ALL
POV: Have Gun, Will Nudge
by Ayn Rand | March 1962
It's Not the Unions — It's the Labor Laws
by Doug Altner | March 19, 2014
Regulatory Strangulation
by Steve Simpson | March 13, 2014
Obamacare creates a new class of free riders
by Rituparna Basu | January 23, 2014
Obamacare Is Suffocating An Already Sick Health Insurance Patient
by Rituparna Basu | January 22, 2014
The Broken State of American Health Insurance Prior to the Affordable Care Act: A Market Rife with Government Distortion
by Rituparna Basu | January 21, 2014
Obamacare is Really, Really Bad for You, Especially If You're Young
by Rituparna Basu | August 21, 2013
Justice Department should let US Airways & American Airlines merger proceed
by Tom Bowden | August 16, 2013
Why Is Apple Inc. On Trial? For Good Behavior, It Turns Out
by Tom Bowden | June 20, 2013
The Forgotten Man of the Minimum-Wage Debate
by Doug Altner | June 19, 2013
Why Delivering Beer Isn’t Easy
by Doug Altner | June 11, 2013
What Explains GM’s Problems With The UAW?
by Doug Altner | May 20, 2013
What Are The Search Results When You Google ‘Antitrust’?
by Tom Bowden | April 18, 2013
To Protect the Defenseless, We Must Abolish the Minimum Wage
by Don Watkins | March 27, 2013
I’ll Buy My Own Contraception, Thanks
by Rituparna Basu | November 13, 2012
Why The Glass-Steagall Myth Persists
by Yaron Brook | November 12, 2012
Why Ayn Rand’s Absence From Last Thursday’s Debate Benefits Big Government
by Yaron Brook | October 15, 2012
Changing the Debate: How to Move from an Entitlement State to a Free Market
by Don Watkins | July 02, 2012
3 Things Everyone Needs to Know About the Apple Antitrust Case
by Don Watkins | April 10, 2012
What's Really Wrong with Entitlements
by Don Watkins | February 21, 2012
The Entitlement State Is Morally Bankrupt
by Don Watkins | September 13, 2011
How Important Is the Obamacare Litigation?
by Tom Bowden | August 12, 2011
Atlas Shrugged: With America on the Brink, Should You “Go Galt” and Strike?
by Onkar Ghate | April 29, 2011
The Road to Socialized Medicine Is Paved With Pre-existing Conditions (Part 3)
by Yaron Brook | April 06, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions (Part 2)
by Yaron Brook | March 10, 2011
In Defense of Finance
by Yaron Brook | February 15, 2011
The Road to Socialized Medicine Is Paved with Pre-existing Conditions
by Yaron Brook | February 10, 2011
The Avastin Travesty
by Tom Bowden | December 12, 2010
Apple Now Targeted for Success Like Microsoft Was in the 1990s
by Tom Bowden | October 04, 2010
The Un-American Dream
by Don Watkins | August 27, 2010
What About Private Health Emergencies?
by Tom Bowden | April 08, 2010
What’s Really Driving the Toyota Controversy?
by Don Watkins | March 26, 2010
Anti-Smoking Paternalism: A Cancer on American Liberty
by Don Watkins | March 06, 2010
Apple vs. GM: Ayn Rand Knew the Difference. Do You?
by Don Watkins | March 02, 2010
Smash the Labor Monopolies!
by Tom Bowden | September 15, 2009
America’s Unfree Market
by Yaron Brook | May 2009
Atlas Shrugged and the Housing Crisis that Government Built
by Yaron Brook | March 2009
The Green Energy Fantasy
by Keith Lockitch | February 25, 2009
Stop Blaming Capitalism for Government Failures
by Yaron Brook | November 13, 2008
The Resurgence of Big Government
by Yaron Brook | Fall 2008
The Government Did It
by Yaron Brook | July 18, 2008
From Flat World To Free World
by Yaron Brook | June 26, 2008
How Government Makes Disasters More Disastrous
by Tom Bowden | April 29, 2008
Life And Taxes
by Yaron Brook | April 17, 2008
War On Free Political Speech
by Yaron Brook | March 21, 2008
To Stimulate The Economy, Liberate It
by Yaron Brook | February 14, 2008
Exploiters vs. Victims in the Grocery Strike
by Elan Journo | January 30, 2004
Prescription Drug Benefits Violate the Rights of Drug Companies
by Onkar Ghate | July 24, 2002
Drop the Antitrust Case Against Microsoft
by Onkar Ghate | March 17, 2002

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From Flat World To Free World

by Yaron Brook | June 26, 2008 | Forbes.com

Considering the many jubilant boasts by “flat world” devotees in recent years, you might have been tempted to regard economic globalization as a juggernaut, powered by inexorable forces of technology and history.

Big mistake. There’s no preordained direction for the world economy — only an undetermined future that will take the shape of whatever ideas and policies we choose to uphold. The lack of an intellectual defense of capitalism has left free markets vulnerable. “The power of the state is reasserting itself,” said Daniel Yergin, co-author of The Commanding Heights and a free-market optimist, in The Wall Street Journal recently.

