It is because of the liberty given to Americans through the instrumentality of the Constitution that this country has been able to become the most prosperous nation not only in the world but in the history of mankind. And as long as man looks to the perfect law of liberty and continues to follow its just principles he will continue to prosper. .
However, there are those who say that it is the duty of government to protect people from being taken advantage of, especially from the wealthy who exploit the labor of their workers to get rich while keeping the laborers poor. They say that the government has a responsibility to protect workers from unfair wages, hiring practices, and working conditions. Therefore, they say that government must regulate businesses to some extent so that everyone is treated fairly, humanely, and safely.
Those who make these claims cite the fact that Americans make up only 4% of the world's population but that we consume 25% of the world's resources and have 25% of the world's wealth. Rather than saying that this shows the results of what man can accomplish if given the liberty to do as he wants, they say this shows the greed and callousness of those who are only concerned about their own selfish interests by taking so much to themselves that they leave very little for others.
Perhaps we can illustrate this concept to make it more understandable. Suppose there is a pile of money worth $1,000 and there are ten people who have access to that money. If it were equally divided among the ten people, each person would receive $100. But if one person takes $600 out of the pile and keeps it for themselves then there is only $400 left to be divided among the other nine people. In this scenario, because one person has made himself rich by taking more than his fair share of the money, he has assured that all the others will not get what they were entitled to receive. This is how the champions of government control over business explain why Americans are so rich and why most of the people living in other countries are so poor.
Unfortunately, too many Americans accept this false reasoning because they do not understand how freedom makes people wealthy and why slavery and bondage to government regulations makes people poor. Therefore, it is necessary to examine the reasons for the fruits of liberty.
The first fundamental fact that must be understood is that wealth is created. There is not a certain amount of money that is just sitting around waiting for people to take but rather money is produced and made just like any other product. The more people want money, the more money there will be to supply the demand for it. For example, in 1776 there were only three million people living in the United States. Today there are over 350 million people and nearly all of them are living a better lifestyle and making more money than most people had two hundred years ago.
In 1776 the average person had only a mug of ale and a bowl of porridge for breakfast because that's all they could afford. Only the rich could afford eating eggs and then only occasionally. Furthermore, people back then only ate two meals a day. By today's standard, even those classified as living in poverty eat better than that.
In 1850 the average workman's wage was about $15 a week for working 60 hours. Today the average blue-collar worker earns more than $15 an hour and only works 40 hours a week and is given a minimum of two weeks paid vacation, plus paid sick leave along with health and insurance benefits for himself as well as his family.
In order to pay someone that much money today to a hundred times more people it's obvious there has to be much more money in circulation now than there was back in 1850 or 1776. The reason for this is that more money has been produced or manufactured to meet the demand for it, just like any other commodity. To illustrate this point, when charting how much money is available and where it goes, it is common to use what is called a "pie" chart. But, as the population grows, instead of the pie staying the same size, more pies are produced so that people have more to share in. A good example of this was during the colonial period where in some states tobacco was used in place of money. When there was more demand for money, more tobacco could be grown.
But to understand how this happens it might be helpful to first understand what makes money or any commodity valuable to people.
In the past when people didn't have money, the way they got the things they needed or wanted was by exchanging one item for another. This is called the barter system. For example, if a farmer wanted to buy some clothes they might give a bushel of corn in exchange for a shirt or exchange a couple of chickens for a pair of shoes. However, in reality, what they were exchanging was their labor. For example, in the above illustration, the corn was planted and harvested by the labor of the farmer and the shirt was made by the labor of the tailor. Therefore, what gave the corn, chickens, shirt, and shoes their value was the amount of labor that each person had invested in producing their product.
If the farmer had offered one cup of corn for one shirt, the tailor would not have made the exchange. The reason why both the farmer and the tailor were willing to exchange one shirt for one bushel of corn is because each of them felt that such a swap was an even exchange for their labor.
