Liberty Lost
BOOK REVIEW
As for the existence , or not , of an extensive welfare state in the United States , there are rigorous debates about regulation , taxation , stimulus and public policy . Swift is well equipped and seemingly eager to engage in those , but that would be a different book . The essential importance and utility of this book is the view through and across successive cycles . In the context of this book , imposing a perspective from one school of economics becomes a distraction .
It can also lead to inconsistencies . In discussing the Sub-Prime Mortgage Crisis ,
Swift states plainly that “ unregulated mortgage brokers fed the bubble with increasingly toxic loan instruments and subprime credits .” Then , just two paragraphs later , he writes “ the Federal Reserve and other financial regulators failed to apprehend the systemic threat these instruments and development created .” How can regulators be blamed for unregulated activities ?
This reviewer has heard Swift speak at several industry conferences . His reporting has been thorough and his analysis has been insightful , both at the micro- and macro-economic levels . A bit more of that savvy , and a little less supply-side orthodoxy , would have been welcome throughout this book .
Gregory DL Morris is an independent business journalist , principal of Enterprise & Industry Historic Research and an active member of the Museum ’ s editorial board .
Liberty Lost
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means of physical improvements to farms , mills , ships or shops or via one or more of the emerging classes of financial securities , continued to monitor their governments , especially the national one , for signs of both venality and weakness . Where some — typically Democrat-Republicans — thought they saw impending tyranny , others — typically Federalists — perceived a national government that was still dangerously feeble .
Tax rebellions in Pennsylvania were handled convincingly , with efficient troop mobilizations followed by arrests , convictions and presidential pardons . Those episodes , combined with military victories against the Indians , proved that the new regime was much more energetic than the previous one and the Democrat- Republican victory in 1800 showed that the franchise was an effective check against federal government overreach , like the infamous Alien and Sedition Acts . Finally , the Supreme Court in Marbury v . Madison and other decisions demonstrated its independence from the other two branches of government , if not yet establishing judicial review in its modern form .
George Washington ’ s 1796 farewell address exemplified the balance between energy and self-restraint believed to represent the key to unlocking good government . First , Washington explained that he was not seeking a third term as President and that he had acceded to a second term only due to the “ perplexed and critical posture of our affairs with foreign nations , and the unanimous advice of persons entitled to my confidence .” The Constitution did not then contain a presidential term limit , but Washington set a precedent of two terms per person that remained in place until Franklin Roosevelt leveraged New Deal spending and the war in Europe to win a third term in 1940 . Washington then deliberately downplayed the sectional ( both North – South and East – West ) and cultural differences that threatened to enfeeble the new nation . To be “ American ,” whether by “ birth or choice ,” was to uphold the national government as a powerful but beneficent “ palladium ” of Americans ’ “ political safety and prosperity .”
Drafted by Hamilton , the address characterized the nation as one that united “ security with energy .” It was militarily powerful but peaceful , endowed with a government that sought to “ cultivate peace and harmony with all ” for moral , religious , geopolitical and economic reasons . Prosperity stemmed from production and trade , not war , because , as Thomas Paine also explained , “ the materials of manufacturers and commerce in various and distant parts of a nation and of the world … cannot be procured by war so cheaply or so commodiously as by commerce .”
Freed from large military expenses , the government did not have to “ burden … posterity ” with a debt that might , with the aid of “ a small but artful and enterprising minority of the community ,” lead to a
“ frightful despotism ” that could degenerate into “ the absolute power of an individual ” erected upon the “ ruins of public liberty .”
Washington then reminded Americans of the importance of maintaining a proper separation of powers within the government , of , in other words , “ the necessity of reciprocal checks in the exercise of political power , by dividing and distributing it into different depositaries , and constituting each the guardian of the public weal against invasions by the others .”
Clearly , then , the founders believed they had created “ a government of as much vigor as is consistent with the perfect security of liberty ,” or in other words a government that protected Americans ’ rights triad from threats foreign and domestic , including the government itself , at minimal cost . Three independent sources of data — net population flows , government bond prices and relative rates of corporation formation — prove that they were right .
Robert E . Wright is Senior Faculty Fellow at the American Institute for Economic Research and has served on the Financial History editorial board since 2008 . He is the author or co-author of more than 20 books , including Liberty Lost : The Rise and Demise of Voluntary Association in America Since Its Founding ( AIER , September 2023 ), from which this article has been adapted .
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