Economic Freedom and Liberty


Traveler
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What is freedom? Can a society have some segments free and others in bondage and still be considered a free society or must a free society guarantee freedom and liberty for all?

Milton Friedman talks about the "Pillars" of freedom in a free society and introduces that thought that economic freedom is one of the great pillars of a free society - that without economic freedom a society will not actually be free and will, without question fall into a collapse of all freedoms.

Most of us believe that humans long to be free. I am not sure I believe such to be the case. In fact I believe the opposite to be more prevalent in history and our current state of things. That few desire or wish for the practice of the disciplines of freedom and if given the choice prefer to be undisciplined. It appears to me that indiscipline has become the definition of what it means to be free.

My father told me that one of the greatest lies rampant in the world - that even your best friend will look you in the eye and without hesitation lie to you concerning how well they handle their personal finances. That they will even look themselves in the mirror and lie to themselves about their personal discipline of their finances. The problem is that we are not economically free and have no desire, what-so-ever to ever be so.

The Traveler

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Economic discipline and freedom are like diet and exercise. Everyone knows they are right, proper, and God's best for us. Practicing such in a consistent, long-term way, is easy to understand, hard to accomplish. Even after some success, it is incredibly easy to "take a break," and then fail to end that break.

Traveler, you are right. Dave Ramsey is right. Nationally, there are proposals that would lead us to surplus budgets within a decade. These are right.

Will we do what's right? Well...will I? Will you? If enough of us do, maybe we can get our leaders to follow?

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Yes, people desire economic liberty. But, people are not born knowing how to achieve such liberty. Therefore, they go by instinctive self-aggrandizing ways to achieve such liberty. Because, the self-less method is not natural.

In the micro level of individual economy - economic liberty is everyone's desire. Knowing how to achieve it is a different matter. Some people earn economic prosperity, some people take from someone else, some just give up the struggle for economic prosperity. The natural instinct of people is to maximize reward for minimum effort. So if the effort is too great, the reward may not be worth it. And, it is also natural instinct for individuals to focus on self-aggrandizement without much regard for others especially those who are not within their sphere of influence.

Going macro, there is the free market. People are expected to be self-aggrandizing. But, people's self-aggrandizing instincts are tempered by somebody else's. It is self-correcting in its purest form. The opposite is socialism - where people are expected to be self-less as a natural state.

Both methods have merit but both methods also have problems in the organization of individual economy into a sustainable society.

The problem with free market is that you can band together to remove market choice hence taking liberty out of one faction of society or the other. Therefore, it requires some form of control to keep a balanced system.

The problem with socialism is that it requires knowing how to be perfectly selfless to be able to do it under liberty. Unfortunately, it takes only a very few imperfect people to skew the system... and with man's natural instinct for self-aggrandizement, there will always be those that desire more for their effort. Hence, it requires some form of control to take liberty out of those imperfect people to bring the system back into balance.

So in either case, control is necessary. And control is a loss of liberty.

So freedom and prosperity - in our fallen state - is a delicate balance.

Edited by anatess
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Milton Friedman talks about....

Your whole post can be broken down to the above. It's typical economic predator talk. "Economic freedom" actually means "slave labor." If anybody were actually concerned about freedom and economic freedom they would be marching in the streets demanding the U.S. adopt President Franklin D. Roosevelt's Second Bill of Rights.

Second Bill of Rights - Wikipedia, the free encyclopedia

When conservatives preach "freedom", watch out. It usually means the very opposite unless you are part of the super wealthy 1%.

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HG doesn't want to listen to Milt. That's fine. I understand. Burned bridges and all of that.

Perhaps the sage wisdom of that classic band Oingo Boingo would be worth a listen?

CAPITALISM Lyrics - OINGO BOINGO

We used to dedicate that song to all the Hoosier Guys on campus, back in my college days. :-)

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Most people don't understand freedom until someone else tells them they aren't free. Is it truly freedom to wage economic domination, or is it simply something disguised as such to justify any misgivings.