But what if the tailor didn't need any more food? What could the farmer give in exchange for a shirt? There were two things they could do. The first was they could perform some work for the tailor to pay for the shirt or the tailor could, if he wanted to, accept an I.O.U. note from the farmer for one bushel of corn to be given at some future date when the tailor was low on food. But suppose that the tailor wanted to buy a pair of shoes. Instead of giving the shoemaker a shirt or do some work for him, he might give him the I.O.U. note for a bushel of corn that he received from the farmer. That way the shoemaker could go to the farmer and get a bushel of corn in exchange for the farmer's I.O.U note that he gave to the tailor.
This is the premise behind money. It is like an I.O.U note that represents something of value. It used to be that our money represented or was backed by our supply of gold. If a person wanted to they could exchange a specially printed piece of green paper called money for a certain amount of gold according to the value indicated on the green paper. In this sense it could be thought of as cashing a check at a bank. But today we no longer use gold or any precious metal, such as silver, to back our money. Therefore, in today's world, our money ultimately represents a person's time and labor.
For example, a person goes to work for a company and in exchange for their labor the company gives them a certain, agreed upon amount of money. The laborer then takes part of that money and pays the grocer for their time and labor in providing food and then takes another part of the money they've earned to give to the bank who provided the service of loaning money to the laborer to buy a house. Thus, money becomes a convenient way to exchange one's labor to purchase something that was made by the labor of someone else.
But where does a company get the money to pay their workers? It gets it from the people who are willing to give their money to purchase the items or service that the company makes, and the more people there are who are willing to do that the more money the company makes and the more it has available to pay someone to produce their product. And the opposite is just as true. If a company produces a product that very few people want then it collects less money which means it doesn't have enough to pay its workers.
The more people there are who want more products then the greater demand there is for money and as the demand goes up, the more money there will be available to spend. This is the way money is produced or increased. But, the amount of new money being printed must equal the value it represents. It is when too little or too much money is printed in relation to its proper value that problems arise. For example, when the government prints more money than there is a demand for, it raises the supply of it which lowers the value of the dollar. This makes the dollar worth less which means it takes more money to buy the same product. This is called inflation.
Then how do we know when and how much new money to print? The answer is found in the Law of Supply and Demand which is as much a law of nature as is the law of gravity. If left alone, this law always regulates itself to keep everything in balance but when people try to manipulate the law, for whatever reason, it always produces negative results. To understand why we must first understand how the law of supply and demand works.
When there is a small supply of a product but a large number of people who want it then the price of it will be high because those wanting it bad enough are willing to pay the higher price. On the other hand, if there is a large supply of the product available and there is a large demand for it then the price of the product will be less because companies will lower their price in order to sell more of their product, especially if there is more than one company making that product. That's called competition and competition helps keep prices lower.
On the other hand, when there is a low demand for a product the lower the price will be because the company making it wants to entice people to buy their product. If the demand for a product becomes too low, in time that product will no longer be produced and it will cease to be available. This is the way the law of supply and demand determines both the price of a product and its availability or supply.
But there is one other factor that determines the price of any product and that is the cost of making it. A company cannot stay in business unless it sells its product for more money than it cost to produce. If the company doesn't make a profit it will eventually not have enough money to pay its bills and when that happens it can no longer stay in business. Therefore, whether the demand for a product is high or low, the selling price of any product has to be more than the cost of making it.
However, if people are not convinced that the product is worth the price being charged, they will not buy it. This is what keeps companies from charging outrageously high prices for their product. On the other hand if people are willing to pay a price that's considerably more that the cost of making that product, the consumer is still paying what they think is a fair price because if they didn't think that then they wouldn't buy the product.
In a truly free society, not one is forced to buy anything they don't want therefore it is the people themselves who ultimately determine the price and availability of any product or service and when a nation obeys this method of supplying the demands of its people they will eventually become prosperous. It's a law of nature.
Furthermore, the more prosperous a society becomes the more incentive they have to experiment and invent new products. But inventing something new doesn't guarantee there will be a demand for it. If there isn't a demand for a new product then the inventor will lose the money they spent making the invention. If people are poor they can't afford to lose money so they either don't invent anything or have trouble finding anyone who has the money to buy their inventions. This again shows the principle of supply and demand at work. Thus, the more prosperous a nation becomes the more it will develop new and better inventions. And the opposite is just as true. The poorer a nation is the less it invents new products that will help improve their living condition.
