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Published February 09. 2011 05:00PM

It is fitting that we are pausing to remember President Ronald Wilson Reagan on the centennial anniversary of his birth this February, a month that also includes Presidents' Day.

One of Reagan's greatest accomplishments was engineering our victory in the Cold War. And one of the key factors that made this victory possible was Reagan's deep understanding of economics. He knew that the Soviet economy was brittle, weak, moribund. He knew that it couldn't hold up in an arms race against our vibrant free-market economy.

In hindsight, the decrepitude of the Soviet Union's centrally planned socialist economy is obvious, but it was by no means so in the 1980s. Believing the Iron Curtain's propaganda lies and a Potemkin village appearance of prosperity, many intellectuals, experts, and Sovietologists believed that socialism was the wave of the future.

How could Reagan be so sure that he was right when most of the experts were saying that he was wrong?

The answer lies in the fact that Ronald Reagan understood economics better than any other American president. Reagan was familiar with the Austrian school of economicsthe only school that has supplied a logical proof of why socialist economies are inherently self-destructive and doomed to fail.

The Austrian economist Ludwig von Mises, in his 1922 masterpiece, Socialism: An Economic and Sociological Analysis, had demonstrated logically the impossibility of rational economic calculation under central planning. Anyone who grasped that theory would know, as Reagan did, that the Soviets' centrally planned economy was programmed for stagnation and decrepitudethat it was a paper tiger, and all we had to do to prevail against the Soviet challenge was to stand firm and keep our government from crippling our economy the way the Soviet government had crippled theirs.

This points to a scandal, perhaps a tragedy, today. As we commemorate the life of a great president whose understanding of the superiority of the private-property order over socialism contributed so much to freedom and prosperity, both at home and abroad, in the aftermath of the Cold Warthe economic understanding that was one of the key pillars of Reagan's philosophy and policies remains largely unknown today.

As we pay tribute to Ronald Reagan, we look back at an era when people around the world voted with their feet for capitalism over socialism. Refugees fled from East Germany to West Germany, North Korea to South Korea, and mainland China to Hong Kongalways away from less freedom and prosperity toward greater freedom and prosperity.

Human beings still have the same preference and make the same choice today. Sadly, though, today businesses and individuals are leaving the United States in favor of less economically oppressive locations.

Demagogues on the left denounce these people as traitors for rescuing their property from governments redistributive plans. The rest of us should regard this phenomenon as a warning sign that, for the first time in American history, a significant number of people are leaving America so that they can be economically freer?

If we really wish to honor Reagan's memory in a meaningful way, then let us reverse the Big-Government policies that are driving productive citizens out of our country. Let us remember Reagan's lesson that government is the problemnot the solutionto our economic challenges. Let us re-establish America as the land of liberty, the favored destination of those who love liberty. Ronald Reagan would be honored to be honored in that way.

Dr. Mark W. Hendrickson

adjunct faculty member, economist,

The Center for Vision & Values at Grove City College.

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