75-12-A1
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Free Enterprise
TranscriptAn 18th century economist may be the father of our current economic troubles. I'll be right back. Most Americans take it for granted we have a free enterprise capitalistic system in which the law of supply and demand prevails. To their credit, most Americans approve of such a system. The catch is however that the free enterprise system as we understand what it ought to be is largely imaginary. It simply doesn't exist except as a dream and an ideal. Any businessman can tell you that our economy is loaded with too many strictures ever to be called free. He can also tell you that the law of supply and demand isn't allowed to work nearly as often as it should. Now don't misunderstand me I'm not charging that the United States has become a socialist state, although in truth, we've traveled a considerable distance down that dark road. Nor am I saying that capitalism has failed or that it can't succeed if given a chance, I believe it can if given a chance. Unfortunately the Federal government in the last forty years or so abetted by a compliant electorate has moved us farther and farther away from a system in which our economy would be regulated by the forces of a free market, Instead we're ruled by a series of short-sighted, ill-planned, poorly-thought-out government interventions into almost every segment of our economy. These interventions are usually meant to aid a single segment but in fact they inevitably have an impact on all the rest. Economists call this system "Ad Hoc Interventionism" and they credit Sir James Steuart, an 18th century economist with being its father. Steuart believed, as do many of today's elected leaders, in an economic system that is a mixture of tax incentives, direct intervention into the market system and outright restraints on individual behavior. Strong stuff you say, but it's true nevertheless. Almost all of us who've been in government are familiar with talk of tax incentives to spur the economy across the board, incentives such as the recent income tax rebate, special tax breaks for business, depreciation allowances and so forth. Now these are not necessarily bad, some may be good, but when we give such incentives we should be aware that their impact may have broad and unexpected effects. Direct government intervention in the marketplace has been a fact of life for a long time. Every regulatory agency we have the I.C.C., the C.A.B., the F.P.C., for example, is a direct intervention. So are fair trade laws and subsidies. These two may not be all bad but certainly they're not all good. Many liberals who supported them for years are beginning to realize that such intervention may restrict business unduly, causing high prices and shortages. Outright restraints on individual behavior are more common than you might think. Rationing for instance. If I can buy only nine gallons of gasoline, my freedom of movement is certainly curtailed. Acreage limitations are another restraint, as is the rule that limits the amount you can earn while on social security. So are wage and price controls. Again some of these may not be all bad but let's not insist they're part of the free enterprise system and when they don't work let's not blame the free enterprise system for their failures. Usually it's the other way around, our leaders have failed the free enterprise system by hamstringing it, regulating it and interfering in it. For free men, the free enterprise system is better than either socialism or Ad Hoc Interventionism. Isn't it time we gave it a chance to work. This is Ronald Reagan. Thanks for listening. |
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