Leadership

It happened on the same day.

Two people, who as far as I know don’t know each other, asked me the same question. Or, to be more precise, they asked two different questions that have the same answer.

In truth, this is a question that a lot of Americans have on their mind right now. Many of them don’t even realize it, but every time they watch the news, hear about current politics, or discuss Washington’s latest antics with friends or at work, they feel a growing sense that our government is becoming less and less likely to handle really big challenges.

The first question went something like this: “Oliver, I just don’t understand your logic in a recent article you wrote. I understand your concerns about big government, but why do you think business is any better?”

The second question was similar: “In your book, LeaderShift, you and Orrin Woodward have James Madison say that as business leaders go, so goes America. Why did you single out business leaders, instead of parents, academia, media or the government?”

This is an incredibly important question. Of course, I won’t presume to speak for Orrin — he can answer this question however he wants. His answers are always excellent. As for me, here’s my answer:

Where there is freedom, there is progress.
Where freedom is lacking, there is decline.

Yes, a little regulation can increase freedom — to the extent that it protects people and keeps contracts and agreements honest, and safe from crime. Beyond this, however, increased regulation means decreased freedom and therefore decline.

During the 1990s and 2000s, for example, the computing technology sector was probably the freest major industry in the world — and it brought us our greatest new fortunes, our major new technologies, and the biggest new advancements that drastically changed our world.

During that era, for example, most other sectors were highly regulated — and in decline as a result. Communications and media were highly regulated, banking became highly regulated after 9/11, transportation and manufacturing was highly regulated, and so was education, health care, farming, law, engineering, etc.

In fact, rewind a few decades, and note that the freedom in home construction and land development before the 1990s made real estate a major part of the economy. Huge fortunes, millions of jobs, and a lot of widespread prosperity came from this freedom. Not to mention widespread home ownership — the kind where people could actually afford their homes.

This kind of growth always happens where there is freedom.

And the increase in overbearing real estate regulation began before the housing bubble — it may well have caused it.

Remember: Where there is freedom, there is progress. Where freedom is lacking, there is decline.

Earlier in world history, America rose while Europe declined — precisely because America was free and most European nations were highly regulated. The same had happened when Greece and Rome chose high regulations while the European nations maintained relative freedom.

In the 19th century when Americans went west and found free lands to till, develop and improve, American prosperity soared. Later, when a Civil War gave a higher level of freedom to all Americans by ending slavery, prosperity skyrocketed. It took a while, but in less than eighty years the United States became the world’s leading power.

Freedom brings progress.

When industry, farming, education, and health care were only barely regulated (just enough to provide basic, obvious protections), all of these sectors made huge wealth, built a strong America, created millions of good jobs (where one working adult could support their whole family), and spurred increased innovations and technologies.

While big-government Europe watched its people live in apartments, small-government America watched its citizens build and own independent homes, often with large yards.

In big-government Europe well-to-do families owned a car; in small-government America even many lower-middle-class families owned several.

Freedom brings progress; decreasing freedom brings decline.

So many more examples from world history could be discussed. Sectors free from regulation lead a nation, at least until politicians figure this out and find ways to regulate them.

Today, there are at least five sectors that have higher-than-average levels of freedom:

1. Family
2. Home businesses
3. Network marketing businesses
4. Online businesses
5. Businesses that operate across borders in many nations

Note that politicians are already scheming ways to tax online businesses, force people to buy an electronic stamp for each email or Facebook update/relationship change, charge fees for various actions of international companies, and many others.

All such attempts to increase regulation actually reduce freedom and bring decline.

But for now, business is the sector of society with the most freedom. If progress is going to come, it will happen in the entrepreneurial sectors.

Bill Gates said that

“One sign of a healthy industry is lower prices. The statistics show that the cost of computing has decreased ten million fold since 1971. That’s the equivalent of getting a Boeing 747 for the price of a pizza.”

So why can’t all of us afford a jet today, just like we afford a computer? The answer is that during the past thirty years the aerospace industry was highly regulated while the computing sector was not. You can argue that airplanes should be highly regulated; after all, they can be weapons. But, in rebuttal, so can computers.

The principle remains: Where there is freedom, there is progress. Where freedom is lacking, there is decline.

If you want to promote freedom today, think entrepreneurially — and encourage your youth and others to do the same. The future belongs to entrepreneurship, because freedom leads to progress.

This is what’s really going on in our nation, and only those who understand this realize what’s coming — and what to do about it.

