Capitalism

[philunderwood]

Why Does Capitalism Still Need Defending?

By Larry Elder

www.JewishWorldReview.com |

Given the evidence of the superiority of capitalism in achieving prosperity, isn't it astonishing we still debate its merits?

Filmmaker Michael Moore actually made an anti-capitalism "documentary" called "Capitalism: A Love Story." Moore says: "Capitalism is an evil, and you cannot regulate evil. You have to eliminate it and replace it with something that is good for all people." Is it relevant that Moore's net worth is reported around $50 million, give or take a few mil, and that his accumulation of wealth occurred within the system of free markets that he trashes?

Another Hollywood leftie, Ed Asner, is a member of the Democratic Socialists of America. In a tax-the-rich cartoon video narrated by Asner, an evil rich man urinates on the poor. Charming.

Adam Smith, the father of modern economics, wrote "Wealth of Nations" in 1776. How do nations prosper, he asked? The answer, Smith said, is to encourage competition between suppliers — whether of goods or services — to please customers. Smith wrote, "In general, if any branch of trade, or any division of labour, be advantageous to the public, the freer and more general the competition, it will always be the more so."

Abraham Lincoln was not an economist but would have been quite at home with the free-market school: "There is not, of necessity, any such thing as the free hired laborer being fixed to that condition for life. ...The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself; then labors on his own account for another while, and at length hires another new beginner to help him. This is ... the just, and generous, and prosperous system, which opens the way for all — gives hope to all, and ... improvement of condition to all. If any continue through life in the condition of the hired laborer, it is not the fault of the system, but because of either a dependent nature which prefers it, or improvidence, folly, or singular misfortune."

Booker T. Washington, a former slave, wrote "Up From Slavery" in 1901, 36 years after the Civil War: "When a Negro girl learns to cook, to wash dishes, to sew, to write a book, or a Negro boy learns to groom horses, or to grow sweet potatoes, or to produce butter, or to build a house, or to be able to practise medicine, as well or better than some one else, they will be rewarded regardless of race or colour. In the long run, the world is going to have the best, and any difference in race, religion, or previous history will not long keep the world from what it wants. ...This is a great human law which cannot be permanently nullified."

This brings us to a standard denunciation of capitalism: greed. Bill Gates, the legendary software pioneer, reportedly once denounced a business for its lack of aggressiveness. "They have finite greed," Gates sniffed. In the movie "Wall Street" Michael Douglas famously said, "Greed is good."

Greed freaks out people like talk-show host Phil Donahue. He once told Nobel laureate Milton Friedman. "When you see around the globe the maldistribution of wealth, the desperate plight of millions of people in underdeveloped countries, when you see so few haves and so many have-nots, when you see the greed and the concentration of power — did you ever have a moment of doubt about capitalism and whether greed's a good idea to run on?"

Friedman responded: "Is there some society you know that doesn't run on greed? You think Russia doesn't run on greed? You think China doesn't run on greed? What is greed? Of course, none of us are greedy; it's only the other fellow who's greedy. The world runs on individuals pursuing their separate interests. The great achievements of civilizations have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about — the only cases in recorded history — are where they have had capitalism and largely free trade."

U2 frontman Bono, the rock star, agrees with Friedman.

Bono has spent three decades raising money to alleviate poverty and combat AIDS and HIV in the Third World. In a speech last year at Georgetown University, Bono talks about his epiphany: "Rock star preaches capitalism. Wow. Sometimes I hear myself and I just can't believe it! But commerce is real. ... Aid is just a stop-gap. Commerce (and) entrepreneurial capitalism takes more people out of poverty than aid. ... In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure."

We end with this quote from Mark Twain: "I'm opposed to millionaires, but it would be a mistake to offer me the position."

[Ritty77]

Income-Inequality Revisionism
Obama rewrites the history of the Reagan revolution as the beginning of the bad times.
By James Pethokoukis
December 9, 2013

To consider only the seen while neglecting the unseen, as 19th-century political economist Frederic Bastiat warned, risks cognitive errors. Policymakers must try to imagine the counterfactual when making a decision, taking an action, or analyzing history.

President Obama’s big speech on inequality last week illustrates vividly the value of asking, “What if . . . ?” Rising income inequality and declining economic mobility, the president declared, are “a fundamental threat to the American dream, our way of life, and what we stand for around the globe.” This factually suspect argument is put forth by Obama to promote his agenda of higher taxes, a higher minimum wage, and higher spending. To support it, he gave a revisionist history lesson worthy of Howard Zinn.

Many Americans recall the 1980s as the beginning of an improbable Long Boom when pro-market polices reversed what at the time had seemed like unstoppable economic decline. Obama, however, described the Reagan revolution as the moment when the postwar “social contract began to unravel” and “trickle-down ideology became more permanent,” leading to decades of dangerously unbalanced economic growth. The rich got even richer as middle-class incomes stagnated. The Age of Inequality had begun.

Actually, middle-class incomes rose roughly 40 percent from 1979 through 2007, and nearly 50 million net new jobs were created. (As President Reagan said on leaving office, “All in all, not bad, not bad at all.”) But leave aside Obama’s factual errors. What’s the president’s counterfactual? What would America be like today had it not embraced center-right reforms such as deregulation, tax cuts, and free trade? What if government had prevented the mergers and takeovers that enabled Corporate America’s necessary restructuring?

