The free enterprise system is not inherently corrupt.
Raymond J. Keating writes: Although the movie industry has certainly thrived under the free enterprise system, Hollywood is often unfriendly in its cinematic portrayals of businessmen and capitalism, though there are some exceptions. A visit to your local video store reveals a disagreement among film makers over what capitalism represents. I recently rented movies by three prominent directors: Oliver Stone, Francis Ford Coppola, and Frank Capra. The contrasts were stark, especially between Stone and the latter two.
Oliver Stone’s Wall Street leads the movie-goer to believe that the securities industry is a rigged game, and that capitalism is inherently corrupt. Hard work as a means to success in the financial community is debunked, only to be supplanted by corruption and law breaking, as securities trading is seen as a game with little or no productive value. Stone presents a harsh judgment on an economic system he fundamentally misunderstands.
Wall Street has come to be the historical revisionists’ cinematic representation of the 1980s—the so-called “decade of greed.” It, unfortunately, offers a view prevailing not only in the film industry, but in academia and the media as well. In many ways, Wall Street perpetuates a class warfare myth, with contrasts being drawn between so-called haves and have nots, or the bourgeoisie and the proletariat.
The movie’s antagonist is Gordon Gekko, a corporate raider. Gekko’s speech at the stockholders meeting of Telder Paper, his takeover target, is meant by Stone to reflect the corrupt nature of capitalism. In fact, Stone managed—knowingly or not—to provide a glimpse of why corporate raiders provide a positive service in a free market economy. Gekko states:
Telder Paper has 33 different vice presidents, each making over $200,000 a year . . . . Our paper company lost $110,000,000 last year, and I’ll bet half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. . . . I am not a destroyer of companies; I am a liberator of them. The point is, ladies and gentlemen, that greed for a lack of a better word—is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms, greed for life, for money, for love, knowledge, has marked the upward surge of mankind. And greed—you mark my words—will not only save Teldar Paper, but that other malfunctioning corporation called the United States of America.
Greed or Self-Interest?
The word “greed” in such a speech is Stone’s carrier of corruption. It is his word of choice designed to elicit a specific response from the movie-going audience. After all, how could one view greed favorably? In fact, “self-interest” would have been a more apt term, which was understood over two centuries ago by Adam Smith, the father of capitalism. Smith wrote in An Inquiry into the Nature and Causes of the Wealth of Nations: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Self-interest removes the judgmental nature of Stone’s presentation, while encompassing not only greed, but also industry, charity, self-improvement, and altruism, i.e., any human motivation.
Gekko’s later statements lend greater clarity to Stone’s view of the world. In reference to a Gekko plan to liquidate the holdings of an airline company, Budd Fox (the movie’s symbol of redemption as he in the end rejects the greed Gekko represents) asks, “Why do you need to wreck this company?” Gekko’s answer: “Because it’s wreckable!” Stone views the breakup of a firm as pure destruction. He is unable to understand what Joseph Schumpeter termed “creative destruction.” That is the notion that resources might be more efficiently used if freed from less profitable ventures and reinvested elsewhere. This is the dynamic aspect of capitalism that allows for renewal and growth.
But the essence of Stone’s limited vision is captured in Gekko’s definition of capitalism: “It’s a zero sum game. Somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one person to another—like magic. This painting here, I bought it ten years ago for $60,000. I could sell it today for $600,000. The illusion has become real, and the more real it becomes, the more desperate they want it. Capitalism at its finest . . . . I create nothing. I own . . . . You’re not naive enough to think that we live in a democracy, are you, Buddy? It’s the free market.” Stone does not understand that wealth can be created, not merely shifted around, and that the free market provides the incentives for individuals to create, innovate, and take risks. He sees a rise in the price of a painting as the pinnacle of capitalism. In fact, it is in those nations that have rejected free enterprise where the only source of value is to be found in a painting, for little else is created.
Wall Street presents a view of capitalism as being controlled by the few at the expense of the many—democracy versus the free market in Gekko’s words. Stone does not understand the nature of an exchange economy, missing a fundamental point that in a free enterprise system, one must first supply a service or good in order to demand; i.e., even the most greedy individuals must supply something that fulfills the needs or wants of another individual in order to participate in an exchange economy. Individuals vote with their dollars, if you will. The phrase “democratic capitalism” seems quite natural, for example, while “democratic socialism” seems oxymoronic. Read the rest of this entry »
The local district mayor wants to call one of several new streets around the vast Halle Freyssinet high-tech startup hub the ‘Rue Steve Jobs’ in honor of America’s best-known Capitalist.