Oliver DeMille is the New York Times, Wall Street Journal and USA Today bestselling co-author of LeaderShift: A Call for Americans to Finally Stand Up and Lead, the co-founder of the Center for Social Leadership, and a co-creator of TJEd.

Among many other works, he is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, The Coming Aristocracy, and FreedomShift: 3 Choices to Reclaim America’s Destiny.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

The Big Lie dominates Washington and much of our American culture. The lie, in a nutshell, argues that as government increases regulation, our society improves.

This lie has lasted a long time, mainly because our society is divided between two versions of The Big Lie. The Democratic version contends that as the government increases regulation on various sectors of society and the economy, our nation progresses. The Republican version maintains that as the United States expands it power around the globe, the whole world benefits.

Both lies are passed down to the rising generations, despite the fact that there is a preponderance of evidence that debunks them.

For example, the Republican Big Lie claims that after each major war (WWI, WWII, Korea, Vietnam, and the Cold War) U.S. leaders have reduced military budgets and hollowed our national defense — and that this has inevitably helped contribute to continued world conflict.

The evidence, however, tells a different story. In times of reduced military budgets, the Executive Branch has actually upped its strategic planning.

Indeed, as Melvyn P. Leffler put it in Foreign Affairs:

Decreased military budgets “forced U.S. policy makers to make tough but smart choices…to think hard about priorities and tradeoffs…And in this regard, history shows that austerity can help rather than hurt…”

The same is true of the Democratic Big Lie. For example, few things have been pursued by Democratic leaders as doggedly as the desire to increasingly regulate big banks, big business, and big health care.

But such policies have caused more harm than good. To date, we have little data about what Obamacare regulation will do to the economy, but there is ample information about banking regulation and its results.

As Charles W. Calomiris and Stephen H. Haber pointed out, nations that highly regulate their banks have experienced less stability and more banking crises than those with fewer regulations. For example, when Britain and Scotland adopted central banks in 1694 and 1695, respectively, both were ruled by King William III.

The King treated the two banking systems very differently, and the results were drastically different as well. Because William III saw the Bank of England as the source of his government’s borrowing, he wanted to regulate it to ensure access to easy capital. In contrast, he thought it “was easier to adopt a policy of laissez faire with respect to the Scots…”

The results are interesting, and instructive. Under the weight of extensive regulation, the English banking system was usually “fragmented,” “unstable” and “England suffered frequent major banking crises…In sharp contrast to England, Scotland [with it’s free, less regulated banking system], by the middle of the eighteenth century, had developed a highly efficient, competitive, and innovative banking system, which promoted rapid growth” in the economy.

In short, higher regulation hurt the economy, while less regulation helped it.

This same pattern was repeated by U.S. and Canadian banks, with the U.S. banks highly regulated and Canadian banks operating under less regulation.

Again, The Big Lie is that government regulation makes things better, but the evidence shows a different reality.

Calomiris and Haber noted:

“The banking system in the United States has been highly crisis prone, suffering no fewer than 14 major crises in the past 180 years. In contrast, Canada…experienced only two brief, mild bank…crises during that period…The Canadian banking system has been…so stable, in fact, that there has been little need for government intervention in support of banks since Canada’s independence, in 1867.”

What is the difference? The Canadian banks were set up, like in Scotland, as free and independent banks, while the U.S. banking system was established like the British model as a highly regulated source of ready capital for the federal government. As a result, Washington continues to increase banking regulation — which nearly always hurts the American economy.

The biggest problem in all this was pointed out by Murray Rothbard in his classic book, The Mystery of Banking, first published in 1983. Rothbard argued that few people understand banking, or how the government works with banks, and so they ignore what is really happening and just let it keep occurring. The connection of banks and the government in a highly-regulated system, Rothbard warned, decreases our freedoms and weakens our economy.

But since most people don’t even think about this, or consider it too complex, it just keeps happening. The truth is that banking really isn’t that much of a mystery, but most people find it too boring to study.

That’s how The Big Lie survives. It’s big, but it’s a bit boring. So the people don’t stand up against it. That’s how it starts.

But in our time, it’s reached another level. Now, in reality, most people actually seem to believe The Big Lie. They actually believe that government regulating something will make it better. They believe that more government regulations on banks will help the economy (truth: it does the opposite), that more government regulations on business will bring more jobs (truth: it does the opposite), and that more Obamacare regulations on health care will bring cheaper, better insurance and health (truth: it is doing the opposite).

The Big Lie is strong and growing in America. And the more it grows, the more it ensures the decline of our economy.