Illusion of choice is freedom in some respects, as is voting, but in the end, most people want predictability. Someone invading me or preaching freedom to me in most cases, have a different agenda other than what they speak of.

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Your whole post can be broken down to the above. It's typical economic predator talk. "Economic freedom" actually means "slave labor." If anybody were actually concerned about freedom and economic freedom they would be marching in the streets demanding the U.S. adopt President Franklin D. Roosevelt's Second Bill of Rights.

Second Bill of Rights - Wikipedia, the free encyclopedia

When conservatives preach "freedom", watch out. It usually means the very opposite unless you are part of the super wealthy 1%.

Ooh! Ooh! A combination of ad hominem and guilt by association! Let me try:

Hmm, Franklin D. Roosevelt. Is that the same Franklin D. Roosevelt who appointed a known Nazi sympathizer who proclaimed "Democracy is finished" and claimed the Jews brought Kristallnacht on themselves, as ambassador to the UK in the early stages of World War II?

(Paging Dr. Godwin. Dr. Godwin, please call your office . . .)

Edited by Just_A_Guy
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Interesting responses. I am convinced that few in our day understand the principles of economic freedom. I submit that the biggest single loss of economic freedom in our generation is the incursion of debt. There is no greater economic bondage and enemy of economic freedom than debt. I seriously doubt that any government that is so dislodged from economic sense as to incur debt willingly cannot to any degree preserve freedom.

As far as political efforts - the so called liberals have proven that they despise economic freedom and would that all rather suffer economic slavery (debt). The so called conservatives do not appear to have any intention of liberating debt - they seem to say one thing and spend anyway. There is no effort to assist to end economic slavery (debt). Rather we have created an economy that depends on it and there is no greater division of haves and have nots than the mass willingness to sell one's self in to the slavery of debt.

We know what does not work - the world if full of bad examples. I submit that there are examples of things that do work but they are rare and generally hated by almost everybody (note that I said almost). Why? Is it possible that religion or as scripture would call it - true religion is the very foundation of economic freedom?

The Traveler

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Economic freedom is an oxymoron as the former speaks of disparity through gain and the latter implies an environment for self will and if religion is added to that, it becomes a gainful self willed justification of divine right.

Just like everything, including political models, theories or suggestions in practice, moderation is best.

I agree that debt is the lurking evil that will trump any other arguments when it decides to call in what its owed, but if everyone believes economic freedom is viable, why are we surprised when we all can't have nice things with the irony being that a large percentage of the people with the nice things are calling the shots, but are living life larger than they should, while proclaiming economic freedom for all.

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Interesting responses. I am convinced that few in our day understand the principles of economic freedom. I submit that the biggest single loss of economic freedom in our generation is the incursion of debt. There is no greater economic bondage and enemy of economic freedom than debt. I seriously doubt that any government that is so dislodged from economic sense as to incur debt willingly cannot to any degree preserve freedom.

As far as political efforts - the so called liberals have proven that they despise economic freedom and would that all rather suffer economic slavery (debt). The so called conservatives do not appear to have any intention of liberating debt - they seem to say one thing and spend anyway. There is no effort to assist to end economic slavery (debt). Rather we have created an economy that depends on it and there is no greater division of haves and have nots than the mass willingness to sell one's self in to the slavery of debt.

We know what does not work - the world if full of bad examples. I submit that there are examples of things that do work but they are rare and generally hated by almost everybody (note that I said almost). Why? Is it possible that religion or as scripture would call it - true religion is the very foundation of economic freedom?

The Traveler

Debt is not all bondage. Debt is merely another tool in our economic arsenal.

For example, on a micro level... Let's say I'm a real estate investor. Buying a rental property in cash is not wise. That is because, rental properties receive monthly revenue. It doesn't matter, therefore, if the property is bought by loan because somebody else is paying that debt back. Putting cash on the property is tying down your liquid asset which drastically lowers your ability to get more properties. Here's another example - shorting a stock is basically using debt as a tool to gain money. You borrow against a particular stock, wait until the stock price falls, then pay it back - you end up paying less than you borrowed keeping liquid asset in your pocket.

Just like if individual families wouldn't buy a house unless they can pay it cash then they will be homeless most of their lives, governments in the ebb and flow of economic recession/expansion, will need to leverage debt to maintain a certain level of service (e.g. military, infrastructure, parks, etc.). It is not advisable to gut the government - like the military when government revenue is low - usually happens when the country is at war. At the same time, it is not advisable to retain money in government coffers when revenue is high to prepare for a future recession. Debt, therefore, is a tool that can be used to balance this.

But yes, we are under a runaway spending government for quite some time now sinking us into unsustainable debt instead of proper leverage of debt. This is a double-whammy of prolonged recession and bad decisions on the injection of funds to jumpstart markets which is tainted with political favoritism and vote-buying.

Edited by anatess
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Economic freedom is an oxymoron as the former speaks of disparity through gain and the latter implies an environment for self will and if religion is added to that, it becomes a gainful self willed justification of divine right.

Just like everything, including political models, theories or suggestions in practice, moderation is best.

I agree that debt is the lurking evil that will trump any other arguments when it decides to call in what its owed, but if everyone believes economic freedom is viable, why are we surprised when we all can't have nice things with the irony being that a large percentage of the people with the nice things are calling the shots, but are living life larger than they should, while proclaiming economic freedom for all.

You are coming to a point I believe to be of great interest in how many define freedom. That is, that they define freedom as being able to do whatever they want. As you point out - such thinking often is an abuse of freedoms that requires the acquisition of wealth based on the labor of others (the many) to profit the few. An example of this would be what is called "golden parachutes" for upper management and much less (if anything at all) for underlings. Or another example, the exorbitant pensions for high government officials elected for a few years and Social Security for the life time of tax payers.

Freedoms, including economic freedoms can be easily taken or lost. But the saddest play concerning freedoms is when they are foolishly and willingly given away.

The Traveler

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Debt is not all bondage. Debt is merely another tool in our economic arsenal.

For example, on a micro level... Let's say I'm a real estate investor. Buying a rental property in cash is not wise. That is because, rental properties receive monthly revenue. It doesn't matter, therefore, if the property is bought by loan because somebody else is paying that debt back. Putting cash on the property is tying down your liquid asset which drastically lowers your ability to get more properties. Here's another example - shorting a stock is basically using debt as a tool to gain money. You borrow against a particular stock, wait until the stock price falls, then pay it back - you end up paying less than you borrowed keeping liquid asset in your pocket.

Just like if individual families wouldn't buy a house unless they can pay it cash then they will be homeless most of their lives, governments in the ebb and flow of economic recession/expansion, will need to leverage debt to maintain a certain level of service (e.g. military, infrastructure, parks, etc.). It is not advisable to gut the government - like the military when government revenue is low - usually happens when the country is at war. At the same time, it is not advisable to retain money in government coffers when revenue is high to prepare for a future recession. Debt, therefore, is a tool that can be used to balance this.

But yes, we are under a runaway spending government for quite some time now sinking us into unsustainable debt instead of proper leverage of debt. This is a double-whammy of prolonged recession and bad decisions on the injection of funds to jumpstart markets which is tainted with political favoritism and vote-buying.

I think you are making one of the great mistakes in understanding debt. There are two parts in acquiring or having things: One we call assets and the other we call liability. Debt is the balance when the liability is greater than the asset. Under this definition, debt is always economic bondage - if not now, it soon will be as sure as the sun set at the end of day.

The Traveler

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I think you are making one of the great mistakes in understanding debt. There are two parts in acquiring or having things: One we call assets and the other we call liability. Debt is the balance when the liability is greater than the asset. Under this definition, debt is always economic bondage - if not now, it soon will be as sure as the sun set at the end of day.