PARIS (Reuters) – Geert De Clercq reports: A proposal to name a street after the late Apple Inc chief executive and co-founder Steve Jobs has divided the leftist city council of a Paris district.
“Steve Jobs was chosen because of his impact on the development of personal computing and because he was a real entrepreneur.”
— Spokeswoman for mayor Jerome Coumet
The local district mayor wants to call one of several new streets around the vast Halle Freyssinet high-tech startup hub the “Rue Steve Jobs” in honor of the U.S. inventor of the iPhone who died in 2011.
“The choice of Steve Jobs is misplaced in light of the heritage he has left behind.”
— Communist local councillors
But Green and Communist local councillors in Paris’s 13th district don’t like the idea because of Apple’s social and fiscal practices.
“Steve Jobs was chosen because of his impact on the development of personal computing and because he was a real entrepreneur,” said a spokeswoman for mayor Jerome Coumet, defending the proposal.
She said other streets would be named after British computer scientist and code-breaker Alan Turing, UK mathematician and computer pioneer Ada Lovelace, US naval officer and computer programming pioneer Grace Murray Hopper and French civil engineer Eugene Freyssinet, who invented pre-stressed concrete.
The originator of the great man theory of history is British philosopher Thomas Carlyle (1795-1881), one of the most revered thinkers of his day.
Jeffrey Tucker writes: Have you heard of the “great man” theory of history?
The meaning is obvious from the words. The idea is that history moves in epochal shifts under the leadership of visionary, bold, often ruthless men who marshall the energy of masses of people to push events in radical new directions. Nothing is the same after them.
“Liberalism was always counterintuitive. The less society is ordered, the more order emerges from the ground up. The freer people are permitted to be, the happier the people become and the more meaning they find in the course of life itself. The less power that is given to the ruling class, the more wealth is created and dispersed among everyone. The less a nation is directed by conscious design, the more it can provide a model of genuine greatness.”
In their absence, nothing happens that is notable enough to qualify as history: no heroes, no god-like figures who qualify as “great.” In this view, we need such men. If they do not exist, we create them. They give us purpose. They define the meaning of life. They drive history forward.
Great men, in this view, do not actually have to be fabulous people in their private lives. They need not exercise personal virtue. They need not even be moral. They only need to be perceived as such by the masses, and play this role in the trajectory of history.
Such a view of history shaped much of historiography as it was penned in the late 19th century and early 20th century, until the revisionists of the last several decades saw the error and turned instead to celebrate private life and the achievements of common folk instead. Today the “great man” theory history is dead as regards academic history, and rightly so.
Carlyle the Proto-Fascist
The originator of the great man theory of history is British philosopher Thomas Carlyle (1795-1881), one of the most revered thinkers of his day. He also coined the expression “dismal science” to describe the economics of his time. The economists of the day, against whom he constantly inveighed, were almost universally champions of the free market, free trade, and human rights.
“Carlyle was not a socialist in an ideological sense. He cared nothing for the common ownership of the means of production. Creating an ideologically driven social ideal did not interest him at all. His writings appeared and circulated alongside those of Karl Marx and his contemporaries, but he was not drawn to them.”
Considering Carlyle’s immense place in the history of 19th century intellectual life, this is a surprisingly nutty book. It can clearly be seen as paving the way for the monster dictators of the 20th century. Reading his description of “great men” literally, there is no sense in which Mao, Stalin, and Hitler — or any savage dictator from any country you can name — would not qualify.
“Rather than an early ‘leftist,’ he was a consistent proponent of power and a raving opponent of classical liberalism, particularly of the legacies of Adam Smith and John Stuart Mill. If you have the slightest leanings toward liberty, or affections for the impersonal forces of markets, his writings come across as ludicrous. His interest was in power as the central organizing principle of society.”
Indeed, a good case can be made that Carlyle was the forefather of fascism. He made his appearance in the midst of the age of laissez faire, a time when the UK and the US had already demonstrated the merit of allowing society to take its own course, undirected from the top down. In these times, kings and despots were exercising ever less control and markets ever more. Slavery was on its way out. Women obtained rights equal to men. Class mobility was becoming the norm, as were long lives, universal opportunity, and material progress.
“A good case can be made that Carlyle was the forefather of fascism. He made his appearance in the midst of the age of laissez faire, a time when the UK and the US had already demonstrated the merit of allowing society to take its own course, undirected from the top down. In these times, kings and despots were exercising ever less control and markets ever more. Slavery was on its way out. Women obtained rights equal to men. Class mobility was becoming the norm, as were long lives, universal opportunity, and material progress.”
