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The Power of Ideas

Just after 9:00am on April 19, 1995 a bomb exploded in the Murrah Federal Building in Oklahoma City, Oklahoma. One hundred sixty-eight people, including 19 children, were killed. The building was damaged to such an extent that it was later demolished. The death and destruction demonstrates not only to the power of the bomb but also power of ideas. That day the power of neo-Nazi ideas about “white power,” “racial purity,” Jews, and other “inferior” races and ethnic groups was shown.

At 8:45am on September 11, 2001 a fuel-filled American Airlines plane crashed into the north tower of the World Trade Center in Manhattan. At 9:03am a second plane hit the south tower, instantly killing hundreds and causing dozens of others to choose between jumping to their deaths or suffocating. Sixty two minutes later the south tower fell, followed shortly thereafter by the north tower. Three thousand sixty six young professionals, tourists, firemen, police, and children were killed that day. Killed because of a hatred of liberalism and humanistic secularism. Killed because of nationalism—the belief that all Arabs belong to a single nation. Killed because of the power of ideas. Killed because of a philosophy. Killed because of an ideology.

Values, philosophies, and ideas are immensely important. As John Stuart Mill said in Representative Government, “It is what men think, that determines how they act.” Ideologies—belief systems—can be the cause of wars, hatred, death, or prosperity. As such, it is very important for each human to analyze their own ideology, to not without question pickup the religious, economic, and political views of his or her parents, and to truly know why they do what they do and for what they would or would not sacrifice. As such, I will attempt here to explain the principles of my philosophy—the philosophy of an entrepreneur.

Part One: The Base Tenets of My Philosophy

Today, the main players on the ideological battleground are socialists, conservatives, welfare liberals, neoclassical liberals, libertarians, conservatives, anarchists, and neo-fascists. As Francis Fukayama points out in The End of History and the Last Man liberalism has won the battle and been accepted by nearly everyone. Although dissent still exists, the ideas of Thomas Hobbes, John Locke, Voltaire and J.S. Mill have, for now, won the day.

To quickly illustrate this point, I will point out that both of the major political parties in the United States are parties that believe in liberalism. Republicans are simply neoclassical liberals who believe that less government can lead to more freedom, while Democrats, often the ones referred to as liberals, are welfare liberals who believe that equality of opportunity does not exist in the United States and the government can take positive actions to rectify this freedom-reducing wrong.

Liberalism sprang up as a reaction to two of the characteristic features of medieval society in Europe—religious conformity and ascribed status. This reaction took place in different times in different places. By the early 19 th century however, ‘liberalism’ had entered the vocabulary of politics and a distinct ‘liberal’ viewpoint emerged. Liberals wanted freedom of religion and separation of church and state. These ideas were diametrically opposed to the thinking of the Middle Ages during which church and state were supposed to work together to defend and spread religion.

The other feature of medieval society which early liberals disagreed with was ascribed status. In medieval times, a person’s class standing was fixed (ascribed) at birth and one could not improve his or her lot or have any upward mobility. The liberals instead wanted to create a society based on achieved status in which everyone has an equal opportunity to work his or her way up in society. Liberalism demanded equality of opportunity and an end to aristocratic privilege. This surely was not possible under the system of feudalism that developed after the collapse of Charlemagne’s empire in the ninth century.

With the wealth controlled by those whom had the most incentive to keep the system as it was, it would take a number of events and many centuries for liberalism to emerge. Adding to the chance liberalism would succeed was the Magna Carta, Renaissance, Black Death, expansion in trade and commerce, the discovery of the new world, the Protestant Reformation, the English Bill of Rights of 1688 and the American and French revolutions.

Thomas Hobbes (1588-1679) is recognized as one of the early founders of liberalism. He introduced the ideas of self-interest and that government should only be obeyed as long as the person or persons in power protected its people in Leviathan (1651). Hobbes argued that government was formed by the consent of the people and that all individuals are equal.

