When we think of financial freedom, big dreams like being able to make life decisions without constraints come to mind. With financial freedom, we could choose a career we love without worrying about money. We could retire early, travel, and pay for higher education without anxiety.
Given the staggering levels of poverty and inequality in today’s world, this notion seems painfully obsolete or inadequate. Far too many people across the globe can barely meet their basic human needs. Their inability to access resources fundamental to health, nutrition and personal safety even as multinational corporations and their leaders thrive--thanks in part to the labor provided by these majorities and to the land they live on—translates into a situation where excessive inequality is, in fact, causing harm. As philosopher Immanuel Kant put it, because people depend on each other, the freedom of one person depends on the freedom of all other people. This is why excessive inequality and economic freedom, in principle, don’t match!
The latest Robinhood Investors Conference is in the books, and some hedge funds made an appearance at the conference. In a panel on hedge funds moderated by Maverick Capital's Lee Ainslie, Ricky Sandler of Eminence Capital, Gaurav Kapadia of XN and Glen Kacher of Light Street discussed their own hedge funds and various aspects of Read More
Modern liberalism and its thinkers provide us with a basis for this. It holds that all people enjoy the same freedom, and therefore a person’s freedom must be limited at the point where his or her freedom would restrict another person’s freedom. Milton Friedman writes that “freedom must be restricted in order to safeguard another person’s freedom.” (Friedman: Capitalism and Freedom, Piper, Munich 2006, p. 49).
Friedrich A. von Hayek echoed, “In order to be free from dictatorial influences, power must also be restricted” (Friedrich August von Hayek: The Road to Serfdom, Reader's Digest Edition in German, Friedrich-v.-Hayek-Institut Vienna 2004, p. 25). In the preface of his book The Road to Freedom it says, “Power is the opposite of freedom.” Most people would agree that too much power is illiberal and detrimental in every facet regardless of whether it is political, economic or sexual power. It is striking that “liberal” thinkers do not also hold this true for the concentration of economic power—for the concentration of private property, inheritances and corporations.
Society has no qualms about restricting power that could impinge on all sorts of personal freedoms. Laws give legitimacy to our expectations that:
- We should not touch other people in certain ways without their consent;
- We should not drive so fast as to endanger others;
- We cannot build houses that reach whatever towering heights we please, or in whatever location we please;
- We can run for certain political offices only one or two times.
Why, then, are there no rules governing the parameters of inequality?
Inequality has a large chain of further problems connected to it: poverty, marginalization, loss of equal opportunities, loss of participation in the political process, environmental destruction, financial instability, crime...Rules governing its parameters would go a long way toward protecting and better serving people everywhere. According to an international meta-study by authors Richard Wilkinson and Jane Pickett, countries with a lower degree of inequality are better off in almost all social indicators: teenage pregnancy, drug addiction, suicides, physical and mental health, obesity, and even life expectancy.
In their book The Spirit Level: Why Greater Equality Makes Societies Stronger (Penguin 2010), Wilkinson and Pickett write, “If the United States was to reduce its income inequality to something like the average of the four most equal of the rich countries (Japan, Norway, Sweden and Finland), the proportion of the population feeling they could trust others might rise by 75 percent—presumably with matching improvements in the quality of community life; rates of mental illness and obesity might similarly each be cut by almost two-thirds, teenage birth rates could be more than halved, prison populations might be reduced by 75 percent, and people could live longer while working the equivalent of two months less per year.”
True financial freedom -- that is, freedom for all not to be harmed by excessive inequality -- will come first and foremost from the democratization of the global monetary system. To accomplish this, we must make a concerted effort to stop treating money as a goal in and of itself and instead, restore its power to serve as a means and public good governed by citizens, an instrument of the economy and a facilitator of transactions and lives.
In my book Money: The New Rules of the Game, I propose, among other initiatives:
- Overhauling the monetary and financial system so that decisions are made by sovereign citizens through a representative voting process
- Creating central banks that are 100% public, with governing bodies composed of stakeholders from all sectors of society;
- Money being issued by these democratic central banks instead of by profit-oriented commercial banks; the gain of money creation would benefit the general public;
- Limiting inequality of income, private property, inheritances and the size of companies, capping the highest incomes at 10-fold or 20-fold the lowest incomes, for example.
Worldwide studies show that the sovereign citizens, if they had the chance, would allow inequality, but only up to a certain limit. An area in Switzerland has enacted a law that limits the income inequality in public banks with ten times the lowest incomes. The City of Portland now charges an extra profit tax on companies in which the highest incomes exceed 100 times the lowest ones.
Introducing feedback mechanisms in which citizens have a voice with regard to money’s role and uses will help bring the monetary system in line with the fundamental principles and values of democratic societies. Only then will we begin to see true financial freedom—for all.
About Christian Felber
Christian Felber is founder of The Economy For The Common Good based in Austria, a movement uniting over 10,000 supporters in 50 nations and backed by 2,300 companies whose mission is to eliminate the fundamental contradiction between business’ values and social well-being. He is the author of 15 books, including, most recently, Change Everything: Creating an Economy For The Common Good (Zed Books-UK, 2015; distributed in the U.S. by the University of Chicago Press). His book Money: The New Rules of The Game was awarded the 2014 getAbstract International Book Award.
An internationally renowned speaker, Christian has given TEDx talks in Brussels and Vienna, and has addressed, among his public talks in 25 countries, the UNDP in New York, the European Economic and Social Committee as well as the U.K.’s Royal Society For the Arts. He is a fellow at the Berlin based IASS think tank, an adjunct lecturer at the Vienna University of Applied Arts and is also a modern dancer.