The Honorable Patrick J. Toomey
United States Senator from Pennsylvania
May 19, 2013
Thank you for this honor Father President Peter Donohue, the Board of Trustees, administrators and deans, Chris Marroletti, distinguished guests, faculty, staff, family and friends, and graduates.
Let me be among the first to congratulate the members of Villanova University’s graduating class of 2013. We are all proud of your accomplishments. You have no doubt learned a lot and had a lot of fun at Nova. Don’t let today be the end of your learning or the end of your fun. The next chapter of your life will be enriched by both.
I understand that the members of this graduating class will be pursuing a wide range of endeavors. Some of you are going into the military. I commend and thank you for your service to our country.
Among the varied careers being launched tomorrow morning, many of you will pursue jobs and opportunities in business—and that search has probably been tough. Despite the fact that you are graduating from a very prestigious university where you received a great education, some of you may still be searching for the job opportunity that is a good fit for you. Well, our economy is a mixed bag right now. It is not terrible, and there are many great opportunities out there, but it could be, and should be, much better than it is. The unemployment rate of those under age 25 is over 13%.
Given the severity of the recession and the weakness of the recovery, some have begun to doubt the vitality, durability of our distinctive, American free-enterprise economic system. Many have suggested that we have to get used to a new normal of high unemployment, and a stagnant standard of living. Some people have long challenged the morality of a laise faire economy and see our current difficulties as an opportunity to move toward a more government-centered economy.
Today, I would like to refute those ideas with three main points. First, I will make the case that a true free-enterprise economic system ranks among the greatest of human achievements. No better economic system—materially or morally has ever been implemented. Second, the causes of the persisting economic weakness are not the failings of free enterprise but rather failed government policies that we can correct. Finally, I want to urge you: don't settle for the weak economy we have today—don't accept this as the new normal. You have a justifiable confidence that you, as individuals and as a community, can “ignite change.” You can ignite the change that will restore a vibrant economy that creates the opportunity, growth, and prosperity that elevates the human condition.
The historical, empirical case for the material superiority of free enterprise is now irrefutable. It took nearly two thousand years—from the time of Julius Caesar to that of George Washington—for the western world's living standard to double. And these two leaders rode into battle on the same form of transportation.
Then the combination of the American Revolution, the Industrial Revolution, and the rise of free enterprise allowed us to begin doubling our standard of living not once in 2,000 years, but every 30-40 years as we did throughout the 19th and 20th centuries. With its free-market economy, America went from a third-world colonial backwater to become the richest nation on earth, despite, or perhaps because, almost every American immigrant came here with nothing.
It was this American economic power that won World War I, World War II and the Cold War. Since the free enterprise system began its march through the developing world in the 1980s, according to the World Bank, the global poverty rate was cut in half from 52% to 26%.
And the wealth that comes with economic freedom is not measured only in dollars and cents. With wealth, societies around the world have dramatically improved the quality of their peoples' lives by lowering infant mortality, extending life spans, improving health care, expanding access to education and cleaning up their environments. The empirical case is very simple. No economic system has lifted more people out of poverty, created more opportunity, and produced a higher standard of living than ours. This is no time to abandon it.
But as true and compelling as the economic case for free enterprise is, it is not enough. People are, and should be, interested in what is good as well as what is efficient. Happily for us, a free-enterprise system is both.
There are three basic ways free enterprise is not only moral, but morally superior to every rival economic system opposed to it, from mercantilism to communism to socialism to any number of hybrid economic systems. First, free enterprise provides everyone an equal opportunity to define and pursue his or her own success. Free enterprise recognizes that the essence of human happiness is not just getting money, but creating value—in your own life and in the lives of others. This concept, which economist Arthur Brooks calls "earned success," speaks to the knowledge that your effort, your sacrifices, your investment in yourself pays off. That's success—and in a free enterprise system, success can be earned by anyone. True free enterprise is a meritocracy. Markets don’t ask the color of your skin or who your parents were. If you can build a better mouse trap, people will buy it.
Just as important, under free enterprise, success must be earned. It's no coincidence that free enterprise’s loudest opponents can often be found in the elite—they are the ones with the most to lose in the dynamism of a real meritocracy. Wherever it goes, free enterprise destroys rigid systems of class, caste, and entitled privilege.
