Why Liberty? A Mostly Economic Perspective

I have put off this post over the last few days, as i mulled over how I wanted to structure my thoughts and what exactly I wanted to write about. After some internal deliberation I decided that, rather than try and writing a long, thorough, and likely boring post, I would produce several short "Why Liberty?" pieces. I will write these as I feel inspired and right now I am inspired to consider liberty from a mostly economic perspective.

Why Liberty?

Economics teaches several lessons about the importance of liberty. Liberty, in the form of voluntary exchange and property rights, is the core of a working economy. An economy can only exist so far as individuals have the liberty to enter into voluntary exchange with one another. The more liberty is taken away from people the smaller the productive economy will be forced to be, the same goes for taxation as it is always a burden on the voluntary economy.

Liberty allows us to take advantage of our individual strengths and skills by specializing in an area where we have a comparative advantage. Liberty also enable us to pursue the areas which we most enjoy. So long as others are willing to reimburse us for our labor we can pursue any profession we please. Only a productive voluntary economy can sustain the massive entertainment and art industries to which we have become accustomed.

The price system is also a result of individual liberty and voluntary exchange. The price system is the fascinating mechanism that allows us to compare the values of billions of different products simultaneously. In the absence of liberty the price system can no longer share all the information which individuals need to make economic decisions. Wage and price controls distort the signals of a price system and inevitably cause distortions in an economy. These distortions direct funds into areas of the economy which are not sustainable, inevitably leading to unemployment, boom and bust cycles, and malinvestment which must eventually be liquidated. The current economic crisis is the result of the manipulation of interest rates, which communicate the time-preference of money in an economy,  and other economic interventions which distort the price system. 

Liberty is the cure our economy needs. The economic restructuring necessary after a period of price system distortion can only be accomplished by allowing the price system to resume functioning freely. The tragedy of this economic restructuring is not that some people will inevitably lose their jobs and see losses in their investment portfolios. The tragedy is that the economy was distorted in the first place and that politicians insist on making the day of reckoning even worse, by stealing away more and more liberty. The alternative to allowing liberty to resume is to continue to live in a distorted, lethargic, and unsustainable economy.  

We would be wise to choose liberty!