Liberty & the proper role of government in a free society

Obama's budget proposal presents plans which run radically counter to the proper role of government if America is to remain a free society:

...The widespread use of the market reduces the strain on the social fabric by rendering conformity unnecessary with respect to any activities it encompasses. The wider the range of activities covered by the market, the fewer are the issues on which explicitly political decisions are required and hence on which it is necessary to achieve agreement. In turn, the fewer the issues on which agreement is necessary, the greater is the likelihood of getting agreement while maintaining a free society.

...a good society requires that its members agree on the general conditions that will govern relations among them, on some means of arbitrating different interpretations of these conditions, and on some device for enforcing compliance with the generally accepted rules...most of the general conditions are the unintended outcome of custom, accepted unthinkingly...no set of rules can prevail unless most participants most of the time conform to them without external sanctions...But we cannot rely on custom or on this consensus alone to interpret and to enforce the rules; we need an umpire. These then are the basic roles of government in a free society: to provide a means whereby we can modify rules, to mediate differences among us on the meaning of the rules, and to enforce compliance with the rules on the part of those few who would otherwise not play in the game.

...the organization of economic activity through voluntary exchange presumes that we have provided, through government, for the maintenance of law and order to prevent coercion of one individual by another, the enforcement of contracts voluntarily entered into, the definition of the meaning of property rights, the interpretation and enforcement of such rights, and the provision of a monetary system.

The role of government just considered is to do something that the market cannot do for itself, namely, to determine, arbitrate, and enforce the rules of the game...

Earlier posts here and here discuss what combination of economic freedom and limited government enables liberty for us:

...How can we benefit from the promise of government while avoiding the threat to freedom? Two broad principles embodied in our Constitution give an answer...

First, the scope of government must be limited. Its major function must be to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive markets...By relying primarily on voluntary co-operation and private enterprise, in both economic and other activities, we can insure that the private sector is a check on the powers of the governmental sector...

The second broad principle is that government power must be dispersed...If government is to exercise power, better in the county than in the state, better in the state than in Washington. If I do not like what my local community does...I can move to another local community, and though few may take this step, the mere possibility acts as a check...If I do not like what Washington imposes, I have few alternatives in this world of jealous nations...

...The power to do good is also the power to do harm; those who control the power today may not tomorrow; and, more important, what one man regards as good, another may regard as harm...

The preservation of freedom is the protective reason for limiting and decentralizing governmental power. But there is also a constructive reason. The great advances of civilization...have never come from centralized government...

Government can never duplicate the variety and diversity of individual action...

It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem...such a view is a delusion...

Economic arrangements play a dual role in the promotion of a free society. On the one hand, freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself. In the second place, economic freedom is also an indispensible means toward the achievement of political freedom...

Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power...competitive capitalism also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other...

Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: the typical state of mankind is tyranny, servitude, and misery. The nineteenth century and early twentieth century in the Western world stand out as striking exceptions to the general trend of historical development. Political freedom in this instance clearly came along with the free market and the development of capitalist institutions...

History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition...

The relation between political and economic freedom is complex and by no means unilateral...

As [nineteenth-century, not twentieth-century] liberals, we take freedom of the individual, or perhaps the family, as our ultimate goal in judging social arrangements. Freedom as a value in this sense has to do with the interrelationship between people...in a society freedom has nothing to say about what an individual does with his freedom; it is not an all-embracing ethic...a major aim of the liberal is to leave the ethical problem for the individual to wrestle with. The "really" important ethical problems are those that face an individual in a free society - what he should do with his freedom. There are thus two sets of values that a liberal will emphasize - the values that are relevant to relations among people, which is the context in which he assigns first priority to freedom; and the values that are relevant to the individual in the exercise of his freedom, which is the realm of individual ethics and philosophy.

The liberal conceives of men as imperfect human beings. He regards the problem of social organizations to be as much a negative problem of preventing "bad" people from doing harm as of enabling "good" people to do good...

Fundamentally, there are only two ways of co-ordinating the economic activities of millions. One is central direction involving the use of coercion - the technique of the army and of the modern totalitarian state. The other is voluntary co-operation of individuals - the technique of the market place.

The possibility of co-ordination through voluntary co-operation rests on the elementary - yet frequently denied - proposition that both parties to an economic transaction benefit from it, provided the transaction is bi-laterally voluntary and informed.

Exchange can therefore bring about co-ordination without coercion...

...Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce...The preservation of freedom requires the elimination of such concentration of power to the fullest extent and the dispersal and distribution of whatever power cannot be eliminated - a system of checks and balances. By removing the organization of economic activity from the control of political authority, the market eliminates this source of coercive power. It enables economic strength to be a check to political power rather than a reinforcement.

Economic power can be widely dispersed...Political power, on the other hand, is more difficult to decentralize...if economic power is joined to political power, concentration seems almost inevitable. On the other hand, if economic power is kept in separate hands from political power, it can serve as a check and a counter to political power...

Obama's budget proposal also runs counter to the philosophical principles underlying the American Founding.