The Traveler

No, I understand debt plenty. Yes, debt is the balance when the liability is greater than the asset. But, debt is not always economic bondage. Even the Church says the same. A student loan is not economic bondage when you have a solid plan to acquire future assets with your education. A house loan is not economic bondge when you have a solid plan to acquire the asset in the future. Shorting a falling stock is not economic bondage when you have a solid financial plan. Military spending in a recession is not economic bondage when your military is used to guarantee future assets. The opposite - gutting Military spending required to protect future assets during a recession to avoid debt will guarantee economic bondage for years to come. Not gaining an education to improve one's qualification to avoid debt is a path to economic bondage when the basic necessities in a society costs more than a non-educated man's qualifications.

And no, this is not a mistake. This is part of every financial arsenal since the invention of the free market. What is a mistake is in using debt outside of a financial plan that weighs risk.

If buying a house on a loan is economic bondage, then freedom is only for the very elite. People have to live somewhere - either renting a place or buying a place or living off of someone else. Putting your money on a rental to avoid debt is economic bondage because you are dependent on the landlord forever. Using the exact same money on a house loan is a short path to economic freedom. Where the mistake lies here is in buying a house without a solid financial plan that involves risk planning. Because, in a properly planned mortgage, the risk on that debt can be very minimal.

And by the way... one mistake that a lot of homeowners make is in thinking that the house they live in is an asset because of its equity. It can only be an asset if you don't have to live in it. Otherwise, it is a liability. Because, if the time comes that you need to convert that asset to food, you're homeless.

Edited by anatess
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No, I understand debt plenty. Yes, debt is the balance when the liability is greater than the asset. But, debt is not always economic bondage. Even the Church says the same. A student loan is not economic bondage when you have a solid plan to acquire future assets with your education. A house loan is not economic bondge when you have a solid plan to acquire the asset in the future. Shorting a falling stock is not economic bondage when you have a solid financial plan. Military spending in a recession is not economic bondage when your military is used to guarantee future assets. The opposite - gutting Military spending required to protect future assets during a recession to avoid debt will guarantee economic bondage for years to come. Not gaining an education to improve one's qualification to avoid debt is a path to economic bondage when the basic necessities in a society costs more than a non-educated man's qualifications.

And no, this is not a mistake. This is part of every financial arsenal since the invention of the free market. What is a mistake is in using debt outside of a financial plan that weighs risk.

If buying a house on a loan is economic bondage, then freedom is only for the very elite. People have to live somewhere - either renting a place or buying a place or living off of someone else. Putting your money on a rental to avoid debt is economic bondage because you are dependent on the landlord forever. Using the exact same money on a house loan is a short path to economic freedom. Where the mistake lies here is in buying a house without a solid financial plan that involves risk planning. Because, in a properly planned mortgage, the risk on that debt can be very minimal.

And by the way... one mistake that a lot of homeowners make is in thinking that the house they live in is an asset because of its equity. It can only be an asset if you don't have to live in it. Otherwise, it is a liability. Because, if the time comes that you need to convert that asset to food, you're homeless.

This in not what the church teaches. They teach that sometimes the economic bondage is worth it, not that it isn't economic bondage in those cases. It is. Always. But sometimes it's worth it (as in home and education).

Anyone who thinks owning their own home under a mortgage is not economic bondage is fooling themselves.

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This in not what the church teaches. They teach that sometimes the economic bondage is worth it, not that it isn't economic bondage in those cases. It is. Always. But sometimes it's worth it (as in home and education).

Anyone who thinks owning their own home under a mortgage is not economic bondage is fooling themselves.

Anyone who thinks that owning their own home (mortgage or no) is not economic bondage is fooling themselves.

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You disappoint me..

..you people raking in on the world.

The devil’s script sells you....the heart of a black bird.

Shine on me baby..

..cause it’s raining in my heart.

–- Elliott Smith, “A Distorted Reality is Now a Necessity to be Free

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I agree that debt is always economic bondage; it just depends on whether it is worth it or not.

Debt used to increase one's productivity may be worth it, while debt used to enhance one's personal consumption is most likely not worth it.

As far as people needing a mortgage to buy a house, I say fooey. I bought my first house, cash.

