Whether you are new to Congress or have weathered many a political campaign welcome (back) to Washington. I too have recently taken on a new role as the president of the Competitive Enterprise Institute. I trust we are wise to remember, however, that our respective new (or renewed) roles are nothing more than a transfer of a precious intellectual inheritance. We all should be focused on implementing the legacy of centuries of ideas about how individual and economic liberty combined with limited public institutions improve human dignity, from Adam Smith to the U.S. Founders to Lord Acton to F. A. Hayek and many others.
To put ideas into action, CEI has always been more than “just a think tank.” Instead, we take a full-service approach to public policy— combining rigorous policy work with an activist’s ability to market, educate, and propagate our research findings and principles. We at CEI are always willing to explain, to anyone who will listen why economic liberty make us all better off, but we do not stop there. We are committed to being honest idea brokers. We are eager to engage, build coalitions, file Freedom of Information Act requests, broadcast our message near and far, and, when necessary, sue to ensure our economic future remains grounded in these timeless principles.
Many agree on the importance of free enterprise, but perceptions vary on what exactly it is. Some think it is a system about money and how to make it—a method for how to foresee the ups and downs of Wall Street, the movement of interest rates, or the right time to buy a house. These are woefully inadequate and shallow understandings of the idea, but unfortunately they are widespread. Thus, it is no surprise that many think “market perspectives” are of little help to policy makers as they wrestle with real and challenging problems.
CEI views markets not as an ideology or a set of specific policy prescriptions, but as a tool for understanding the world. Money does not need be involved to make a decision be “economic.” The free enterprise way of thinking helps us to understand what happens whenever people make choices in pursuit of goals. When we apply it this way, it becomes very effective in exploring how the world works. A central insight we gain from free enterprise is that the world is enormously complex and interconnected. We believe that markets are a key form of this interconnectedness that is not only crucial to the functioning of a modern economy, but that enables us to understand what is not always obvious.
We are not naïve, however. We also understand that political discourse often focuses on what is visible and immediate. This can create conflicts between the economically sensible and the politically fashionable. Consequently, I am pleased to present Avoiding the Regulatory Cliff: A Bipartisan Agenda to Restore Limited Government and Revive America’s Economy. In this document, CEI policy experts have created concrete, achievable proposals to liberate the creative energies of American entrepreneurs, companies, and workers.
Our compendium highlights four important lessons.
The first is that markets are dynamic. Contrary to textbook models, real-world markets are not static, predictable, or perfectly efficient—like machines. Rather, they are dynamic, unpredictable, and self-organizing—like organisms.
The second lesson is that markets encourage experimentation, and through trial-and-error, innovations produce progress. Markets lead to economic progress because they encourage and test on-the-spot experimentation among millions of individuals. From this decentralized trial-and-error process come innovations and coordination that no single mind could have planned.
The third lesson is when altering rules of the game, be aware of “unseen” consequences. The institutions governing markets are crucial. Given that markets are so complex and ever changing, and given that people respond to incentives created by institutions, minor changes in market institutions can have far-reaching effects— both positive and negative—that are difficult to see and even harder to predict.
The fourth lesson is act like market-growing gardeners, not blueprint-writing engineers. Public policies that pick winners or prescribe one-best-way solutions will tend to freeze markets and reduce innovation. The better role for public policy is to ensure underlying rules of the game that (a) maintain the openness and dynamism of already-established markets; and (b) encourage the evolution of decentralized, self-organizing markets where they do not yet exist.
On a personal level, “Free enterprise” is just another phrase for what I call the “freedom to prosper.” And, as Adam Smith knew well, material prosperity is only a means to an end. The question is: To what end? Some pursue wealth to stockpile villas and private planes. Some start charities to fight sex trafficking and cure AIDS. Along the way one creates new jobs for thousands, another soothes shattered souls. We who advocate economic liberty recognize these endeavors as the choices that free individuals make to realize their dreams and all are necessary to improving the human condition. And by doing so, we contribute to a more dynamic and innovated American economy.
Promoting this freedom to prosper should be Congress’s top priority for the next four years—and beyond. CEI stands ready to be a resource to you to help make this a reality.