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Yet Again, Obama Shows Why He Doesn’t Quite ‘Get’ Why Free Enterprise Is so Important. So Let Me Explain.
President Obama recently gave a speech at Northwestern University’s business school in which he offered his philosophical insights into government and economic freedom:
There is a reason why I came to a business school instead of a school of government. I actually believe that capitalism is the greatest force for prosperity and opportunity the world has ever known. And I believe in private enterprise — not government, but innovators and risk-takers and makers and doers — driving job creation.
He continued:
But I also believe in a higher principle, which is we’re all in this together. That’s the spirit that made the American economy work. That’s what made the American economy not just the world’s greatest wealth creator, but the world’s greatest opportunity generator. And because you’re America’s future business leaders and civic leaders, that makes you the stewards of America’s greatest singlet asset — and that’s our people.
So as you engage in the pursuit of profits, I challenge you to do so with a sense of purpose. As you chase your own success, I challenge you to cultivate more ways to help more Americans chase their success.
See, it’s stuff like this that makes folks on the right wonder if the president really “gets” the true value of the free enterprise system. Free enterprise doesn’t just make us a richer people — it doesn’t just “deliver the goods” – it makes us a better people. The pursuit of profits, often at the same time the pursuit of a dream and of personal meaning, can be high purpose.
First of all, economic freedom goes hand-in-hand with political freedom. As Milton Friedman wrote in Capitalism and Freedom: “Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power. The kind of economic organization that provides economic freedom directly, namely, competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other.”
Note that Friedman uses the phrase “competitive capitalism.” That means businesses living and dying based on their ability to generate consumer-relevant value, not their ability to lobby government for support and favor. Competitive capitalism is not crony capitalism or corporatism where Big Business works hand in hand with Big Government.
Second, free enterprise enriches life beyond material riches. Economist Deirdre McCloskey, from her book “The Bourgeois Virtues: Ethics for an Age of Commerce“:
I claim that actually existing capitalism, not the collectivisms of the left or of the right, has reached beyond mere consumption, producing the best art and the best people. People have purposes. A capitalist economy gives them scope to try them out. Go to an American Kennel Club show, or an antique show, or a square-dancing convention, or to a gathering of the many millions of American birdwatchers, and you’ll find people of no social pretensions passionately engaged. Yes, some people watch more than four hours of TV a day. Yes, some people engage in corrupting purchases. But they are no worse than their ancestors, and on average better.
Participation in capitalist markets and bourgeois virtues has civilized the world. Richer and more urban people, contrary to what the magazines of opinion sometimes suggest, are less materialistic, less violent, less superficial than poor and rural people. Because people in capitalist countries already possess the material, they are less attached to their possessions than people in poor countries. And because they have more to lose from a society of violence, they resist it.
The richer, more urban, more bourgeois people, one person averaged with another, I claim, have larger, not smaller, spiritual lives than their impoverished ancestors of the pastoral. They have more, not fewer, real friends than their great-great-great-great grandparents in “closed-corporate” villages. They have broader, not narrower, choices of identity than the one imposed on them by the country, custom, language, and religion of their birth. They have deeper, not shallower, contacts with the transcendent of art or science or God, and sometimes even of nature, than the superstitious peasants and haunted hunters-gatherers from whom we all descend.
They are better humans—because they in their billions have acquired the scope to become so and because market societies encourage art and science and religion to flourish and because anyway a life in careers and deal making and companies and marketplaces is not the worst life for a full human being.
As the economist and philosopher Amartya Sen puts it, “The freedom to exchange words, or goods, or gifts does not need defensive justification in terms of their favorable but distant effects; they are part of the way human beings in society live. . . . We have good reasons to buy and sell, to exchange, and to seek lives that can flourish on the basis of transactions.” He instances the liberation of women worldwide through access to markets.
Capitalism has not corrupted the spirit. On the contrary, had capitalism not enriched the world by a cent nonetheless its bourgeois, antifeudal virtues would have made us better people than in the world we have lost. As a system it has been good for us.
Capitalists ended slavery and emancipated women and founded universities and rebuilt churches, none of these for material profit and none by damaging the rest of the world. Bourgeois virtues led us from terrified hunter bands and violent agricultural villages to peaceful suburbs and lively cities. Enlightened people such as Voltaire, Montesquieu, Adam Smith, and Mary Wollstonecraft believed that work and trade enriched people in more than material things. They believed that a capitalism not yet named broke down privileges that had kept men poor and women and children dependent.
And for the soul they believed that labor and trade were on the whole good, not dishonorable. Work is “rough toil that dignifies the mind,” wrote Wollstonecraft, as against “the indolent calm that stupefies the good sort of women it sucks in.” Commerce, the French said, was a sweetener: le doux commerce. Commerce may have lowered the spirit of the proud noble, Voltaire noted with little regret, having suffered literal beatings at his behest, but it sweetened and elevated the rude peasant.