I saved over 50% of my take-home for over 6 years. I bought an old house that needed fixing up and a house that was sufficient for my needs. Nothing fancy, just enough to make do. I fixed it up used the extra savings from not having a rental payment and in 3 years, HELOCed the 1st house bought a 2nd house cash and I'm now getting ready to sell the 1st house for close to the price I bought the 2nd house for (a bigger, better place, closer to work but needed a little work). In another 3-6 months, I'll be back to no house debt. I could sell the 1st house for 20% less than I bought it for and I'll still have no house debt. I still save close to 50% of my take home.

It is 100% doable to buy a house for cash after saving; the problem is that most individuals don't have the discipline to actually do it. Most people use their house as "saving" or investing.

In fact, if the government didn't back 30 year mortgages, housing prices would be much cheaper than they currently are and more people would be able to buy them without debt.

People talk about things that destroy societies, immorality, drugs, etc. Well debt is right up there. Debt destroys societies . . . . people who are in financial bondage are just as much in bondage as those who are in spiritual bondage.

The whole 2008 Great Recession was fueled by Debt, of course the government's answer to solve the debt problem is to get people to take on more debt. Eventually you can't squeeze blood from a turnip.

IMO, the absolute greatest evil in the world isn't drugs or immorality . . . . it is our financial system starting with the Federal Reserve. It is pure evil. If you ever want to know what the collapse of a monetary system can do to a society, just read When Money Dies.

And the Federal Reserve System will eventually cause the collapse of our monetary system. It may be in 5 years or 100, but it will happen.

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Buying a rental property in cash is not wise. That is because, rental properties receive monthly revenue. It doesn't matter, therefore, if the property is bought by loan because somebody else is paying that debt back. Putting cash on the property is tying down your liquid asset which drastically lowers your ability to get more properties. Here's another example - shorting a stock is basically using debt as a tool to gain money. You borrow against a particular stock, wait until the stock price falls, then pay it back - you end up paying less than you borrowed keeping liquid asset in your pocket.

What you are referring to is leverage. Leverage is awesome on the way up, but it is a punk on the way down. But ultimately it is a house of cards. A lot of people learned that lesson in '08. Looks like a lot of people will need to re-learn that lesson again.

You won't get rich quick buying properties for cash; but you never have to worry about a crash. If I have 100 properties leveraged and the rental market collapses I will very quickly go bankrupt. If I have 10 properties bought in cash and the market collapses I can sell one or two use it for living expenses and hold out until the market comes back.

And that is the thing no one thinks about; to use leverage properly you have to actually be able to be solvent during the bad times which requires capital. The old saying used to go that the only people who can get loans are those who don't need it, precisely for that reason.

For example, a 30 year mortgage is insane in today's economy. The embedded assumption with a 30 year mortgage is that inflation will eat away my payments so I should go out and get the maximum amount now. Right, so I'm going to be able to have a consistent job over the next 30 years? Okay, tell me another good one. Or that in 10 years my wages will be so much bigger making my payment today so much smaller. Okay great, except that all the interest is front-loaded so once my wages actually do increase (assuming I don't get laid off in that time-period), there is no incentive to actually pay down the loan because I'll be paying mostly principle. No in general, debt is a fool's game.

It can be used judiciously, but a wise plan must be put in place.

Edited by yjacket
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Economics is trust and if I don't know what you own or what I own, how can I trust that my money is actually what I thought it was. That is the problem with debt. Multiply that by trillions, then the foundation of who owes who becomes a question of fear once an institution collapses. Supposedly, banks are backed by governments, but its a pretty silly notion, considering that if the banks go, so does government.

I had a conversation with a friend a month or so ago and he was telling me how secure digital currency was and he got irritated with me when I laughed and said no currency is safe from fraud. A few weeks later, guess what, fraud and debt. Bonds, stocks, insurance, leverage, currency, dividends, consolidated debt, the latest idea from the stock exchanges in how to trade magic beans, is still all trust.

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