The following is from our November issue. Forty-one symposium contributors were asked to respond to the question: Are you optimistic or pessimistic about America’s future?
Recent statistics about America’s levels of debt and tax burden make for depressing reading. Our national debt has increased from 42 percent of GDP in 1980 to 100 percent of GDP today. Government spending (27 percent of GDP in 1960) is 37 percent of GDP now—and is set to hit 50 percent in 2038. Between 1986 and 2008, the share of federal income taxes paid by the richest 5 percent of Americans has risen from 43 percent to 59 percent. At the same time, the number of Americans who pay zero or negative income taxes has risen from 18.5 percent to 51 percent.
Numbers like these have led some to despair that there are really only two possible scenarios for America’s future. In one, we finally hit a tipping point where so few people actually pay for their share of the growing government that we embrace European-style social democracy. (Think France.) In the other scenario, our growing welfare state slowly collapses under its own weight, and we get some kind of permanent austerity once the rest of the world finally realizes the depth of our national spending disorder and stops lending us money at low interest rates. (Think Greece.)
These are not, however, the only two choices. We can make the hard choices as a nation to consolidate fiscally in a way that cuts government spending and stops penalizing entrepreneurs. But the way to achieve this is not the way conservatives typically advocate, which is doubling down with scary data about terrible economic growth and distortionary taxation. Instead, what conservatives must do is turn to the moral case for free enterprise: that it allows individuals to flourish as they earn their own success, is fundamentally fair in rewarding merit, and is the best way to give opportunities to the less fortunate.
This prescription would hardly sound foreign to our Founders, who in the Declaration of Independence asserted our right to pursue happiness instead of the mere possession of property. On the other side of the Atlantic, the father of free-market economics, Adam Smith, was articulating a soulful defense of human liberty in which every man “is left perfectly free to pursue his own interest in his own way.” He wrote these words 17 years before penning The Wealth of Nations.
How is it that today’s free-enterprise warriors have forgotten how to use the language of morality? Statists may talk about fairness and “social justice,” but free marketers seem content to console themselves with the language of economic efficiency and productivity. They are right about free enterprise being good for economic growth, but their arguments rarely move the soul. Yet it is the moral, cultural case for free enterprise that America most needs to hear today if it is willing to make sacrifices for the future.
Rather than making the business case, free-enterprise advocates must stop talking about dollars and cents and start talking about what is written on their hearts. They must talk again about why America is an exceptional nation and about what its system of free enterprise offers—the possibilities of self-realization, matching our skills with our passions, and pursuing happiness in whatever way we choose to define it.
If we do this, then Americans may help us change course before statism changes our nation for good.
Arthur C. Brooks is president of the American Enterprise Institute.