The Influence of American Values

A QUARTERLY MESSAGE ON LIBERTY

SUMMER 2014VOLUME12NUMBER3

Thank you for inviting me here today to speak

about a few topics dear to my Soviet-born

heart: individual freedom, limited govern-

ment, and traditional American values. If only

my die-hard Communist grandfather could see me now!

In his 1962 book Capitalism and Freedom, Milton Friedman

wrote, “History suggests that capitalism is a necessary condi-

tion for political freedom. Clearly it is not a sufficient condi-

tion.” That is, we must still fight for human rights and that fight

must be fought on principles.

With that in mind, I want to begin by congratulating the

winner of the 2014 Milton Friedman Prize for Advancing

Liberty, Leszek Balcerowicz.

GARRY KASPAROV

GARRYKASPAROV, FORMERWORLDCHESSCHAMPION, ISCHAIRMANOFTHEHUMANRIGHTSFOUNDATIONANDAGLOBALADVOCATEOFLIBERTY. HEGAVETHEKEYNOTEADDRESSATTHE2014MILTONFRIEDMANPRIZEFORADVANC-INGLIBERTYBIENNIALDINNER INMAY.

The Influence of American Values

2 • Cato’s Letter SUMMER 2014

Very much thanks tohim, Poland has become the successstory that givesVladimir Putin night-

mares—and for that I personallythank him! If it can happen in Polandit can happen in Ukraine, and thatwould be an unacceptable role modelfor Putin. If only the West’s currentleadership supported Ukraine as pas-sionately as Ronald Reagan and Mar-garet Thatcher supported the PolishSolidarity movement. Sometimes Ijoke that if guys like Barack Obamaand David Cameron had been inpower in the 1980s, I would still beplaying chess for the Soviet Union.

Like probably half the people in

this room, I’m currently working ona book project I never have time tofinish. Its central theme is the shift inAmerican values over the past fourdecades. Ronald Reagan’s shiningbeacon on a hill of my Soviet youthhas moved away from the freedomagenda, both domestically and inter-nationally. The traditional Americanvalues of liberty, sacrifice, risk-tak-ing, and even faith have declined. On

the rise are safety over risk, equalityover excellence, comfort over sacri-fice, and hyper-partisanship thatfights harder and harder for smallerpieces of a smaller pie.

The working title of my manu-script is a little shocking to some: Un-American. But it is perfectly accurate.I am myself literally un-American.Although, I like to say that I wasborn in the Deep South, right next toGeorgia. . . . The Deep South of theUSSR, in Baku, the capital city ofAzerbaijan, right next to the Repub-lic of Georgia.

But the title Un-American alsocomes directly from the dictionary:“adjective; not characteristic of orconsistent with American customs,

principles, or traditions.”And in my opinion there ismuch about the America of2014 that fits that descriptionfar too well. This is a tragedynot only for Americans, butfor the entire world that hasdepended on, and learnedfrom, the United States—itseconomy, its military, itstechnology, its moral leader-ship—for over a century.

It is no coincidence thatthis rise of un-American val-

ues has been accompanied by a risein global criticism of the UnitedStates and the system that made it sosuccessful.

By “system” I do not meandemocracy, although the rise ofChina and the arrogance of dictatorslike Putin and Assad has allowed thesuperiority of democracy to be ques-tioned. An even more dangerousdelusion is the increasing attack on

It is no coincidence that this rise of un-American values hasbeen accompanied by arise in global criticism ofwhat made the UnitedStates so successful.

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SUMMER 2014 Cato’s Letter • 3

the free market concept it-self, an attack on the princi-ples of capitalism that havecreated our unprecedentedstandard of living.

On one hand, the criticsare correct. It is important totalk of the ills of society.Many have forgotten that theAmerican Dream was notsimply to get rich. Immi-grants didn’t come becausethey thought the streets here werepaved with gold. The AmericanDream was for your children to havea better life. The immigrants camebecause in America they would be re-warded for their hard work. And ifthey got rich in the process, well, thatwas okay too!

In recent years the attacks on cap-italism have increased as inequalityhas increased. It is a logical correla-tion, but also a false rationale.Thomas Piketty’s book, Capital inthe 21st Century, has become that rareeconomics bestseller, although I’mnot sure many of the buyers are actu-ally reading it. But capitalism has notfailed us; we have failed capitalism.

I’m afraid my memory is not pho-tographic as some of the legendsabout me say, but I am sure I wouldremember if the works of AdamSmith included the phrase, “too bigto fail.” When the state steps in, de-ciding which companies live or die,things have gone terribly wrong. If abankrupt small business in SouthCarolina can go belly up, so mustGeneral Motors, so must GoldmanSachs. Much of the conservative con-versation about the government isabout making it smaller. But size isn’t

everything. A small government canstill be dangerously interventionist.Limiting the government’s powershould come before worrying aboutits size.