Those who point it out, from either the Right or the Left, or the middle, are simply ignored by most Americans. As a result, it is very difficult to fix the problem.

We are a nation in denial. We think more government will fix things, and so it grows. As it grows, it causes more problems.

And the cycle repeats.

At some point, we need to face The Big Lie. More government regulation from Washington won’t fix our nation. More government power from Washington won’t fix other nations.

We need to apply principles, not increase regulation. The principles of freedom work. We need them. Most of all, we need the average American to study them and understand them.

Oliver DeMille is the New York Times, Wall Street Journal and USA Today bestselling co-author of LeaderShift: A Call for Americans to Finally Stand Up and Lead, the co-founder of the Center for Social Leadership, and a co-creator of TJEd.

Among many other works, he is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, The Coming Aristocracy, and FreedomShift: 3 Choices to Reclaim America’s Destiny.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

It’s time for optimism in America. Right now.

I’m convinced that the best era of America is still ahead. And it’s time to start building it, even if Washington won’t, and even if the politicians are going to bring us both ups and downs in the years ahead.

When we turn on the news, we hear of debts ceilings, a $17 trillion national debt, deficits, credit rating downgrades, inflationary money, layoffs, political party anger and name-calling, leaders who won’t negotiate, government shutdowns, sequesters, defaults, international unrest and conflicts, and on and on.

It’s a bit overwhelming, and most people are either deeply frustrated or have decided not to follow the news too closely.

But this is only part of the story.

While those in Washington argue, over and over, about their latest Crisis of the Month, a lot of regular citizens have done something very important. They’ve realized that the future is up to them, and not to the politicians.

And the numbers of such people are growing. Some are getting more involved than ever before at the local level, and others are spending more time strengthening their families. Some are studying current events with real passion, and others are tackling history and the great classics in order to learn a lot more.

Still others are focusing on community projects, service, teaching the youth, and supporting charities that really need more support, and quite a few are increasing their entrepreneurship — building the economy for themselves and others instead of waiting for politicians to get their act together.

And make no mistake, when the regular people in America, Canada, and other nations realize that it’s up to them and then take action, it’s like rousing a sleeping giant. When the average citizen stands up and gets involved, like after Pearl Harbor or during the American Revolution, big things really happen.

Right now, the giant is just starting to stir. The signs are faint, but they are growing: Tea Partiers, Occupiers, protestors, bloggers, radio-show callers, “social medi-ers,” and above all, lots of newly-focused volunteers and entrepreneurs.

The people are beginning to feel the need to take their nation back, especially their economy. The future is bright.

Whatever Washington does, the leadership spirit in our homes will determine the years and decades ahead. Many experts have dubbed the 21st century “the China Century,” but in truth the reason China is growing is widespread entrepreneurship. That’s the real story.

And up until now, most freedom-lovers have argued that American entrepreneurs will bring back our economy — if Washington will just get out of the way. This message is now changing.

As the problems in politics keep increasing, more and more people are looking around, taking stock, and saying, “You know what? Washington might never get its act together. So, I guess it’s up to me.”

This is the spirit of enterprise, and there is almost no power in the world as strong as a people fully committed to free enterprise.

This is an exciting time. Instead of waiting for the politicians to free up the economy, we’re now making the great FreedomShift: Regardless of what Congresses and Presidents and Justices do, let’s build our families, communities, and the economy to a whole new level — and show Washington what to do. We’re the leaders now. When we lead, the politicians will have to follow.

If you haven’t joined this movement yet, today is a good time to start.

Build a business.
Or read a great classic.
Start a class for kids in your area.
Or begin attending all your city council meetings.
Make and follow a plan to double your savings rate.

Brainstorm. Identify where your passions are, and then take action to genuinely improve your life and the world around you.

Get started. The economy and society need you. It’s up to us.

What the media and politicians don’t realize is that this is happening. The worse Washington gets, the more people are taking personal action. It’s real. And it’s growing. Whatever Washington does, this is the movement that will make or break our future.

Smile. Laugh with a friend. Tell your kids a joke and giggle together. Tell them that the future is bright. And take action to make it true.

Now is a time for real optimism.

Oliver DeMille is the New York Times, Wall Street Journal and USA Today bestselling co-author of LeaderShift: A Call for Americans to Finally Stand Up and Lead, the co-founder of the Center for Social Leadership, and a co-creator of TJEd.

Among many other works, he is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, The Coming Aristocracy, and FreedomShift: 3 Choices to Reclaim America’s Destiny.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.