John Locke continued on Hobbes’ path by stating in his Letter Concerning Toleration that it was wrong for governments to force their subjects to conform to a particular religion. He stated that governments should tolerate diverse religious beliefs as long as those beliefs did not directly jeopardize the order of the state. Locke set forth the natural rights of all humans as life, liberty, and property—rights that no one could take away without cause and explained that the populace had the right to overthrow any government that threatened these natural rights.

These beliefs were summed up eighty six years later in the Declaration of Independence of the United States . It was “self evident”:

that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.—That to secure these rights, Governments are instituted among Men, deriving their powers from the consent of the governed.—That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or abolish it, and to institute new Government, laying its foundation on such principles, and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

These beliefs were committed to writing once again thirteen years on with the French Declaration of the Rights of Man. Here are three articles that illustrate this commitment to liberalism.

Article I:           
Men are born, and always continue, free and equal in respect of their rights. Civil distinctions [i.e., ranks or estates], therefore, can be founded only on public utility.

Article II:          
The end [i.e., goal] or all political associates is the preservation of the natural and imprescriptible rights of man; and these rights are liberty, property, security, and resistance of oppression. 

Article X:          
No man ought to be molested on account of his opinions, not even on account of his religious opinions, provided his avowal of them does not disturb the public order established by the law.

Liberalism as it is the core of what of believe. I firmly and wholeheartedly believe in freedom of religion, separation of church and state, and equality of opportunity for all humans. I believe government is created with the consent of the governed and that its main roles are to provide security, protect and promote liberty, and make laws. Finally, I believe that a democratic republic is the best form of government man has created to date.

These statements leave many questions unanswered, however. What is the best economic system? Why do I feel entrepreneurship and competitive market economies are very positive things? Which ‘side’ of liberalism am I on, right or left, neoclassical conservative or welfare liberal?

Part two: My Economic Philosophy

There are many questions to be answered in determining one’s economic philosophy. Though not neo-classical, I would consider myself economically conservative. I am a believer in competitive market economies and the possibility of the human spirit and potential along the lines of Abraham Maslow; however I am similarly compassionate to the core for the welfare of the human.

I surely do not use the ideal of liberalistic laissez faire, no regulation and no government interference, as a façade to pay less taxes and enrich myself while those without the same opportunity as I languish, as many of the further right conservatives do. On the other hand, I do believe that those who build the real economy, the entrepreneurs and business owners, should be given incentives to produce and that their incentive should not be taxed or regulated away. Without such incentives or with too much regulation, the wealth that is needed to have the ability to provide jobs or assistance to the impoverished would be non-existent.

My beliefs on the source and redistribution of wealth are encapsulated best by the following quotes from George Gilder’s Recapturing the Spirit of Enterprise

  • “The distribution of capitalism makes sense, but not because of the virtue or greed of entrepreneurs or the invisible hand of the market. The reason capitalism works is that creators of wealth are granted the right and burden of reinvesting it—of choosing the others who are given it in the investment process&ldots;The very process of creating wealth is the best possible education for creating more wealth. An economy can continue to grow only if its profits are joined with entrepreneur knowledge.” (p. 7)
  • “As Marxist despots and tribal socialists from Cuba to Angola have discovered to their huge disappointment, governments can expropriate wealth, but can not appropriate it or redistribute it. (p. 10)
  • “The wealth of America is not an inventory of goods; it is an organic living entity, a fragile pulsing fabric of ideas, expectations, loyalties, moral commitments, visions.” (p. 15)
  • “Wealth consists not chiefly n things but in thought.” (p. 68)
  • “Castro imagined that by expropriating the capitalists, he was gaining command of his nation’s most important capital. In fact, he was giving it to America &ldots; Perhaps the most impressive Cuban success story outside Miami occurred in Atlanta, Georgia . In October 1960 when Castro confiscated Coca-Cola’s Cuban bottling plan in Havana, he drove into exile a young chemist named Roberto Goizueta. Goizueta became and area chemist with Coca-Cola in Nassau, came to the United States , rose quickly though the ranks, and in 1981 became chief executive and chairman of the board of this $5 billion company. Castro got the bottling equipment the United Sates got a major industrial leader.” (p. 115)

From these quotes you may see that I believe that wealth is an intangible thing. It is not a dollar bill or a bar of gold. Wealth is simply the right to enlist the labor of man or purchase something created with that labor. It is created through ideas, know-how, and the investment of money. When money is taken from those who best know how to create wealth and given to those with few ideas and little know-how, less wealth is often created. When less wealth exists, everyone suffers, especially those at the lower end of the economic spectrum. While it would be a moral thing to redistribute income from the well-off to the impoverished, such a distribution in too large of amount would not benefit them as the wealth those well-off could have created with those funds would benefit the impoverished significantly more than the one time spending of the redistributed income by those receiving the redistributed income.

