The Tide Is Turning – Reclaiming Freedom Through Constitutional Limits
The final and culminating argument of Free to Choose is both a hopeful diagnosis of the present and a radical prescription for the future. The Friedmans contend that the intellectual and popular tide that has for fifty years favored ever-bigger government—the philosophy of the New Deal and the welfare state—is finally turning. A widespread and growing disillusionment with the failures of government has created a historic opportunity to change course.
However, this change will not happen on its own. The political system as it is currently structured contains a fundamental, self-perpetuating bias toward expanding government and serving powerful special interests at the expense of the general public. Simply electing “better” people or fighting legislative battles one by one is a losing game, like trying to slay a many-headed hydra.
The only effective and lasting way to reverse the trend, they argue, is to change the fundamental rules of the political game. The solution is to enact a set of constitutional amendments—an “Economic Bill of Rights”—that would impose clear and binding limits on the power of government, particularly in the economic sphere. This is not just a policy proposal; it is a call to fundamentally restructure our political institutions to protect individual liberty from the tyranny of the state, just as the original Bill of Rights was designed to do.
Part 1: The Observation – A Turning Tide of Public Opinion
The book’s final argument begins with an optimistic observation: the long-dominant faith in government as the solution to all social and economic problems is collapsing. For decades, the intellectual consensus in the West, from Fabian socialism in Britain to New Deal liberalism in the United States, held that an activist, interventionist state was the engine of progress and justice. This intellectual climate shaped the thinking of leaders and the public alike, making the growth of government seem both desirable and inevitable.
The Friedmans assert that this tide has crested. The reason is simple and undeniable: the patent failure of government programs to achieve their goals. The public no longer needs to read theoretical critiques of big government; they are living with its consequences every day. They experience firsthand:
- Rampant Inflation: The hidden tax that erodes savings and destabilizes the economy, which, as argued previously, is a direct result of government monetary policy.
- Crushing Tax Burdens: The visible taxes that consume an ever-larger share of family incomes, not to produce better services, but to feed a seemingly insatiable bureaucracy.
- The Inefficiency of Government Services: The stark contrast between the dynamism and quality of the private sector (supermarkets, consumer electronics) and the stagnation and poor service of government monopolies (the post office, inner-city schools).
- The Welfare Mess: The cycle of dependency, the erosion of the family, and the staggering cost of programs that have failed to eliminate poverty.
- The Tyranny of Bureaucracy: The blizzard of incomprehensible regulations, the arrogance of unelected officials, and the sense that individual lives are being controlled by a distant and unaccountable power.
This dissatisfaction is no longer a fringe opinion. It has become a powerful political force, evidenced by the “tax revolt” sweeping the United States (symbolized by California’s Proposition 13), the election of Margaret Thatcher in Britain on a platform to reverse socialism, and the turn toward market-oriented policies in countries like France. This popular reaction, the Friedmans believe, represents a profound shift in the intellectual and political climate, creating a rare window of opportunity for fundamental change.
Part 2: The Diagnosis – Why Special Interests Prevail
If the majority of people are unhappy with big government, why does it keep growing? Why do bad policies persist even in a democracy? The Friedmans’ answer to this crucial question lies in what they call the “invisible hand in politics,” which works in precisely the opposite direction of Adam Smith’s famous invisible hand in economics. While in the market, individuals pursuing their own interest are led to promote the public good, in the political process, individuals who may sincerely believe they are pursuing the public good are led by an invisible hand to promote narrow, special interests.
This perverse outcome is the result of a fundamental structural flaw in our legislative process: the asymmetry between concentrated benefits and diffuse costs.
Let’s take a clear example, such as a government subsidy for a particular industry, say, the merchant marine.
- The Benefits are highly concentrated on a small, easily identifiable group: the ship owners, operators, and unionized sailors. For these few thousand people, the subsidy is a matter of millions of dollars—their profits, their jobs, their entire livelihood. They have an enormous incentive to organize, to lobby Congress, to make campaign contributions, and to work tirelessly to secure and maintain this subsidy.
- The Costs, on the other hand, are spread thinly across the entire population of over 200 million taxpayers. The cost per person might be only a few dollars a year. For the individual taxpayer, this amount is almost invisible. It is not worth their time to even become informed about the issue, let alone to organize a political campaign to oppose it. The cost of fighting the measure would far exceed the personal benefit of defeating it.
In this unequal political battle, the concentrated special interest will almost always win against the diffuse general interest. Congress does not operate by weighing the true total costs against the true total benefits. It responds to political pressure. The intense, focused pressure from the small group that stands to gain will invariably outweigh the weak, disorganized, and largely silent opposition from the millions who will each pay a small price.