In Latin America, the pro-market reforms of the 1990s are being swallowed by resurgent nationalism. Hugo Chavez’s program for national socialism in Venezuela includes the gleeful seizure of foreign assets in oil, mining, cement, steel, telecommunications and electricity.

Ecuador, Bolivia, Nicaragua and neighboring nations have fallen into step with Venezuela, further chilling international trade. Argentina, already burdened by high inflation, recently imposed taxes on grain exports so painful that farmers went on strike nationwide.

Russia has pursued nationalization less noisily than Chavez, using selective prosecution and other threats to bully foreign investors like British Petroleum into surrendering valuable oil and natural gas interests. Even England — which for decades embraced Margaret Thatcher’s privatization program, despite a long tradition of state-run enterprise — decided earlier this year to nationalize a private bank, Northern Rock.

Other ominous symptoms of nationalism’s growth are the massive sovereign wealth funds springing up in the Middle East, China, Brazil and wherever else oil and export revenues fatten up government coffers instead of private balance sheets.

The International Monetary Fund estimates such funds may control $12 trillion in assets globally by 2012, up from $3 trillion today. Few question such funds’ legitimacy, even as their state-appointed managers pursue hidden political agendas from which market distortions and political fallout predictably follow.

In America, politicians are embracing this strong state role so that no matter which party prevails this November, the reform agenda will include trade policies that retreat from economic globalism.

In little more than a decade, Congress approved both North American Free Trade Agreement (1994) and Central America Free Trade Agreement (2005), encouraging speculation that the Free Trade Area of the Americas (FTAA) would soon topple trade barriers throughout the hemisphere. Although such agreements don’t establish actual freedom of trade, they nonetheless represent improvements over highly protective tariffs.

But this year, the House of Representatives has deep-sixed trade bills negotiated in good faith with Colombia and South Korea, and the FTAA is in cold storage. Meanwhile, Congress has blithely pushed through a farm bill whose trade-distorting provisions seem certain to frustrate the ongoing World Trade Organization talks aimed at lowering trade barriers worldwide.

So why is the world retreating behind nationalistic walls — even in America, where you might least expect it?

The short answer is this: The expanding economic freedom of the past few decades was primarily a response to the bankruptcy of communism and socialism; it was not based on acceptance of capitalism as an ideal. Without such acceptance, recent political advances — despite the economic success they generated — are vulnerable to the new wave of anticapitalist measures.

For all of capitalism’s astounding accomplishments, the intellectual underpinning sufficient to deflect its critics has never been fully identified or understood. Capitalism and the profit motive continue to be viewed with suspicion.

After all, even in America, we live in a culture that lauds self-sacrifice, community service and “giving back” as its moral ideals. Businessmen who selfishly pursue profits, in contradiction to those ideals, are consigned to a moral dungeon from which they can only hope to escape on evenings and weekends. This is why Barack Obama can get away with belittling the “money culture,” his wife can smugly counsel youth to shun “corporate America” and John McCain can brag about working “out of patriotism, not for profit.”

The odor of moral suspicion that clings to capitalism helps explain why, decade after decade, businessmen are first to be blamed for the never-ending crises actually caused by statist market distortions. Whenever some new emergency arises, culpability falls first on greedy capitalists, whose profit-seeking is regarded as morally suspect, and rarely on government regulators, whose selfless policies are regarded as morally unquestionable.

The resulting pattern is depressingly familiar. Are people in Latin America still poor? The cause must be “exploitative” multinationals, and the cure must be state ownership of natural resources and more forced wealth redistribution. Are food prices rising? Blame the “ruthlessness” of global supply and demand and the “machinations” of speculators, then jettison free trade and ban exports.

Are domestic companies sending jobs overseas? Then temper the “cruelty” of the world market: Ban outsourcing of government projects, weaken the dollar and use tax policy to keep jobs at home.

Capitalism will remain the world’s punching bag until such time as the profit motive is rescued from moral oblivion. Ideas shape history — and therefore political reform requires active, fundamental intellectual change, not passive reliance on favorable trends.

What ideas and ideals are needed for freedom to flourish?

History offers no better answer than the American story. Two centuries ago, the Founding Fathers blazed the path to a capitalist future by creating a nation based on the individual’s right to life, liberty, property and the selfish pursuit of his own personal happiness.

For the first time, a nation’s social system embodied approval of profit-seeking, the lifeblood of capitalism. America’s founding principles, all but forgotten today, facilitated the explosive economic globalization of the 19th century and remain our only hope for freedom in the 21st century.

Those founding principles withered because no one could morally defend self-interest. For individual rights to prevail in politics, nothing less than a revolution in ethics will be required — a bloodless revolution — not of arms, but of ideas. You’ll know that struggle is over when businessmen are finally viewed not as moral pariahs or ciphers but as paragons of virtue, precisely because they pursue profits.

About The Author

Yaron Brook

Chairman of the Board, Ayn Rand Institute