I believe my thoughts on the socio-economic divide and equality can be best summed up by quoting my April 2003 article, “Why I Stood Up for Free Enterprise: Thoughts on the Socioeconomic Divide and Equality”.

A child born to a wealthy family in Bethesda, Maryland will have a very different life and set of opportunities than a child born to a peasant family in Zimbabwe . Comparing these two persons does not prove very fruitful, as the economic and political situation between the United States and Zimbabwe are vastly different. But what about a child born to a wealthy U.S. family versus a child born to a impoverished U.S. family? And what about a white child versus a black or Hispanic child? Are the opportunities the same? Is there truly equality of opportunity?

Surely there is not. The white child born to the wealthy family will undoubtedly grow up in a good neighborhood, go to good primary and secondary schools, likely private ones, be cared for by both parents, be encouraged to go to a college, have his college paid for, be provided with a car, house, and a good job upon graduation, and receive a large sum bequeathed to him upon his parents passing. The poor minority child will likely only have one parent, not have that parent around too often, be living in poor conditions, be exposed to drugs and violence at an early age, and have a good chance of impregnating someone before he reaches adulthood. He will attend poor schools throughout and never have the encouragement or additional assistance needed to do well. He will likely never reach college or finish high school and end up uneducated, an early parent, and with a low-wage job. The cycle of poverty will continue to the next generation.

So how, if I believe that there truly is not equality of opportunity in the United States can I so vehemently support its economic system. Well, perhaps the following anecdote will illustrate the answer.

Standing Up for the Free Enterprise System

Exactly a month ago today, the day after the start of the war in Iraq, my very-liberal PSYC 10 professor decided to postpone the class on development psychology in favor of having a ‘discussion’ on why he was against the war and why it was an immoral and illegal war. While I had no problem with him expressing these feelings, I did have a problem when he turned the anti-war speech into a tirade on the American competitive market economy.

Thankfully, Dr. Lawson opened the floor for comments after his twenty minute speech. With three hundred students in the lecture hall looking on, no one raised their hand to speak. I raised my hand, and taking my notes with me, proceeded to the front of the room as the professor handed me the microphone. I began with a comment that in Iraq Professor Lawson would have been stoned, hung, shot, or otherwise killed and what I liked about this country was that one could speak their mind without fear. I continued that he in fact did have free speech in the university setting, but personally I had come that day to learn psychology. This caused the students to cheer. I think they were quite surprised by this point. Who was this kid taking on his professor in front of hundreds of people?

Fortunately, we all knew Dr. Lawson well, or at least knew he was a very easy-going guy. Somehow we discerned this by stories of his twelve years living in developing countries and going to the beach and doing yoga every day. I was sure that he would welcome differing opinions, so I continued. I mentioned that I was not going to talk about the war, as we had all heard the pros and cons ad nauseum, but rather, wanted to give a rebuttal to some of his comments about the free enterprise system. I felt that I someone had to fight for the competitive market economy. Being an economics major, entrepreneur, and Vice-President of the Carolina Entrepreneurship Club I thought I was a good person to do it.

Comments like, “Money is the root of all evil,” that the “rich are battling the poor in America ,” and other anti-capitalist overtones drove me past the brink. So I stood up and told Dr. Lawson that in fact money is the root of all prosperity. That without it societies would have to resort to barter, greatly reducing the amount of trade and welfare in the world. Further I explained that the only reason that we had the awesome facilities in that room was because of free enterprise – that without a competitive market for desks, lights, seats, microphones, projectors, carpet, wood, paint, and construction the room we were in could never exist, that the high standards of living we have are directly due to the competitive market economy, and that without a competitive market economy we would have no incentive to produce and to make high quality goods at low costs.