Our entire political system has become a marketplace for these special interests. A legislator gets elected not by serving an abstract “general interest,” but by assembling a “logrolling” coalition of special interests. He or she will promise to support the sugar farmers’ price supports, in exchange for the steelworkers’ union’s support for tariffs, in exchange for the local community’s support for a new federal building. Each group gets its special favor, and the bill for all of them is sent to the anonymous, unorganized taxpayer. The result is a government that is on all sides of almost every issue—subsidizing tobacco farmers with one hand while funding anti-smoking campaigns with the other—and a budget that grows uncontrollably as more and more special interests get their piece of the pie.
This problem is massively compounded by the growth of a permanent government bureaucracy. Bureaucrats themselves become one of the most powerful special interests, dedicated to expanding their own budgets, power, and job security. They are unelected and largely insulated from public control. They are the ones who write the detailed regulations that give laws their real-world impact, and they are masters at using the machinery of government to serve their own institutional interests and ideological preferences, often in defiance of the public’s will.
Part 3: The Prescription – An Economic Bill of Rights
If the problem is systemic, the solution cannot be to simply fight each special interest battle one at a time. That is a game of political whack-a-mole that the general interest is guaranteed to lose. The only lasting solution is to change the rules of the game itself, to place certain actions and powers beyond the reach of the government altogether. This is the logic behind the original Bill of Rights, and it is the logic the Friedmans apply to the economic sphere.
The genius of the First Amendment, for example, is that it does not allow us to decide on a case-by-case basis whether a particular group’s speech should be allowed. It establishes a general, overriding principle: “Congress shall make no law…abridging the freedom of speech.” We accept this because each of us, recognizing that we may one day be in an unpopular minority, values the protection of our own freedom more than we value the power to suppress others.
The Friedmans call for a similar set of self-denying ordinances for economic policy, enacted as a series of constitutional amendments. The purpose of this “Economic Bill of Rights” is to create a binding framework that limits what the political process can do. It would fundamentally alter the political dynamic. Instead of colluding to make the economic pie available for political distribution larger, the special interests would be forced to compete with one another for a share of a strictly limited pie.
They propose several specific amendments as a starting point for public debate:
- A Spending and Tax Limitation Amendment: This is the cornerstone of their proposal. It would limit the total spending of the federal government to a fixed, and gradually declining, percentage of national income. This would force Congress to operate within a hard budget constraint, just as families and businesses must. It would change the entire political conversation from “What good cause can we spend more money on?” to “Given our limited budget, which of these many good causes is the highest priority?”
- A Free Trade Amendment: A simple, powerful clause prohibiting Congress from laying any duties on imports or exports. This would take the power to grant protectionist favors off the table entirely.
- A No-Price-Controls Amendment: An economic equivalent of the First Amendment, establishing the right of people to buy and sell goods and services at mutually acceptable terms without government interference.
- An Occupational Freedom Amendment: A prohibition on laws that abridge the right of any citizen to follow a profession of their choice, striking at the heart of government-mandated licensure as a tool for creating cartels.
- A Tax Reform (Flat Tax) Amendment: To replace the current complex, loophole-ridden, and punitive progressive income tax with a simple, low-rate flat tax on all income above a personal allowance. This is seen as the only way to achieve genuine tax reform, as it would require a constitutional bargain that neither side could later renege on through the legislative process.
- A Sound Money Amendment: A requirement that the monetary authorities keep the growth of the money supply within a narrow, fixed range (e.g., 3-5% per year). This would take the printing press away from the politicians and provide a constitutional anchor for a stable currency, ending inflation.
- An Inflation-Proofing (Indexing) Amendment: As a fallback, an amendment requiring all government contracts, tax brackets, and bonds to be automatically adjusted for inflation. This would not cure inflation, but it would remove the government’s hidden incentive to create it, since it would no longer profit from the stealth tax of bracket creep or the repudiation of its debt.
The process of debating and enacting such amendments would itself be a crucial part of the solution. It would force a national conversation about the proper role of government, educating the public and solidifying the shift in the climate of opinion. Furthermore, the constitutional amendment process, which requires broad supermajorities and ratification by the states, is a far more democratic mechanism that is less susceptible to capture by the Washington-based special interests that dominate the ordinary legislative process.
Conclusion: The Choice Remains Ours
The book concludes by returning to its title theme. The United States has strayed far from the principles of economic and personal liberty upon which it was founded. We have been persuaded to grant ever more power to government for what seemed like good purposes, forgetting the fundamental truth that the concentration of power is the greatest threat to freedom.
Fortunately, the disastrous results of this experiment with big government are becoming clear to all. We are waking up. The tide of opinion is turning. We are, as a people, still free to choose our future. The choice is stark: we can continue down the current road toward bigger government, higher taxes, more inflation, and less freedom, which leads ultimately to a collectivist “road to serfdom.” Or, we can consciously choose to change direction, to reclaim our heritage by imposing constitutional limits on our government, and to once again unleash the creative power of free individuals cooperating in a free market. The future is not preordained. The choice is ours.