Freedom Still Works
Why Classical Liberalism Is the Answer to America’s Economic Confusion
Hello friends,
Inflation may have cooled from its peak, but prices remain painfully high. Housing affordability is collapsing in many parts of the country. Interest rates are elevated. Government debt is exploding to $40 trillion.
Trust in institutions is eroding. And both political parties increasingly seem more interested in managing the economy than trusting people to build prosperity themselves.
That should concern all of us.
Yesterday, I spoke to a stellar conservative group hosted by Tom Giovanetti’s Institute for Policy Innovation in Dallas about the history of classical liberalism and why its lessons matter now more than ever.
The conversation centered on a growing reality many Americans feel intuitively:
Government has become too large, too intrusive, and too comfortable controlling more parts of our lives.
Meanwhile, too many policymakers on both the left and right are embracing different versions of the same flawed idea: centralized control.
Some call it industrial policy.
Others call it economic nationalism.
Others call it national conservatism, post-liberalism, or populism.
But too often, they rely on the same progressive tools:
more tariffs, more subsidies, more mandates, more favoritism, more political management of the economy, and more government power over private decisions.
That is not the path to prosperity.
The answer is not replacing progressive management with conservative management.
The answer is restoring freedom.
Classical Liberalism Built the Modern World
Classical liberalism is the tradition of Adam Smith, Frederic Bastiat, Friedrich Hayek, Milton Friedman, and Thomas Sowell.
It is built on a few foundational ideas:
Private property
Free exchange
Limited government
Sound money
Entrepreneurship
Rule of law
Civil society
Personal responsibility
At its core, classical liberalism starts with a simple but powerful belief: People generally flourish best when they are free.
Free to work.
Free to build.
Free to exchange.
Free to innovate.
Free to fail.
Free to succeed.
That may sound obvious today, but historically it was revolutionary.
For most of human history, poverty was the normal condition of mankind. Economic mobility barely existed. Your birth largely determined your future.
Then societies increasingly embraced property rights, entrepreneurship, voluntary exchange, and constitutional limits on power.
The result transformed civilization.
According to long-run global data from the World Bank, extreme poverty collapsed from roughly 80 percent of humanity in the early 1800s to below 10 percent today.
That did not happen because governments centrally planned prosperity.
It happened because free people were allowed to solve problems.
Capitalism Is Moral, Not Just Efficient
One of the biggest mistakes defenders of capitalism make is defending it only in technical terms.
GDP.
Growth rates.
Productivity.
Those matter. But capitalism’s strongest case is moral.
Free-market capitalism decentralized power.
Before classical liberalism, economic and political power were concentrated among kings, aristocrats, or political elites. Opportunity was limited. Privilege dominated.
Capitalism changed that.
Not perfectly.
But dramatically.
Ordinary people gained the ability to own property, start businesses, accumulate savings, build wealth, support families, and improve their lives through voluntary exchange instead of political favoritism.
That matters because dignity requires freedom.
As Friedman once said: “Human freedom and human prosperity go hand in hand.”
History overwhelmingly supports that conclusion.
The Economy Is Warning Us
The latest economic data tell us something Washington and Wall Street do not want to admit: The economy is softer underneath the surface than many headlines suggest.
Recent GDP growth has remained sluggish relative to the enormous amount of fiscal and monetary stimulus injected into the system since 2020. Inflation remains above the Federal Reserve’s target. Labor force participation remains weak. Housing affordability continues deteriorating. And interest rates remain elevated because inflationary pressures never fully disappeared.
As I recently wrote in my Substack newsletter, “The Economy Is Telling You Something Wall Street Won’t”, many of today’s economic distortions stem from two core problems:
Government overspending
Federal Reserve monetary manipulation
During Covid, Congress spent trillions under both parties while the Federal Reserve massively expanded its balance sheet and held interest rates artificially low.
Too much money chased constrained supply.
Inflation followed.
That was not capitalism failing.
It was policy distortion.
As Friedman famously warned:
“Inflation is always and everywhere a monetary phenomenon.”
Once again, he was right.
The Dangerous Rise of “Buffering”
One of the defining characteristics of modern policymaking is what can be called “buffering.”
Whenever markets send painful signals, politicians increasingly try to buffer people from economic adjustment instead of fixing the underlying problem.
Housing expensive?
Subsidize demand.
College expensive?
Expand student loans.
Healthcare expensive?
Increase government payment systems.
Energy prices rise?
Blame producers and regulate them more.