But when anyone, especially governments, try to artificially regulate either the demand or supply of a product in any way, they violate the law and, just like when any law of nature is violated, the law of supply and demand will seek to compensate for its unnatural state by correcting for the imposed imbalance.
We can think of the laws of nature as a gyroscope. No matter how it's turned, if left to itself the gyroscope always strives to keep itself upright. For this reason it is used to help stabilize aircraft in flight and helps it stay on course. But, if the gyroscope is artificially kept from righting itself, it doesn't work as it should which then creates problems for those who depend on its proper functioning.
In the same way, when the law of supply and demand is prevented from following its natural course, the economic system of a country that depends on the proper functioning of this law gets out of balance and the country becomes economically unstable. Instead of taking us in the direction of prosperity the economy goes off course, leading us into all sorts of economic problems.
To work properly the law of supply and demand requires liberty. People must be free to make their own decisions of what to buy and what to pay for it. The reason why America is the most prosperous nation in the world is because they are the freest people in the world. The reason why there are countries who are poor is not because Americans have taken more than their fair share of the world's resources but because those countries are not free to obey the law of supply and demand. If they were they would become prosperous themselves.
There are many ways this law can be violated but confiscation of property is one of the main reasons. Take, for example, a farmer who raises vegetables. If he is free he will plant more food than his family can eat which then allows him to sell his excess crop to make a profit. But if the government takes most of his excess supply of food or profits in the form of a tax, the farmer has less money at the end of the season. If he doesn't make enough profit he won't have enough money to buy more seeds than his family needs to plant during the next growing season which leave him with less excess of food to sell. As the government continues to take high taxes the farmer may not only have nothing left to sell but may not have enough left for his family to live on. In this scenario the farmer is working hard but not only remains poor but keeps getting poorer.
Throughout history, this is how kings and rulers have met their own needs, but when someone takes from those who produce without replacing what they've taken they violate the law of supply and demand. The result of this violation is that some people become wealthy off the industry of others while the majority of the people become poor despite all their hard work. And it doesn't matter if this taxation is done for compassionate reasons. The law is still violated and when it is the consequences are still the same.
We can liken this to the law of gravity. If someone falls from a ten-story building that's on fire, the law of gravity doesn't care whether that person deliberately jumped out to avoid being burned or if they were maliciously thrown out. The end result of violating the law of gravity will be exactly the same in both cases. And the same is true of the law of supply and demand. The more a society obeys this law the more prosperous they become and, conversely, the more they violate it the poorer they become as a society.
Those who drafted the Constitution of the United States understood the economic effect that liberty would have on our country. But liberty can only exist when man follows the spirit of our Creator's law which is designed to produce moral character in men. Morality can be defined as doing that which is right. It is behaving correctly and properly.
The intent of God's law is to treat others as we would like others to treat us. That's not just a philosophical statement but a lifestyle that will produce happiness in our relationship with others. When this attitude is widely adopted then society itself is improved. However, when people abandon this kind of lifestyle the consequences are that it produces problems in our societal relationships.
Without a moral character, people tend to become greedy and selfish which then leads them to find ways to manipulate the law of supply and demand for their own benefit which leads to a wider chasm between the rich and the poor.
The answer to this problem is not to have the government step in and control the marketplace. That only makes a bad situation worse because the law doesn't care if the government's actions are done for the right reasons or not. If the government does anything that violates the law of supply and demand they will cause greater hardships than if they did nothing.
That doesn't mean governments can't pass laws to prevent unethical business practices. In fact, that is part of what governments are required to do but they need to make sure that what fixes they propose don't violate the law of supply and demand in the process. If those in government either don't understand that law or are not righteous themselves then they will violate it knowingly or unknowingly.
The more unrighteous the leaders of a country become the more they tend to control the economy and when they do the more they will violate the law of supply and demand which will eventually cause that country to become less and less prosperous. It is only through a righteous society that we, as a nation, can continue to enjoy the fruits of liberty.