A Spectrum of Government
Some people seem to think we need zero government. Others seem to think we always need bigger government, no matter how big it is already. Neither extreme is desirable. To help frame the issue of which economic system is best, it makes sense to think of economic systems as falling along a spectrum like the one below: At one end of the spectrum individuals have complete freedom to do whatever they want. We would call this anarchy. Unfortunately, anarchy means that people are also free to rob, cheat, and murder!
At the other end of the spectrum individuals have very little freedom to do as they wish because government controls everything. We would call this totalitarianism. Unfortunately, totalitarianism means that people have less freedom to do good things like create jobs, invent cool new products, and increase prosperity generally.
Neither extreme is desirable. Where should we want to be on this spectrum? As you can see, I estimate that the optimal spot is much closer to anarchy than totalitarianism, yet significantly short of anarchy.
Free-market capitalism exists somewhere in this optimal range. In this optimal range society embraces a strong preference for freedom, but also provides enough government to protect our individual rights and provide the stability needed for prosperity.
Should Individuals or Government Hold More Power?
The liberty spectrum helps to clarify that the crucial question we always face is whether individuals or government should hold more power. When government holds more power, then the individual must hold less.
Free-market capitalism allows individuals to keep more power. Big Government transfers more power from individuals to government.
Understand that inventors, investors, and entrepreneurs generate prosperity for society. For this reason, we want inventors, investors, and entrepreneurs to have lots of freedom so they can create prosperity for all of us.
On the other hand, government does not create prosperity, and in fact often impedes prosperity. We therefore want as little government as is reasonable and practical.
But not zero government. We want government to play an important role. Prosperity requires a stable environment with limited and predictable laws and regulations, strong protection of contractual and property rights, a stable national currency, and minimal corruption. The role of government is to provide this stable environment.
When government performs its properly limited role, this then provides inventors, investors, and entrepreneurs with the combination of freedom and stability they need to create prosperity.
The Spectrum Helps Provide Clarity
The spectrum also provides greater clarity regarding labels like liberal/conservative, left/right, and socialism/fascism. Such labels can get confusing, with fuzzy meanings and conflicting interpretations.
For example, many people view Socialism as left-wing government and Fascism as right-wing government. The framework of the liberty spectrum allows us to cut through the fog of political posturing, past or present. Using the spectrum, it’s clear that fascism belongs on the totalitarian end of the spectrum along with socialism. This makes sense since both fascism and socialism are Big Government and both reduce the freedom of the individual.
This also aligns with the historical reality of Italy (from whence the term fascism originated) and Germany in the 1920s to 1940s. Both governments imposed heavy control of private property and businesses. And after all, Nazi was short for the National Socialist German Workers’ Party.
The spectrum can also provide us with a high-level thought framework to help determine whether certain issues are desirable or not. For example, if a politician, law, or policy being considered would push society toward the optimal range on the spectrum, then it’s probably worth supporting. But if it would push society away from the optimal spot, then it’s probably not worth supporting.
The spectrum is very high level and by no means perfect or precise. Still, it is a useful philosophical underpinning for pondering the eternal question of how much freedom individuals should be allowed to keep and how much power government should be allowed to acquire.
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