Markets weaken?
Inject liquidity.
But buffering worsens the distortions underneath.
Subsidies without available supply raise prices.
Cheap money without productivity creates bubbles.
Persistent deficits crowd out private investment and weaken long-run growth.
You cannot permanently suspend economics.
And yet that is increasingly how both political parties operate.
The Right’s Identity Crisis
Many conservatives correctly recognize that progressive economics has failed.
But instead of returning to constitutional government and classical liberalism, some on the right are embracing mirror-image versions of progressivism.
National conservatives, post-liberals, and economic populists increasingly support:
Industrial policy
Protectionism
Tariffs
Government-directed investment
Expanded executive power
Pressure campaigns against private firms
That should worry everyone who values liberty.
Because once government gains the power to direct economic outcomes, the only remaining question becomes who controls the machinery of power.
Classical liberalism rejects that premise entirely.
It limits power itself.
Not merely who controls it.
Trump, Biden, and the Overspending Problem
President Trump’s first term included several important pro-growth victories in this order:
Deregulation
Tax reform
Stronger investment incentives
Expanded domestic energy production
I saw part of that firsthand while serving at the White House Office of Management and Budget during Trump 45.
But tariffs were still a mistake then and remain a mistake now.
Tariffs are taxes.
They raise prices, distort supply chains, reduce competition, and create uncertainty.
Then the Biden administration expanded government intervention even further through industrial policy subsidies, green-energy favoritism, student loan transfers, and continued deficit spending.
Both parties increasingly seem more comfortable managing capitalism than defending economic freedom.
That is a dangerous trend.
Texas Still Works Better—But Warning Signs Matter
Texas continues outperforming many states because it still allows more room for markets to function.
No personal income tax.
A strong energy sector.
Relatively lighter regulation.
More housing construction than many coastal states.
A more entrepreneurial culture overall.
People and capital continue moving to Texas because opportunity still exists here.
But Texas is not immune from bad policy.
Through my work with Americans for Tax Reform on state budget analysis across the country, one lesson consistently emerges:
Overspending eventually undermines growth.
When government spending grows faster than population growth plus inflation over long periods, taxpayers eventually get squeezed through:
Higher taxes
More fees
More debt
More government crowding out private investment
Texas Republicans often campaign like fiscal conservatives while growing budgets too quickly.
That disconnect matters.
If Texas wants to remain Texas, it must restrain spending, reduce property taxes through genuine budget discipline, expand housing supply, and preserve energy abundance.
Healthcare and AI Reveal the Same Lesson
Healthcare and artificial intelligence both illustrate the broader principle.
Healthcare is one of the most distorted sectors in the American economy. Third-party payment systems, subsidies, licensing restrictions, mandates, and government intervention dominate incentives. Then politicians blame “markets” for rising costs in a system government already heavily controls.
The answer is not more price controls.
It is more transparency, competition, innovation, and patient choice.
The same principle applies to AI.
America became the global technology leader because we embraced entrepreneurship, venture capital, private investment, and permissionless innovation.
If we regulate AI like Europe, we should expect European results:
slower growth, less innovation, and fewer breakthroughs.
The answer is not centralized planning.
It is preserving the conditions that allow innovation to flourish.
Freedom Still Works
Despite all the problems we face, I remain optimistic.
Because freedom still works.
Markets still coordinate better than centralized planners.
Entrepreneurs still create value.
Innovation still improves lives.
People still respond to incentives.
And free societies still outperform centralized systems over time.
America’s strength has never been government management.
America’s strength has always been free people solving problems.
That was true in Adam Smith’s time.
It was true in Milton Friedman’s time.
And despite all the noise today, it remains true now.
Three Key Takeaways for Policymakers
1. Overspending and Monetary Distortion Are the Core Economic Problems
Persistent deficits and Federal Reserve manipulation distorted prices, fueled inflation, weakened affordability, and slowed long-run growth.
2. Government Buffering Often Makes Problems Worse
Subsidizing demand while restricting supply creates higher prices, more distortions, and weaker economic signals.
3. Classical Liberalism Still Offers the Best Path Forward
Economic freedom, sound money, spending restraint, entrepreneurship, property rights, and limited government remain the strongest foundation for prosperity.
The evidence from history is overwhelming:
Freedom works.
And when government gets out of the way, people build things far greater than politicians could ever design.
Thank you for reading and sharing.
For more analysis and commentary, visit VanceGinn.com and geta paid subscription at Let People Prosper on Substack.