Incremental Freedom
Posted May 6, 2005
Virtually any person with a basic understanding of money is familiar with the
term "compounded interest." They may not know exactly how it works, but they
understand that it is a good thing and helps their money grow.
Without trying to get too overtly technical, let's take a look at this in equation
form. In order to keep it as simple as possible, we will assume a compounding
frequency of 1 year. We also need to first define the variables of the equation:
P is the principal
r is the rate of return (expressed as a decimal)
n is the number of years of the investment FV is the future value of the investment
OK, now that we know that, let's look at the equation:
Now let's bring it home by throwing in some numbers. We'll go with $10,000
invested at 7% for 30 years:
FV = 10,000(1 + .07)30 = $76,122.55
This is simple enough right. Now let's look at it with an annual addition,
that is, we make a yearly addition to our principal amount in addition to the
interest gain. In order to do this, we need to add an additional variable:
c is the amount of the yearly contribution
Now bear with me here because this equation is somewhat more complicated so
we are going to use a little math trick called "summing a geometric series,"
to keep it as simple as possible:
FV = P(1 + r)n + c[((1 + r)n + 1 - (1 + r))/r]
Now, let's take that same $10,000 invested at 7% for 30 years and make a yearly
addition of $1000:
FV = 10,000(1 + .07)30 + 1000[((1 + .07)30+1 - (1 + .07))/.07] = $177,195.60
Assuming I made no math errors, that is quite a nice increase over the one
time investment.
By now, you are probably wondering what all that has to do with incremental
freedom (the topic of this post). It has everything to do with it. Let's rewrite
the variables in terms of freedom:
CF is the current amount of freedom we have
d is the increased desire for more freedom once some freedom has been tasted
n is the number of years of the investment in incremental freedom
FF is the future amount of freedom we will have
i is the amount of freedom added each year through incremental steps
So now we have the equation for what every libertarian wants, future freedom:
FF = CF(1 + d)n + i[((1 + d)n + 1 - (1 + d))/d]
I point this out because, just as everyone knows that the way to make real
money through savings is to combine the effects of periodic savings with the
effects of compounded interest, libertarians should know that to obtain freedom
you must add to it a little each year and build it up with the increased desire
for freedom that will come as the veil of a century or more of creeping statism
is lifted. This makes sense from a economic standpoint, right? You work hard,
save your money in an interest bearing account and it grows. Why should we look
at freedom any differently?
Unfortunately, too many libertarians (including the LP) want to take a different
approach. They sit around like a poor family living in a Louisiana trailer park
waiting to hit the Power Ball. They make extravagant plans about what they will
do with this freedom jackpot, tell everyone how great it will be and quickly
let their friends know that they are stupid if they don't buy tickets too. Of
course, their numbers never seem to hit. But nothing changes. Instead of working
hard and saving, they keep buying Lotto tickets
and complaining the government isn't giving them enough handouts. Likewise,
the libertarians refuse to see that the incremental way is the only one that
will work. The government is not going to give us more handouts in the form
of increased freedom. There will be no Freedom Ball jackpot headed our way.
Those that wish to increase government control over our lives figured this
out a long time ago. They have been working for decades to increase the power
of government, slowly doing so bit by bit, year after year. They knew that to
do it all at once would only lead to a violent uprising against them. People,
like animals, do not just become domesticated over night. It takes time to accustom
them to their new masters and to give up their wild ways. Conversely, people
domesticated by government handouts are not just going to give them up to go
live in a free market. They have to be weaned just like a domesticated animal
being returned to the wild.
People need to be taught the tools necessary for them to survive on their own
in a free market. They need to learn critical thinking and self-reliance. It
takes time to learn these skills otherwise, when they are suddenly freed but
cannot take care of themselves, they move back towards what they have always
known.
Take a look at Russia; it is happening there as I type this. Even though they
tasted the sweetness of freedom, their inability to thrive in it is causing
them to allow Putin to move them back towards the comforts of government control
they have always known. There will come a time, however, that those born in
freedom will violently fight to keep it. Much blood will be shed.
I don't want this for the US. I want our move to freedom to be everlasting. That is why I want to move
in increments towards freedom rather than waiting for the collapse or violent
uprise that will eventually come from our continuance on the current path.
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