On Liberty

by Nicholas Vardy
Liberated_Man

Over himself, over his own body and mind, the individual is sovereign.

- John Stuart Mill, On Liberty

Many years ago, I rented an apartment around the corner from Kensington Square in London.

As it happened, the British philosopher John Stuart Mill (1806 - 1873) lived and worked there for much his life.

It was once a secret goal of mine to buy that house one day.

The property came up for sale in the early 2000s.

I asked a real estate agent whether its former occupant increased the value of the property.

She gave me a puzzled look. She had no idea who John Stuart Mill was.

Alas, my fantasy of owning Mill's house clashed with the reality of London property values.

The asking price for the house was then just over 5 million pounds (approximately $8 million).

Today, Mill's former house is easily worth about twice that amount.

So who was John Stuart Mill, and why is his influence so important to us Americans?

Mill's Formative Years

I first came across John Stuart Mill in college when I read his most famous work, On Liberty.

One Mill biographer called On Liberty "the greatest celebration of the value of human freedom ever written."

Almost as famous is Mill's Autobiography.

In it, Mill revealed he was the unwitting subject of an astonishing educational experiment.

Under the watchful eye of a domineering father, between the ages of six and eight, Mill wrote a history of Rome, read Plato in Greek and digested Sophocles like a Rhodes scholar.

By age 20, Mill had fallen into a deep depression.

Education had fostered Mill's analytic capacities. But it had left his many other abilities underdeveloped.

For example, Mill lamented never learning to play rugby like other boys and eventually turned to the poetry of William Wordsworth for solace and hope.

Mill's Major Contributions

Mill went on to become "the most influential English-speaking philosopher of the 19th century."

His writing always struck me as both remarkably contemporary and relevant.

Mill's thinking was characterized by three fundamental ideas - each linked by the concept of "freedom."

1. Freedom of Action

On Liberty addresses the nature and limits of the power a government can exercise over an individual.

Mill believed that an individual should be free to do as he wishes unless he harms others.

He implicitly trusted that individuals are rational enough to make decisions about their well-being without any outside interference.

2. Freedom of Expression

Mill was a passionate defender of free speech.

He felt free speech was a necessary condition for all intellectual and social progress.

That's because you can never be sure that a silenced opinion does not contain some element of the truth.

All ideas should be subject to debate, whether you agree with them or not.

3. Freedom to Prosper

Mill's economic philosophy, as developed in his Principles of Economics, embraced free markets over government intervention.

Mill was also one of the first advocates of a flat tax.

First published in 1848, Principles - primarily a history of economic thought - remained the standard economics text at Oxford University until 1919.

Mill as Role Model

So why should the ideas of a long-dead philosopher like Mill matter to you?

Mill matters because he is a terrific model for how to think about problems in a complex world and act independently to chart your own course (like navigating the murky waters of today's financial markets, for instance).

Mill was neither "conservative" nor "liberal" in the way we understand those terms today.

In some ways, he was politically and socially conservative. He was appalled by the outcome of the French Revolution and how it trampled on individual rights. And on a personal level, he was prim and proper - the opposite of flamboyant rakes like Oscar Wilde.

In other ways, Mill's radical beliefs challenged socially accepted norms.

As an agnostic teenager, Mill refused to join the Church of England. That decision kept him out of both Oxford and Cambridge... and the conservative establishment.

In his 1869 essay, "The Subjection of Women," Mill expressed advocacy of women's rights as well as his opposition to slavery.

Nor was Mill just an ivory tower academic. He engaged with the world rather than observe it from afar.

Unlike his contemporary (and fellow Londoner) Karl Marx, Mill worked for a living. He spent his life as a civil servant at the British East India Company, the private company that essentially ruled India.

In contrast, Karl Marx chose to live in near poverty for much of his life. Marx - the hero of the working class - always felt work was beneath him.

Unlike Marx, Mill was more interested in conversation than dogma. He preferred thoughtful analysis to mudslinging and personal attacks.

In short, Mill serves as a model for thinking about human problems in a serious and civilized way.

His life was an example of "the good life."

As one critic for The New Yorker put it in 2008...

A good life for Mill... is one where you have gone out into the world to build the best self you can - travelled where you wanted and seen what you could and said what you had to, sung your own songs and heard your own poems.

It is perhaps this philosophy that remains John Stuart Mill's greatest legacy of all - and one we'll be exploring more in the weeks to come.

Good investing,

Nicholas

Thoughts on this article? Leave a comment below.

TAP Into a New Trading Opportunity

Nothing says America like hamburgers, hot dogs and an ice-cold brewski - particularly one that's made in the heart of the Rocky Mountains.

On April 23, Chief Investment Strategist Alexander Green added Molson Coors Brewing (NYSE: TAP) to his True Value Alert portfolio. In addition to its inexpensive valuation, here are the other reasons Alex sees this as an opportunity to tap into...

Based in Denver, Molson Coors Brewing is one of the world's leading spirits companies, offering such iconic brands as Molson, Coors, Miller, Blue Moon, Icehouse, Carling, Keystone, Henry's Hard Soda and many others.

The company's growth has slowed in recent years, however, as consumers' tastes have moved from low-carb beers toward premium brands.

As a result, the stock has fallen from its 52-week high of nearly $100 a share to about $70.

Yet things are not nearly as bad as the share price decline would indicate. Sales are still growing 12.4% year over year, and total annual revenue exceeds $11 billion.

The company also enjoys a 17% operating margin, and management is earning a 12% return on equity.

Still, how does Molson plan to tackle the change in customer preferences?

Partly by doubling down on what it does best, including its Blue Moon brand, and by taking advantage of the burgeoning popularity of flavored seltzers with a new line of alcoholic ones.

It is also concentrating on meeting customers' desire to drink healthier and lose weight by testing a new brand called Miller Ultra.

Plus, it has a new agreement to import Sol, a popular Mexican beer. Given the success that Constellation Brands (NYSE: STZ) has had with Corona in the U.S., this could spark further growth.

Other good things are likely to happen here too. The company's enormous free cash flow gives it the opportunity to introduce new brands, increase marketing, pay down debt, buy back shares and boost the 2.25% dividend.

Meanwhile, the stock is awfully cheap at less than 11 times trailing earnings - about half the ratio of the S&P 500 - and only 9.5 times my estimate for the next 12 months.

This inexpensive valuation is surely a reason why Credit Suisse recently issued a buy recommendation on Molson with a $96 price target, indicating 37% upside from here.

Not bad for a recession-resistant vice stock with a growing dividend.

- Donna DiVenuto-Ball and Alexander Green

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