In the “Wealth of Nations”, Adam Smith believed that a successful nation’s free market will be guided by “an invisible hand”. In studying Adam Smith’s economic philosophies, the Founding Fathers of the United States kept the government out of the free market by writing no laws and regulations restricting any aspect of the market within the country. They knew that if they let this “invisible hand” run its course, the newly formed American economy would flourish. With nothing to hold them back, the Patriots of the country could specialize in anything of their choosing, develop a niche market and become a staple in their communities for their trade. The “specialists” would prosper, as would the others in their respective trades, thus developing a strong, sustainable, wealthy community that would later become a shining example for capitalism and free markets around the world.

Thus was the economic principle of a majority of the Founding Fathers. Alex Hamilton, who was also present at the Constitutional Convention, disagreed. Speaking just blocks from Wall Street on Thursday, in an attempt to finally lay out his economic plan in comparison to the other candidates, Barack Obama attempted to channel Alex Hamilton and describe why Adam Smith’s market guided by the “invisible hand” can no longer work in America, and why our economy is failing. The economy that made America a “shining City on a Hill”, envisioned by John Winthrop, and finally cultivated by Ronald Reagan, is not good enough for Barack Obama. The “invisible hand” is not good enough.

Again channeling Hamilton, Obama pointed out that the government should play in important role in the economy by encouraging manufacturing and infrastructure. “Free market was never meant to be a free license to take whatever you want, whenever you can get it.” said Obama Thursday. Freedom in the philosophical sense is defined as “the power to exercise choice and make decisions without constraint from within or without; autonomy; self-determination”. So a “free” market IS meant to get whatever you want, whenever you want it.

Not everybody makes the right decision all the time, but we learn from our mistakes. As children, our parents can tell us a stove is hot, but we don’t believe them until we get burned. They tell us not to wrestle outside with our friends, but we don’t stop until we break our arm. They can shield us however much they want, but ultimately, by human nature, we learn by mistakes. There are several million people who have made bad financial decisions recently. Granted many were encouraged to do so by enticing products and services, however they were not forced. No matter how often someone may tell you something is a bad decision, it is human nature to see for yourself and learn from the consequences.

The current state of our economy is a correction, a learning curve if you will. Many of us have made bad financial decisions. The average rate of personal savings for 2007, according to a study by the U.S. Department of Commerce, was 0.43%. So, with a median income of around $48,000, that means on average, consumers saved $206 last year. That is the largest indicator that we are not making sound financial decisions - we are not saving anything! However, Obama and other Democratic thinkers feel that if the government can step in and shield us from ourselves, the economy can avoid a state of “bubbles and bursts” and get to a system of “steady growth”. Nothing is wrong with steady growth, it is shielding us from ourselves that goes against the idea of freedom.

Obama stated that government needs to protect consumers from their excesses, that they should regulate institutions more to protect the consumer, and that, and I quote, “…if we can extend a hand to banks on Wall St. who are in trouble, we can extend one to Americans who are in trouble by no fault of their own.” The housing crisis, as I said before, is a well needed correction, and many economists agree. This is a free country, and consumers were not forced to sign for a bad loan, or buy a $500,000 that they could afford only because they received a temporary rate of 1%. What, honestly, did they expect to happen? For Obama to say that consumers are hurting “by no fault of their own” is an outright lie.

A free market should be just that - a free market. We need to learn from our mistakes, take freedom in its ups and downs and deal with the consequences, or else we are bound to repeat ourselves. This exact scenario happened in the 1920’s. I wrote a thesis paper on the causes of the Great Depression, and it scares me how exactly similar it is to today when I look back on my writings. However the government stepped in and attempted to bail us all out and implement regulations to keep us from ever having to suffer a consequence again. This false sense of security that the government has it all under control is raining down on us once again, so why let the government have even more control, and repeat the cycle all over? Obama feels the government should regulate and control every aspect of consumer spending and industry to keep us from our excesses, and ultimately our successes and fortunes. Maybe I’m wrong, but this is eerily similar to the economic philosophies of the former Soviet Union and the National Socialist Party of Germany, and we have seen how all of those have turned out.

I have actually only covered about 5 minutes of Obama’s speech, his understatements, his economic plans to shield us from freedom and excesses and his new Communist Manifesto for America in 2008. To read more, please subscribe to our newsletter!

You can view all of Obama’s speech here

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