The second great moral value of free enterprise is that it encourages us to live lives of service. Because every transaction in a free enterprise system is voluntary, people are rewarded only to the degree that they add value to other people’s lives. This was Adam Smith’s revolutionary insight in The Wealth of Nations: the invisible hand that harnesses individuals' self-interest to the service of the common good.
In a free-enterprise system—whether you're a florist or a banker, whether you work for a restaurant or an airline—the only way to succeed is to help other people. Under a true free-market system, nobody can take anything from anyone—not legally. The process of voluntary exchange depends on personal trust, so everyone has a strong incentive to be trustworthy.
Whether you mean to or not, every rung you climb in a free enterprise economy, you bring other people up with you. When you earn your success, you enjoy your rewards, but everyone else gets to enjoy the value you create and the service you render.
One of the greatest examples of how free enterprise serves others is the career of Bill Gates. He is one of the richest men in the history of the world and he is giving virtually all of his fortune away to charity. I commend him for this, and wish his philanthropy every success. But even if his philanthropic efforts are wildly successful, I doubt they will do as much to improve the human condition as he did revolutionizing the computer industry by making computers easy for everyone to use.
Finally, and most importantly, free enterprise protects personal, human freedom and serves human dignity. It protects freedom by creating—in free enterprise's many industries and enterprises—a source of power, opportunity, and progress unconnected to the state. The voluntary institutions of civil society, including businesses large and small, national and local charities and associations, organizations down to your local Boy Scout troop, serve as an organic, pre-emptive check against the state’s tendency to expand its control over our lives. Together, they serve as natural bulwarks against tyranny.
So these are the moral values of a free enterprise system: equality of opportunity, service to others, and respect for human dignity. But I can almost hear people asking, "If our free enterprise system is so effective and moral, why are so many people still struggling so much today?" That’s because we are stifling our economy with misguided policies in Washington.
Our free-enterprise system is not as free as it used to be. I’ll give you three examples:
- When the government engages in overspending meant to stimulate the economy, it drains resources from the private sector and you can't borrow your way to prosperity.
- Huge tax increases that discourage the work, savings and investment that we desperately need.
- An avalanche of new regulations and mandates that substitute politicians' and bureaucrats' judgments for privately negotiated transactions between free people.
But I have good news to report, too: Despite our policy mistakes in Washington, our economy is incredibly resilient. We have been managing some modest growth. And I believe we are poised for a tremendous resurgence as soon as we get policies right. We have many major, structural economic advantages that the rest of the world envies and that will, one day soon, enable us to have the kind of recovery we have been waiting for:
- We have the best-trained, most highly educated large workforce in the world, and you are now part of it
- We have the finest higher-education system on the planet—you have experienced it
- We have the world’s largest reserves of energy
- We lead the world in innovation and entrepreneurship
- We continue to be the world's largest manufacturer and largest food producer
- And we are still the world’s largest economy by far.
For all our mistakes, I wouldn't even think about trading places with any country in the world.
There is even occasional good news from Washington. The President has reached out to Senate Republicans and we’re meeting now, having occasional dinners and lunches together, exchanging ideas. It may not sound like much but this is new and it's progress.
I even look for silver linings in my defeats. I was disappointed that the bill I wrote with Senator Manchin, requiring background checks on commercial gun sales, did not pass. But the process helped me develop a better working relationship with colleagues on both sides of the aisle. That will be helpful in the future.
So despite our sub-par economy and all the challenges we face in Washington, when I think about our strengths as a nation, I am reminded of the wisdom of the great Winston Churchill who said about all of us: "You can always count on the Americans to get it right…after they have exhausted every other possible option." Well, we have been exhausting the other options for a while now and I am confident we will soon start getting it right.
You will help our nation most of all by simply moving forward, pursuing your dreams, consistent with your values and your faith, in spite of any obstacles in your way. You can also help by putting pressure on the political class to get its act together: to start implementing the policies that will set loose the entrepreneurial genius of the American people. You can "ignite the change" that will bring along congress and the administration to pass the pro-growth agenda we need. Eventually, Congress follows the will of the people. You can help speed the process along. I hope you will. And when you do, you will help ensure that the 21st century is another great American century.
Congratulations and thank you very much.