The strength of a democracy depends on the economic and political freedom of its citizens. Compare the strength of economies and the welfare of citizens that are democracies to those that are directed by despotic regimes – it’s clear. But even in a democracy, there is a “tyrant” that can exercise despotic power if left unchecked – the government: federal, state and local. Government policies can restrict freedom of choice, confiscate resources and valuable time, compel actions that grossly fail to pass any cost-benefit test, show favoritism, and enforce servitude. And these powers can be used to entrench a political dynasty. Political freedom and the right to express views openly as well as to vote free of coercion are critical, but economic freedom, the right to use the fruits of our labor every day without political influence, is essential for democracy to thrive.
America’s small businesses employ half our private sector workers, produce nearly half of our private sector output, and are routinely praised by politicians for their importance. But these politicians frequently limit the economic freedom of small businesses. The top problems (out of a list of 75) facing these firms according to NFIB’s Small Business Problems and Priorities poll of a sample of its hundreds of thousands of member firms are:
Small business owners’ top problems are clear evidence of the reach of government into the economic freedom of private economic agents.
The current administration has taken several steps to support a healthier democracy. Regulatory burdens are being reduced, with government playing a smaller role in directing the use of our valuable capital. Lower compliance costs mean more funds available to invest in the firm’s growth, providing more jobs and better incomes for citizens. The new tax code is returning money to the private sector where history makes clear it will be better invested than by a government bureaucracy. The misuse of government for political purposes is being exposed and improvements will be made. Protecting our democracy requires that the private sector not be deprived of its right to manage its economic affairs, and the process of “delevering” governments grip on the private sector is underway. History has proven that governments cannot deliver the success that an unfettered economy can.
There is much more work to be done. Rising health insurance costs have not been addressed, and tax code complexity remains an obstacle for small business owners. Governments have made promises (pensions, welfare, etc.) that cannot be met without a heavy tax on the private sector. The rising burden of our debt will weigh heavily on the private sector, siphoning off resources to pay interest to our lenders. Economic growth is critical to our ability to deal with these issues. The economy is now growing 50 percent faster than it did from 2009-16, producing more jobs, income, and of course tax revenue, not from higher tax rates but a growing tax base and rising employment. Combined with more sensible regulation, growth will better prepare us to deal with our economic and political problems and preserve and strengthen our democracy.