America is in the midst of an identity crisis, and it’s probably not the kind you’d think. Our nation is wrecked by an abysmal economy and unhappy people losing confidence in their country. In such unhappiness, people on both sides of the political aisle too often propose “solutions” that grant the government more control of our lives, even though that control is usually the source of the problem.

The American experiment has paved the way for millions to escape poverty and build a better life via a free-market system with a constitutional republic that encourages innovation and results in more human flourishing than ever before. We need to get back to those roots.

I had the opportunity to discuss this phenomenon with Dr. Samuel Gregg, author of the book The Next American Economy and distinguished fellow at the American Institute for Economic Research, who said this country’s founding values are based on “liberty and personal responsibility.” 

What set America apart was a vision for commoners to determine their own future, and we continue to rank as the most entrepreneurial country in the world. American’s earliest ideals demanded liberty and responsibility, rejecting directives from a distant King. As a result, the roles of the federal and state governments were carefully managed by a system of federalism, with checks and balances to restrain overreach and protect liberty. According to Gregg, this ongoing experiment is why immigrants are continually inspired to leave their homes and venture to the United States. 

These core tenets of America have become less defined over the past century. America has increasingly chosen big government over individual liberties, thereby reducing the benefits of free-market capitalism.

The major expansions of government started in the progressive era, with Presidents Teddy Roosevelt, Woodrow Wilson, and Herbert Hoover. Those historic expansions were put on steroids by President Franklin D. Roosevelt’s “New Deal,” which prolonged and deepened the Great Depression. Likewise, President Lyndon B. Johnson’s “Great Society” program ballooned government through the creation Medicare and Medicaid, among others. The results have been massive government spending with increased dependency on government programs. 

President George W. Bush’s expansion of Medicare with Part D provided some prescription drug coverage for seniors, with questionable results, at a massive cost. President Barack Obama’s Obamacare expanded government control, contributing to the high cost and declining quality of US healthcare. President Trump’s attempt to punish China with tariffs actually punished low-income Americans most. Most recently, President Biden’s 2022 “Inflation Reduction Act” further grows government, without reducing inflation and at a huge cost to taxpayers. 

Inflating the role of government in an attempt to solve underlying issues created by big government created a vicious cycle that continues today. Government meddling distorts the economy by blocking and confusing free people’s choices. This results from a cultural shift, where Americans increasingly seem to believe government can solve problems better than markets or individuals.

This belief is contradicted by the evidence. The lack of belief in free markets is really the lack of believe in free people, as the market is nothing but people. Big government is usually the cause of economic and social problems, so trying to solve them with more government just exacerbates the issues. A severe deficit in the knowledge of history, both of culture and economics, helps explain why post-modern socialist solutions increasingly entrance younger generations. 

Unlike older countries, America’s identity comes from the “texts, documents, and debates” that created our founding, says Gregg. Surveys show that only 1 in 3 Americans can pass a citizenship test, because most of them aren’t familiar with the foundational ideas outlined in our texts and documents. A national identity crisis is near-inevitable, when we forget our core values of liberty and personal responsibility

The further we stray from the principles that made our nation great (including free-market capitalism, a constitutional republic, and personal responsibility) the more swiftly we head down what economist Friedrich Hayek called “the road to serfdom.” 

Only by learning our unique history, and grasping the principles of free-market economics free from burdensome interference, can Americans embark on the next American economy.

Originally published at AIER. 

​Many Americans have historically associated “socialism” with things like the Red Scare, Nazism, the Cold War, and McCarthyism. Today, that fear has largely faded—particularly among young people—and has instead become a love affair.

A recent Axios/Movement poll found that 51% of 18 to 34 year-olds view socialism positively, though the share is only 41% for all Americans. That poll also found that 49% of young adults viewed capitalism favorably—a decrease from 58% in 2019. However, across all Americans there is 57% support for capitalism with just 36% having a negative view of it, which is a slight decrease from the 61% to 36% split in 2019.

Many reasons explain these trends, but the fact that capitalism has lifted more than one billion people worldwide out of poverty is irrefutable.

Despite this reality, the alarming rise in support for socialism, particularly among young adults, begs the question: Do proponents of “socialism” really understand it, and will it ever invade America?

In short, institutions matter and we should understand them, because when we do, we have a better appreciation for capitalism and will reject socialism, even as socialism metastasizes throughout many sectors of our economy.

Socialism is an economic system in which government owns the means of production. Socialism is an extractive economic institution with redistribution of resources—not with market prices but rather by elite politicians who supposedly understand the collective desires of society.

Capitalism, on the other hand, derives its success from an inclusive economic institution with private ownership of the means of production in a free enterprise system. This institutional framework has strong private property rights allowing for a well-functioning price system in markets that allow efficient allocation of resources to those who desire things most with a profit-loss calculation to increase prosperity.

Many supporters of socialism believe society would be best served by a big government that oversees things like health care, food, employment, and transportation, with college and housing at no charge. Socialism’s enthusiasts also claim government-run societies would decrease income inequality and give workers a greater voice.

However, socialists fail to recognize the truth that nothing is free.

More precisely, scarcity means there are always costs, whether realized or unrealized. Free college and universal health care could be fantastic services if they were truly free, but the government doesn’t have its own money—it must extract resources from Peter to give to Paul, and “free” provisions like these have poor outcomes.

Moreover, the ideas of “tax the rich” and “give to the poor” are fallacies that don’t support lower poverty or less income inequality, as they reduce opportunities for success in the productive private sector while contributing to greater dependency on costly government redistribution. This intervention stifles consumer power, eliminates competition, and oftentimes contributes to greater poverty and income inequality.

History shows us that socialism has never worked and will never work well.

Cuba—a socialist country located only 90 miles south of Florida—first embraced socialism over 60 years ago under Fidel Castro. Cubans yielded enormous liberties to Castro’s government in exchange for promises of a better life. As Cuba now grapples with shortages of COVID-19 vaccinations, food, and other critical supplies, even President Biden recently denounced Cuba and its economic system as a failure.

Despite the growing disdain for capitalism in the United States, data from the Economic Freedom of the World report confirms that capitalist, free-market policies lead to the greatest prosperity.

Greater economic freedom under capitalism provides for a more robust economy and a well-functioning price system that yields higher life expectancies, higher incomes, greater per-capita GDP, and less poverty. And capitalism is also morally superior to socialism as it empowers people to make decisions that meet their needs rather than being told what to do through subjective determinations from elite politicians. Furthermore, socialism requires the immoral violation of personal property rights and individual freedoms.

Government is not intended to dictate the lives of each individual, nor it is it supposed to control a society’s factors of production.

As former President Trump said, “America will never be a socialist county.” Socialism did not make America great, nor will it provide for a more perfect union. While we’ve moved further toward socialism in many sectors of our economy, which explains their poor outcomes, Americans should appreciate the many benefits of capitalism so that we can right the course toward more human flourishing.

​Commentary