An educated guess is possible thanks to two large advanced economies that provide a pair of natural economic experiments. Unlike Reagan’s America and Thatcher’s Britain, Japan in the 1980s declined to undertake “neoliberal” reforms to open its economy, as finance professor Noah Smith recently noted in Foreign Affairs. Corporate taxation there today is high, key industries such as retailing and agriculture are protected from competition and subsidized, and labor markets remain tightly regulated. Workers don’t move around much. Sure, Japan has less income inequality. But it also has less dynamism. Over the past two decades, Japan’s per capita GDP has fallen from 85 percent of America’s to 71 percent. Indeed, one of Prime Minister Shinzo Abe’s “three arrows” of economic reform is injecting more competition and churn — creative destruction, really — into the Japanese economy.

Then there’s France, which continues to sniff at the “Anglo-Saxon” style of capitalism. Taxes there are high and headed higher, unions are strong, and inequality is low. Its per capita GDP is also only a bit more than two-thirds of America’s, and France is hardly anyone’s idea of a dynamic economy pushing the technological frontier. Oh, and the French economy seems on the verge of its third recession in five years.

Now both France and Japan are wealthy nations with some big, successful multinational corporations. And each has a vibrant culture. But would anyone say they are flourishing? From these examples, we can reasonably conclude that if America had rejected the Reagan revolution, we might well have less inequality today, but we would probably also have less wealth, entrepreneurship, innovation, and, when you think of it, less fun. Further evidence for our counterfactual: a 2009 study by researchers Dan Andrews, Christopher Jencks, and Andrew Leigh that found that more inequality is actually associated with higher GDP growth. Obama mentioned lots of stats and studies in his income-inequality speech, but he somehow failed to cite this one.

Of course, it may not feel like America is prospering right now, either. While the economy added a better-than-expected 203,000 jobs last month, there are still nearly 4 million fewer full-time workers today than before the Great Recession. But it could be worse. At least America is growing and adding jobs. If we’re going to do a lot better, though, we need to draw the right lessons from the past — not distort it to promote stale ideological agendas.

— James Pethokoukis, a columnist, blogs for the American Enterprise Institute.

www.nationalreview.com/article/365788/income-inequality-revisionism-james-pethokoukis

[philunderwood]

The Pope and Capitalism

By Walter Williams

www.JewishWorldReview.com |

Pope Francis, in his apostolic exhortation, levied charges against free market capitalism, denying that "economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world" and concluding that "this opinion ... has never been confirmed by the facts." He went on to label unfettered capitalism as "a new tyranny." Let's look at the pope's tragic vision.

First, I acknowledge that capitalism fails miserably when compared with heaven or a utopia. Any earthly system is going to come up short in such a comparison. However, mankind must make choices among alternative economic systems that actually exist on earth. For the common man, capitalism is superior to any system yet devised to deal with his everyday needs and desires.

Capitalism is relatively new in human history. Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. With the rise of capitalism, it became possible to amass great wealth by serving and pleasing your fellow man. Capitalists seek to discover what people want and produce and market it as efficiently as possible as a means to profit. A couple of examples would be J.D. Rockefeller, whose successful marketing drove kerosene prices down from 58 cents a gallon in 1865 to 7 cents in 1900. Henry Ford became rich by producing cars for the common man. Both Ford's and Rockefeller's personal benefits pale in comparison with that received by the common man by having cheaper kerosene and cheaper transportation. There are literally thousands of examples of how mankind's life has been made better by those in the pursuit of profits. Here's my question to you: Are people who, by their actions, created unprecedented convenience, longer life expectancy and a more pleasant life for the ordinary person — and became wealthy in the process — deserving of all the scorn and ridicule heaped upon them by intellectuals, politicians and now the pope?

Let's examine the role of profits but first put it in perspective in terms of magnitude. Between 1960 and 2012, after-tax corporate profit averaged a bit over 6 percent of the gross domestic product, while wages averaged 47 percent of the GDP. Far more important than simple statistics about the magnitude of profits is its role in guiding resources to their highest-valued uses and satisfying people. Try polling people with a few questions. Ask them what services they are more satisfied with and what they are less satisfied with. On the "more satisfied" list would be profit-making enterprises, such as supermarkets, theaters, clothing stores and computer stores. They'd find less satisfaction with services provided by nonprofit government organizations, such as public schools, post offices and departments of motor vehicles.

Profits force entrepreneurs to find ways to please people in the most efficient ways or go out of business. Of course, they can mess up and stay in business if they can get government to bail them out or give them protection against competition. Nonprofits have an easier time of it. Public schools, for example, continue to operate whether they do a good job or not and whether they please parents or not. That's because politicians provide their compensation through coercive property taxes. I'm sure that we'd be less satisfied with supermarkets if they, too, had the power to take our money through taxes, as opposed to being forced to find ways to get us to voluntarily give them our earnings.

Arthur C. Brooks, president at the American Enterprise Institute and author of "Who Really Cares," shows that Americans are the most generous people on the face of the earth. In fact, if you look for generosity around the world, you find virtually all of it in countries that are closer to the free market end of the economic spectrum than they are to the socialist or communist end. Seeing as Pope Francis sees charity as a key part of godliness, he ought to stop demonizing capitalism.