I guess I would like to see a little more of that in Obama’s musings on free enterprise, a bit more poetry and wonder, rather than the perfunctory boilerplate and box ticking he typically offers before transitioning to his core message about “higher principles” where he urges his audience to transcend the pursuit of lucre for more enlightened purpose. Actually, creating a prosperous society where as many people as possible have the means and opportunity and freedom to pursue happiness as they see it is high principle and high purpose. Full stop. The president may understand this, but you wouldn’t know it by listening to him.
Published in General
But I also believe in a higher principle, which is we’re all in this together.
Obama actually has this much right, even though he doesn’t realize it. We are all in this together, compatriots and competitors alike.
We. Not we and government. We. We don’t need government to “help” us or to “guide” us. We’ll do nicely–especially in comparison with government involvement–all by ourselves. As Friedman intimated.
After all, in a free market exchange, both participants are better off than they were before the exchange. This is impossible with government involvement.
In the end, in a free market, we did build that. Full stop.
Eric Hines
What he does not get is that a free market is the most effective mechanism for collective action ever created by people. You’d think with the word “collective” he’d like it. Actually, I think the fundamental problem for Progressives is that the free market is undirected collective action. There is no one “in charge” so it is chaotic and unsettling and its outcome cannot be predetermined.
Since Obama is clearly not referring to religion when he speaks of “higher principles” and “a sense of purpose” where would one go to find these? I think his view is that he and others of his ilk can provide the needed guidance – those principles and sense of purpose – to these otherwise uncontrolled collective actions.
What he’s saying is in no way different than what one hears from very many religious people as well. In fact, it’s indistinguishable from the “attacks” on capitalism from the Catholic Church: i.e. there’s no “purpose” or “morality” to “economic pursuits”.
So in fact, it seems that Obama’s words here are pretty mild, and pretty mainstream.
Of course, I don’t believe for a second he believes any of it. I think he is very much against free enterprise. But simply going on what he says here, this same mentality is probably found in the majority of Americans, and especially found at the majority of church pulpits.
But of course, this is about as old of an argument in economics as it gets. It’s one of the basic premises of Adam Smith’s book.
PS: The interesting thing is that virtually 100% of of articles, whether they be in the popular press or the academic press, making such arguments, have to cite Friedman’s 1970 newspaper article on CSR. Seems that nearly 50 years later, a tiny little article he wrote remains an impossible barrier for them to overcome.
And as you described, a true higher calling!
Beautifully articulated. Thank you.
I’ll tell you who doesn’t get it…and that’s people who say that Obama doesn’t get it. Obama wants to destroy the United States. Full stop. He’ll do and say whatever it takes to achieve that end and mixing truth with error is just one of his many tactics. Obama does, in fact, get it. He knows the score and he knows exactly what he is doing. Too bad the same can’t be said for our side.
What he’s not saying is that he wants you to proceed using His purpose and His ideas to further His goals so that His vision for America comes to be. Unfortunately, too many people are willing to go along rather than make the effort to think for themselves.
That’s lovely, James.
Mickey Kaus asked an excellent question a few years ago:
The President is a bright enough guy, but my guess is that he doesn’t want to hear what he doesn’t want to hear. IOW, doubling down on ineffective, clumsy policy is always the answer because the man is done with learning stuff.
He practices cargo cult economics. Mouthing a few platitudes is meaningless.
This. In my experience living amongst a large swath of progressives — including members of my own family — this is the key bit. My kid constantly rails that all these people making their own decisions are idiots that would be much better off if they just did it his (oddly similar to Obama’s) way.
Wrong, wrong, wrong! You are assuming that Obama has America’s best interests at heart and that the motivation for what he is doing is born out of some basic misunderstanding (whatever the reason) of the world and/or reality. I find it incredibly frustrating when my fellow Americans can’t seem to wrap their heads around the possibility that Obama is evil and that his motivations are rooted in an intense hatred for America and for what it stands/stood for. It is extremely dangerous to label Obama as incurious, incompetent, uninformed or progressive because it prevents us from recognizing the true peril that our country is in with him at the helm. The name “Obama” should be synonymous with the phrase “Trojan horse”.
There is a (possibly apocryphal) story told of a Soviet commisar visiting England and after arriving at the airport taking a car into London accompanied by an English official. As the car comes into the city, the Soviet visitor is amazed to see bakery after bakery without the long lines he always sees in Moscow. He turns to his English companion and inquires “but who is in charge of the bread supply for London?”. The answer of course is no one. It’s just another “higher principle” being fulfilled in the process.