You may think that statement is trite. I actually think it makes a ton of sense.
Americans are rightfully proud to live in the Land of the Free. We have more freedom than most countries in all sorts of awesome ways: religion, speech, movement, etc. As they say, it makes us the envy of the world and is the primary reason why immigrants — legal and otherwise — still flock to our borders and shores.
Of course, there are limits to our freedom. We are not free to murder and pillage, sell heroin, run naked onto an NFL field. These are easily agreed upon taboos. Reason being is that the cost to society of allowing that much freedom is simply unacceptable and/or morally reprehensible.
There are also what I call ‘debatable freedoms,” those which we have hashed out to decide whether or not they are worth exercising. Our acceptance of them evolves over time. Think legalized marijuana or same-sex marriage.
And then there are other societal freedoms many of us seem to believe in that come with huge, often under-recognized, and to my mind, hard-to-defend costs. Three examples here are free, unfettered financial markets; a wide-open internet; and nearly unlimited access to firearms. Many of us believe passionately in these freedoms, but I wonder if we fully understand the price we pay for them.
Let’s take them one by one.
Free, unfettered financial markets
You could argue that the financial crisis of 2008/2009 came about in large part because of deregulated or under-regulated financial markets. Speculation in credit derivatives and mortgage-backed securities, along with accompanying risks that were poorly understood, created systemic risk, which badly damaged our nation’s economy and much of the rest of the world’s as well. How much did these free financial markets cost us during the Great Recession? It’s hard to pin down exactly, but I’ve seen estimates of anywhere from $12 trillion to $22 trillion — yes, with a ‘T’.
After Lehman Brothers collapsed in 2008, policymakers advanced a slew of regulations intended better prepare the financial system for market and economic volatility. REUTERS/Joshua Lott/Files
A few points here. Of course our free markets have created trillions more than that in wealth. And I’m not talking about implementing thousand of pages of myriad arcane derivatives regulation. I’m thinking mostly about increasing the amount of capital for securities firms. Simple stuff. Next financial crisis, make shareholders pay, not Jane Q. Public. So I’m arguing that with more capital requirements, which is a form of less freedom (I know, hard for Americans to swallow if it’s put that way) and yes adding cost, we could optimize our capital markets. A most worthwhile exercise, I say.
A wide-open Internet
Next the Internet. First let’s acknowledge that the internet isn’t completely free to begin with, even in the U.S. You cannot legally post child pornography or sell opioids on the web, for example. So there are limits already. Again, I know Americans will hate to admit this, but clearly we need more regulation. Why? Because the costs are too high not to.
Right now, we are paying an unquantifiably high societal price and then spending blindly to clean up after the fact. For instance, how much did the hacks on our parent company Yahoo cost? After one breach was announced, Verizon lowered its purchase price by $350 million. As for the Equifax breech — and dozens more — who knows.
This is obviously a hugely complex problem, but clearly we need to re-think many facets of the web security and social media. For example, we need to replace our Social Security number system. And social media companies like Facebook and Twitter need to disclose who is paying for ads on their platforms. Finally, these companies must own up to one degree or another that they are responsible for all content on their platforms.
The cost here is massive. But the cost of allowing Russian trolls and Macedonian teenagers the unfettered ability to destabilize our society is far higher.
Free, nearly unlimited access to firearms
And finally we have the freedom in America to buy nearly any kind of firearm our heart desires, even if these guns aren’t designed for hunting or self-defense. Are there costs associated with that? Yes. Huge costs that are escalating every month. Let me give you an example: The shootings in Columbine in 1999 cost an estimated $50 million. And that’s in 1999 dollars.
And the Pulse nightclub shooting in Orlando last year? Ted Miller, a researcher with the Pacific Institute for Research and Evaluation, estimates that cost as much as $390 million. Miller also says that a typical day in America costs $600 million for shootings. Miller’s tallies include medical and insurance costs, the cost of police and first responders, the cost to employers and the dollar value of lives lost.
That suggests to me that the Las Vegas shooting will end up costing over half a billion dollars. Mind-boggling, right?
An exhibit booth for firearms manufacturer Smith & Wesson is seen on display at the International Association of Chiefs of Police conference in Chicago, Illinois, October 26, 2015. REUTERS/Jim Young
Limiting access to guns reduces shootings, which among other things reduces costs to our society. Am I worried that limiting the public’s access to assault weapons will confer too much power to the government? Not so much that I wouldn’t make the trade-off in a second.
So, you see what I say all that freedom not being free. But maybe it’s not so much about framing it as reducing the amount of freedom we have in the financial markets, or on the web, or in buying weapons. It’s understanding the costs and the trade-offs and then making smart decisions.
— Andy Serwer is Yahoo Finance Editor-in-Chief. Read more:
