Michael Novak: I’m Michael Novak, the Jewett Chair at the American Enterprise Institute, Washington DC.
Question: Does the free market corrode moral character?
Michael Novak: It’s a two side of the answer I want to give. No, commerce does not corrupt morals. On the country, it strengthens morals better than the alternatives. In Eastern Europe, people have discovered in the ship from socialism that a more creative and dynamic economy requires more of them, requires more sacrifice, more initiative, more foresight, harder work. It makes higher moral demands, it demands more respect for law. And this is the sort of thing with the founders that anticipated and wrote about. Commerce has a couple of other values. It’s intimately the linked to law; it can’t function. You can't send trading ships across the world to the far side of the world without contracts ready to be of service, too big an expense. Commerce and law go together.
Commerce also tends to strengthen patience, the ability to live with small gains. Britain in the 19th century had on average about 1.5% growth a year and that was the first breakthrough in progress, what we call modern progress, economic progress. And daily wages and daily welfare increased by something like 1600% in the course of that 100 years.
The downside is what Lincoln called—the Abraham Lincoln called the silent artillery of time. What early generation sacrificed for and had vision for, had worked for, and they worked too hard to enjoy much of it, their children try to emulate what their grandchildren often want to get away from. Here different music on the wind and prefer not to work so hard, prefer not to strict the life, not so demanding in life, prefer a more enjoyable, freer life, and there comes in the wake of all that very quickly a kind of decadence in society, a decline in foresight, willingness to work, concern about the future rather than the present, and it’s what Daniel Bell calls The Cultural Contradictions of Capitalism. Its very success makes young people take it all for granted and be willing to throw it away, trade it too cheaply.
Question: Do you think the economic crisis will worsen?
Michael Novak: If this localized, as I said, it’s a very small proportion, trouble is it’s mixed in to the derivatives and other bundling effects that are sort of too bright, that is the traders and—well, Wall Street, they are much too bright for their own good and for the good of the country. And now, it’s very hard to locate where those bad mortgages are. They’re bundled with other things. This may pass very quickly. It’s a terrific investment opportunity. I don’t know when the bottom will be reached, but on the way down and as far down as we’ve come, it’s amazing the values that are available if people have any cash.
Question: Can free markets help prevent war?
Michael Novak: The great danger that we face and we learned was international forum of terrorism not identified with the state but linked to states. That is to say we didn’t have a clear enemy to face. There wasn’t anyone placed to threaten as we have done in the mutual shore destruction in the getting through the long, difficult cold war period. And one reason for that is there are enormous numbers of young males in Arab societies particularly and in Muslim societies around the world who have no place to go for jobs, even if they have education as many of the bombers of September 11, 2001 had masters degrees and other degrees. They weren’t underprivileged at all.
But there were so few opportunities for them. Therefore, it seemed to me early on that the best thing that could happen is if somewhere in the Middle East the, the most unsettled part of the world with an enormous amount of suffering over the last 50 years, almost everybody there living under the most—well, not the most extreme but under extreme forms of tyranny from religious police, as well as security police and the secret police, would be if somehow in that part of the world the movement got started toward more commercial republics. Those countries have always been good in commerce, but getting commerce free from the state undirected by the state of the theocracy and getting the presence of the democratic institutions and above all, the protection of rights going could result into societies with much more to offer to their young people, creative things to do, not a destructive revolution bent on tearing down other societies. So that seemed to me to be the really creative direction to take and there is a good chance this may come off in Iraq. There's a chance it may not, but it was an opportunity.
I argued right from the very beginning that maybe there was a 40% chance of succeeding, but 40% was too high a possibility to waste. We have to get the momentum going in a different direction in that part of Iraq.
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