In response to his comment that there was ‘the biggest disparity between rich and poor since slavery’ I added that anybody that was motivated enough could, through entrepreneurship, support themselves and break out of poverty. I added that it was not the disparity that mattered, but rather the ability of anyone to become anything they dream. This was what truly mattered. A large pie unevenly distributed is much better than a small pie divvied up exactly in equal proportion. As former Chinese ruler Deng Xiaoping once noted, “I can distribute poverty or I can distribute wealth.” It is better for there to be inequality and the worst-off person have $10 than there to be equality and everyone have $5.

So did this anecdote elucidate my views? Essentially, I submit the fact that in the U.S. there is not equality of opportunity. However, I retain that anybody of solid mental faculty can, with enough desire and perseverance, reach the same heights as anyone born into money and a supportive family. While it is not perfect, there are great opportunities in the economic system we have, and without the incentives provided within it, we would all be worse off and there would be a lot more of us in poverty. Surely there is some corruption within the economic system we have, but surely it was much less that that in other countries and other systems. The competitive market economy is the best system man has created to date.

A Preface to the Beliefs & the Beginning of a Treatise for Change

I was completely sure of this view talking that day in psychology. I stood up there and vigorously and eloquently defended what I held to be dear and true.

A girl came up to me after class that day, however; a girl named Allison. Allison just asked me to consider that perhaps many poor persons did not have the opportunity I had had. It was true. I had two loving parents, a mom who always encouraged me to follow my dreams and be independent, and a supportive childhood during which I received a good education. I also had the luck to become good at web site development and web marketing and help build a company to a million dollars in sales my senior year of high school, providing at least some financial comfort for me.

I had never considered how difficult it would be for a person taking on loans to get through college to start a business. I had never considered how difficult it would have been for me to start a business without loving parents supporting me. I had never considered how difficult it would have been to obtain a good education without the encouragement to go to school and do well. I never considered how difficult it would have been to start a business if one of my parents was a drug addict. I had never considered how hard it would have been to start a business if I would have grown up with murder and drugs outside my door. I had never considered how hard it would have been to start a business if my parents didn’t tell me what I needed to know about sex and I would have impregnated a girl at fifteen.

So do these considerations change my views on the competitive market economy and entrepreneurship? No, not one bit. It just added a bit of compassion to them. I realize that our world is not perfect and as long as there are things like heroine, guns, and gangsta rap out there it will never be. I realize that as long as the animalistic nature of aggression resides in the instinctual genetic make-up of homo sapiens the world will never be perfect. While we may not be able to start people out on the same footing, we can through competitive market economies, entrepreneurship, public education, charity, and a little bit of compassion provide any person who wants to take hold of it the opportunity to break the cycle of poverty and make something of themselves. It is up to that person to take the initiative. It is up to us to spread the word that this possibility is there.

I believe in the principles of liberalism and competitive markets and am a strong anti-corruption advocate. I feel that, from an economic standpoint, I combine the economic principles of neo-liberalism (conservatives) with the compassion and goals of welfare liberalism (liberals). This is surely a fine line to toe.

Note: This article is in draft form and will be updated and extended in the coming months. I plan to extend this article with discussion on the social welfare philosophy of T.H. Green, the benefits from entrepreneurship, mercantilism, the downfall of Communism, the type of capitalism I am against, why I am against corruption, exploitation, and lavish spending on non-investment items, development vs. ecology, where government is essential, the economics of developing countries, the enigma of Malthusian theory, the importance of sustainability, the mission for the foundation I will be starting, and trade policy.



This Economics & Policy article was written by Ryan P Allis on 2/9/2005

Ryan P. Allis, 20, is the author of Zero to One Million, a guide to building a company to $1 million in sales, and the founder of Ryan is also the CEO of Broadwick Corp., a provider of the permission-based email marketing software and CEO of Virante, Inc., a web marketing and search engine optimization firm. Ryan is an economics major at the University of North Carolina at Chapel Hill, where he is a Blanchard Scholar. [learn more.