicious military-intelligence establishment to wage a “Cold War” against America’s WWII partner and ally, the Soviet Union. That would be followed by a giant empire of military bases, not only domestically but also all over the world.
The CIA and the NSA were called into existence, accompanied by their omnipotent, totalitarian-like powers of assassination and secret mass surveillance. What followed were decades of coups, assassinations, kidnappings, torture, secret surveillance, wars of aggression, regime-change operations, foreign aid, and alliances with brutal dictatorial regimes.
Welfare-warfare state dependency
Today, the American people are hopelessly dependent on government largess. The notions of self-reliance and independence that characterized 19th-century Americans is gone. Modern-day Americans look at the federal government as their daddy or, even worse, their god. In their minds, it takes care of them with retirement pay, medical services, education, food, housing, and other essentials of life and keeps them safe from the communists, the Muslims, the terrorists, Russia, China, and other official enemies.
At the same time, Americans remain the most frightened people in the world. They are convinced that all those official enemies, as well as illegal immigrants and drug dealers, are coming to get them. They see the federal government as their savior who will protect them from all the scary people who are supposedly coming to get them. Ironically, the more powerful the federal government becomes, the more fearful the American people become.
The worst part of this is that most Americans have no idea of the two completely opposite visions that have governed our nation. They honestly believe that it’s been the same system the entire time. They remain convinced that Roosevelt “saved” free enterprise through a welfare state and a regulated/managed economy. They are convinced today that they live in a free country.
In other words, notwithstanding the fact that they live under a totally different type of political-economic system than their ancestors lived, today’s Americans are convinced they are as free as their 19th-century counterparts. They perfectly embody the words of the great German thinker Johann Goethe: None are more hopelessly enslaved than those who falsely believe they are free.
The second-worst part of all this is that when Americans of today look upon the massive dysfunctional nature of American society — for example, the soaring suicide rates among young people, the drug addiction, the alcoholism, the police abuse, and the irrational acts of mass violence — they blame it on freedom and free enterprise, which causes them to want to move America even further toward socialism and interventionism.
Two conflicting visions. Which one should Americans embrace going forward? It sure seems like a no-brainer to me.
This article was originally published in the September 2021 edition of Future of Freedom.