When you base your policies onprinciples there is no room for “but.”“We believe in the free market but . . . ”That’s trouble. Rising inequality is acritical problem today, and it comesfrom decades of moving away fromthe principles of excellence that hadcreated the richest society in historyby the end of the 1960s.Trying to re-pair the damage of nearly two gener-ations of value shift with policiesthat attempt to enforce equality willonly make things worse. Trust me, Iam from a place where everyone wassupposed to be equal, or else, and itwasn’t as nice as some of today’s lib-eral commentators seem to think itwould be.

As someone who looked at Amer-ica through the Iron Curtain I havestrong feelings about the relation-ship between the importance of free-dom at home and caring about free-dom globally.

Ronald Reagan had two thingsmore recent free world leaders lack:principles and the credibility only

As someone who looked at Americathrough the Iron Curtain I have strongfeelings about the importance of freedomat home and globally.

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principles can provide. The ColdWar was not won just because ofAmerican technology or the disas-trous Communist economy. It wasalso values, what the whole worldcalls—or used to call—American val-ues. For those of us behind the IronCurtain, we knew people outsidegenuinely cared, that we were notalone, that Americans believed indi-vidual liberty was for all, not justthose lucky enough to be born into

it. Is that true today? Reagan saidthat “freedom is never more thanone generation away from extinc-tion.” We cannot take it for granted.

Let us turn to a more academicnote for a moment. Think of threefundamental documents that estab-lished in writing our definitions ofmodern civil society. The EnglishBill of Rights in 1689. The AmericanDeclaration of Independence in 1776.

And the French Declaration of theRights of Man in 1789. So, how manytimes is the word “democracy” men-tioned in them? The answer is zero.The method by which leaders werechosen was not yet a relevant issue.The fundamental rights that definedthe relationship between the govern-ment and the people, that is whatmattered. The right to opportunity.The right for the government only toprotect, not to promote. And that isstill true today. Individual freedom isthe basis for the free market systemof all successful economies.

Risk, excellence, sacrifice, faith,unity. American values that weregood for the world and good for theAmerican economy. Not coinciden-tally, these are also the values of inno-vation and entrepreneurialism, ofnew technologies, new industries,and new jobs. Since roughly 1970,there has been a shift away fromthose values and toward their oppo-sites. A shift toward security, equiva-lence, comfort, cynicism, hyper-par-tisanship.

In the span of one generation theworld’s greatest entrepreneurs andcapitalists convinced themselvesthat there could be reward withoutrisk. It is time to wake up from thisdangerous delusion, built on a moun-tain of debt. It is time to dream againof exploration and excellence andeverything else that made, andmakes, America great.

In 1980 Milton Friedman said,“Society doesn’t have values. Peoplehave values.” Yes, and we must talk topeople about these principles of free-dom—work with people and notagainst them, not even for them—to



rediscover the values of bigchallenges, of seeking new op-portunities, of doing thingsbecause they are hard. It is, orshould be considered, un-American, anti-capitalist, andanti-democratic to expect agovernment or employer orany other institution to takecare of you beyond physicalsecurity and maintaining alevel playing field.

For the government toget out of the way, the peo-ple have to demand it. Aiming high,believing in yourself and the powerof your desires to change the world isan essential part of citizenship in ademocracy, especially the greatestone of all. The best way for Americato thrive and to lead is for it to onceagain serve as a model of how suc-cessful a nation can be when the gov-ernment stays out of the dreams ofits people.

Thinking short-term, thinking

about the next poll or the next elec-tion or the next term, has very strictlimits. It can work tactically some-times, but will fail strategically. BarryGoldwater lost terribly in 1964, butthe ideas of his campaign laid thefoundation for the Reagan Revolu-tion. At some point you have to runon principles not just policies andsound bites. You have to run on thefuture of the country, and the futureof the world.n

“The best way forAmerica to lead is for it to once again serve as a model of how suc-cessful a nation can bewhen the governmentstays out of the dreamsof its people.

“—GEORGE WILL,writing in theWashington Post

Now the nation no longer lacks what it has longneeded, a slender book that lucidly explains theintensity of conservatism’s disagreements withprogressivism. For the many Americans whoare puzzled and dismayed by the heatedness of political argument today, the message ofTimothy Sandefur’sThe Conscience of the Constitution: The Declaration of Independenceand the Right to Liberty is this: The temperatureof today’s politics is commensurate to the stakes of today’s argument.

