Earned Success in the Free(lance) Market

Hammond_typewriter[1]This article was originally published at ValuesandCapitalism.com on August 20, 2012.

As I begin my last year of college, I think often about my post-graduation plans. Thinking often gives way to worrying, though, as the job market is weak and landing my dream job isn’t likely. So, like thousands of other frustrated Americans, I am considering freelance writing as a profession—at least temporarily. I have experience with it already, and it offers a relief from the incessant job-hunting that plagues so many today.

My decision, however, is not one solely of necessity. In fact, I rather like the spontaneity and risk involved with freelancing. I’ve enjoyed my experience with it so far.

But most importantly, I like the fairness of freelance work—merit-based reward that only freelance markets can offer. Indeed, working freelance gives me a deeper understanding of the fairness of free markets from a perspective others don’t necessarily have.

For most people, applying for jobs happens maybe once or twice every few years. For freelancers, it happens every day. Employers are always looking at their portfolios, evaluating their work, and deciding if they are good enough for the job.

It’s stressful. As a freelancer, I won’t necessarily know if I’ll have a paycheck next week. I won’t have a traditional long-term contract. No paid vacation time. No automatic raise after six months. If I decide not to work one day, I won’t get paid. But honestly, I wouldn’t have it any other way.

What I really love about working freelance is the knowledge that the better I do, the more money I will make, and the more successful I will be. Growing up, I did very well in school. My grades were about as high as they could possibly be. So working harder did not necessarily mean more reward. This was always frustrating.

But working as a freelance writer, I am rewarded according to how well I do my job, not according to whether I completed my tasks for the day. Reward is commensurate with quality. A job well-done makes the next one that much easier to land. And there’s no limit on how much or what kind of work I can do—there are always more articles to write, more work to be done, and more money to be made.

Will I ever be like Malcolm Gladwell or George Will? I doubt it. And like anything else in life, successful freelancing involves a bit of luck. But as a freelancer, I can have full confidence that the harder I work at being a better writer, the more successful I will be. People appreciate work done well, and they naturally reward those who do things the right way.

While the world of freelance offers a unique perspective on the fairness of free markets, don’t believe that the “permanent job” market is any different.

In fact, in a free market we are all freelancers—regardless of our job or title. We all try to sell our labor to potential employers, refine our skills to earn more money, and work harder in hopes of getting a promotion. If we show up early, we get rewarded. If we slack off, we lose our jobs (and getting another one becomes much more difficult). There really is no difference between freelance work and “traditional” work—freelancers simply switch jobs more often and receive their rewards (and penalties) more immediately.

So while freelancing offers an up-close view of the fairness of the free market, everyone—freelancer or not—has firsthand experience with this fairness. Success is earned in the free market, not granted arbitrarily.

Unfortunately, many seem to forget this fact and choose instead to blame the free market for economic inequality. Capitalism, they argue, leaves the masses in the dust of the super-rich and powerful. But in the course of their accusations, they wage war on the notion of earned success. They take for granted the idea of merit-based reward, and overthrow the principle undergirding their belief that good work deserves good reward. But of course, there is nothing as deceptive as an obvious fact. As long as our culture takes for granted the notion of merit-based reward, capitalism will be ever under attack.

In that light, maybe a little freelancing would do us all some good.

Read the rest at ValuesandCapitalism.com.

Is the Fed Really to Blame?

bernankThis article was originally published at ValuesandCapitalism.com on August 14, 2012.

With the passage of Ron Paul’s “Audit the Fed” bill in the House recently, monetary policy is once again becoming a mainstream political issue. And it’s about time. For decades, Americans have stood idly by as inflation destroys the value of their hard-earned savings with the sole purpose of pushing economic problems further into the future.

But while Paul and many Republicans like to blame the Federal Reserve, the fact is that inflation has as much to do with your own personal spending habits as it does with Bernanke and his cohorts at the Fed.

According to the BEA, Americans saved an average of 3.9% of their income last May. Over the past several decades, this number has been steadily declining. Indeed, just 30 years ago, the personal savings rate was near 10%, meaning Americans saved almost three times more money than they do today.

While there are various explanations for this decline in personal savings, perhaps the most popular among conservatives is that reckless inflationary policies scare many would-be savers into spending more money to avoid higher prices in the future. Thus, the Fed and big government would be to blame, as only they have the power to legally create money out of thin air.

But another perspective on this decline—while less convenient—is equally plausible and decidedly more ominous. That is, Americans’ failure to save money left little reason for them to actively oppose the inflationary environment that government has always desired. Inflation, then, is a resultand not just a cause of Americans’ own personal financial irresponsibility.

For example, Americans who save a portion of their income every year have much to lose to inflation. Indeed, the more money they’ve put away in the past, the more loss they will experience as the Fed expands the money supply and devalues the dollar. Savings do not adjust for inflation.

On the other hand, Americans who do not save have virtually nothing to lose—they have no substantial wealth for inflation to diminish. Yes, their groceries might become more expensive. But wages adjust for inflation all the time, and inflation for spenders is simply nominal—very little happens to their levels of real wealth.

That said, as Americans continue to spend more and more, they will become increasingly less likely to vote against inflation, let alone actively oppose it. And the further they go into debt, the more an inflationary status quo will become desirable. Currently, levels of personal debt and spending in the US are so high that any serious attempt at curbing inflation through legislative means is probably unrealistic. The reality of inflation simply does not hit home for most Americans, despite the fact that its long-term consequences are disastrous.

Of course, Keynesian economists often welcome this increased spending. Too much saving, they argue, is an impediment to economic progress. But saving and investment are the true engines of economic growth, and without a private sector backed by financially sound individuals, sustainable progress over time will remain an economic fantasy.

No doubt, blaming “average Joes” for inflation isn’t as marketable as blaming Bernanke. But when Americans are saving less than four percent of their income, the effects of inflation become palatable—even attractive—to many Americans, and elected officials find the support they need to fund excessive spending with irresponsible inflation.

Congress and the Federal Reserve are not blameless, however. An audit of the Federal Reserve should have happened decades ago, and the ever-expanding government “safety net” discourages rainy day saving. But before you go marching on Washington, make sure your own financial house is in order.

As long as Americans continue to spend themselves into oblivion, inflation will continue to run its destructive course. We are a republic, indeed. Our elected officials must pass our test if they are to remain in power. Thus, as we seek to preserve capitalism, reexamining our own values and habits will be far more effective than blaming those to whom we ourselves give power. Indeed, how much we spend is ultimately up to us—a matter of personal responsibility.

In the end, Congressman Ron Paul puts it well:

We would like to think that all we have to do is elect the right politicians and everything is going to be OK. But the government is a reflection of the people and their values. That is why the burden is on people like you to make sure we have those values.

Read the rest at ValuesandCapitalism.com.