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HARDBACK $24.95 • EBOOK $12.99AVAILABLE NOW AT CATO.ORG/STORE AND BOOKSTORES NATIONWIDE

N E W F R O M T H E C A T O I N S T I T U T E


Nicole Kaeding is a budget analyst for the Cato Institute fo-cused on federal and state spending policy. Previously, shewas the state policy manager for Americans for ProsperityFoundation (AFPF), where she oversaw the organization’s ac-tivities in 34 states. Before that, Nicole was a manager andbank officer at Fifth Third Bancorp and a financial adviserat American Express. She graduated from Miami Universitywith bachelor’s degrees in finance and political science andholds a master’s degree in economics from DePaul University.

cato scholar profile

Nicole Kaeding

WHAT DREW YOU TO CATO?

I was introduced to Cato while in graduateschool; a study on immigration policy was re-quired reading. Suddenly, I needed to readeverything that Cato produced. It became mysource for current, up-to-date libertarian analy-sis. I knew even then that I wanted to workhere at some point during my career. Cato poli-cy papers and conversations with scholars in-formed my policy analysis at AFPF. Again andagain, the strength of the Institute’s researchand scholars exceeded my expectations.

WHY ARE TRANSPORTATION PROJECTSSO NOTORIOUS FOR RUNNING OVERBUDGET?The U.S. government spends more on high-ways and transit than it collects in fuel tax rev-enue, which has depleted the Highway TrustFund. Cost overruns are a large driver of thisimbalance. One 2003 study examined 258 largetransportation projects across Europe andNorth America. Eighty-six percent of projectswent over budget, with an average cost overrunof 28 percent.

In the United States, cost overruns are part-ly caused by the complex nature of transporta-tion funding, which reduces political responsi-bility. The federal government collects muchof the revenue, divides it up, and sends it backto the states. Grants are handed out mostly byformula, and the states are generally not re-warded for frugality. As a result, neither level ofgovernment has an incentive to control costs.

Controlling spending on projects wouldhelp to close the $14 billion annual gap betweenspending and revenue in the Highway TrustFund. Unfortunately, the new Senate highwaybill actually increases spending. A better ap-proach is the proposal by Sen. Mike Lee andRep. Tom Graves, which would devolve mosttransit spending to the states. This would givegovernments stronger incentives to controlcosts if their own taxpayers were footing the bill.

ISN’T THE DEPARTMENT OF DEFENSEALSO HAVING SIGNIFICANT PROBLEMS?In April, our colleague Chris Edwards dis-cussed a failed DoD attempt to replace thepresident’s helicopter fleet. The project wascanceled after several years due to large costoverruns and schedule delays, which ended upwasting $3.2 billion. Again, this is hardly unique.

Later that month, a report by the Govern-ment Accountability Office (GAO) providedfurther insight. GAO tracked the progress of80 weapons systems, which have total project-ed costs of $1.5 trillion. Combined, these proj-ects have gone over budget by a huge $448 bil-lion. The report estimates that the averageproject is 28 months behind schedule, up from23 months in fiscal year 2011.

The problem is misaligned incentives.Once weapon system procurements get un-derway, it is very unlikely that they will be can-celed before completion. For the many proj-ects that turn into white elephants, officialstend to throw good money after bad. n

The Cato Institute is conscious-ly and actively engaged in con-necting with upcoming gener-ations. If our society is to have

any chance of remaining free and prosper-ous, we must effectively counter the “gov-ernment solves all” message of our presenteducational system. Infusing in the next gen-eration love of liberty and respect for thetransformative power of free markets andthe rule of law is critical to Cato’s commit-ment to preserving and expanding free,open, and civil societies.

Our array of carefully crafted student pro-grams includes Cato’s highly competitive se-mester-long internship program. We offerthis signature program for students threetimes annually—in the fall, spring, and sum-mer. Assigned to specific policy departmentsbased on their interests and backgrounds, stu-dents are able to work one-on-one with schol-ars and staff on constitutional issues, healthcare, foreign policy, media, and more. Alongwith training on writing and interview skills,interns also participate in a tailored programof educational research seminars which ad-dress libertarian history, economics, politicalphilosophy, law, and public policy issues.

A great many students and young peoplealso choose to attend Cato University, an in-tensive weeklong introduction to libertarian-ism. Most participants find Cato Universityto be an enjoyable, sometimes life-changing,experience. Support from our Sponsors cur-rently allows us to offer scholarships—theBastiat Scholars program—to 50 students.These lucky students are able to attend withno cost for registration, meals, lodging, or ma-

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Another big component of our portfoliois our in-person briefing program. Thousandsof students study in D.C. at local colleges,while others come to Washington on fieldtrips or semester-long programs. Cato offersrobust, customized briefings that includepresentations by our policy scholars, an intro-duction to the fundamentals of libertarian-ism, and an overview of the role of thinktanks in public policy.

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The Influence of American Values