Carlyle would have none of it. He longed for a different age. His literary output was devoted to decrying the rise of equality as a norm and calling for the restoration of a ruling class that would exercise firm and uncontested power for its own sake. In his view, some were meant to rule and others to follow. Society must be organized hierarchically lest his ideal of greatness would never again be realized. He set himself up as the prophet of despotism and the opponent of everything that was then called liberal.
“Carlyle would have none of it. He longed for a different age. His literary output was devoted to decrying the rise of equality as a norm and calling for the restoration of a ruling class that would exercise firm and uncontested power for its own sake. In his view, some were meant to rule and others to follow. Society must be organized hierarchically lest his ideal of greatness would never again be realized. He set himself up as the prophet of despotism and the opponent of everything that was then called liberal.”
Right Authoritarianism of the 19th Century
Carlyle was not a socialist in an ideological sense. He cared nothing for the common ownership of the means of production. Creating an ideologically driven social ideal did not interest him at all. His writings appeared and circulated alongside those of Karl Marx and his contemporaries, but he was not drawn to them.
“Why the state? Because within the state, all that is otherwise considered immoral, illegal, unseemly, and ghastly, can become, as blessed by the law, part of policy, civic virtue, and the forward motion of history.”
Rather than an early “leftist,” he was a consistent proponent of power and a raving opponent of classical liberalism, particularly of the legacies of Adam Smith and John Stuart Mill. If you have the slightest leanings toward liberty, or affections for the impersonal forces of markets, his writings come across as ludicrous. His interest was in power as the central organizing principle of society.
Here is his description of the “great men” of the past:
“They were the leaders of men, these great ones; the modellers, patterns, and in a wide sense creators, of whatsoever the general mass of men contrived to do or to attain; all things that we see standing accomplished in the world are properly the outer material result, the practical realization and embodiment, of Thoughts that dwelt in the Great Men sent into the world: the soul of the whole world’s history….
One comfort is, that Great Men, taken up in any way, are profitable company. We cannot look, however imperfectly, upon a great man, without gaining something by him. He is the living light-fountain, which it is good and pleasant to be near. The light which enlightens, which has enlightened the darkness of the world; and this not as a kindled lamp only, but rather as a natural luminary shining by the gift of Heaven; a flowing light-fountain, as I say, of native original insight, of manhood and heroic nobleness;—in whose radiance all souls feel that it is well with them. … Could we see them well, we should get some glimpses into the very marrow of the world’s history. How happy, could I but, in any measure, in such times as these, make manifest to you the meanings of Heroism; the divine relation (for I may well call it such) which in all times unites a Great Man to other men…”
And so on it goes for hundreds of pages that celebrate “great” events such as the Reign of Terror in the aftermath of the French Revolution (one of the worst holocausts then experienced). Wars, revolutions, upheavals, invasions, and mass collective action, in his view, were the essence of life itself.
The merchantcraft of the industrial revolution, the devolution of power, the small lives of the bourgeoisie all struck him as noneventful and essentially irrelevant. These marginal improvements in the social sphere were made by the “silent people” who don’t make headlines and therefore don’t matter much; they are essential at some level but inconsequential in the sweep of things. Read the rest of this entry »
Here’s to fish, and here’s to the technology that has made it possible to enjoy, cheaply and easily, in every household.
Jeffrey Tucker writes:In the Renaissance, painters often featured fishmongers selling fish from tables right there for anyone to buy. Why? For the first time in history, people had money to buy things, from actual merchants. Fish for sale to anyone and everyone was a lovely sign of wealth, an indicator of progress.
Fish preparation now takes less time than it took the burger place yesterday to make me lunch.Still, you could only get it if you lived near the sea. Fast forwarding a few centuries, when I was a kid in West Texas, eating fish at home was unthinkable. Fish
sticks, maybe. Otherwise fish at home didn’t exist. By culture, tradition, and by sheer availability, we ate beef.
“Dramatic things have happened to the market for fish over the past 10 years. It is wholly changed. Now you can get incredibly great fish at nearly every supermarket”
Even today, many people are reluctant to prepare fish at home. This is my strong impression from talking to friends and colleagues.
This usually traces back to one bad experience. Maybe it came from childhood. The fish was fishy, boney, and just generally dreadful. That one experience can color a lifetime of food choices.
“Hardly any time passes between swimming around and landing in a separately sealed individual packet, ready for eating. Massive improvements in technology (thank you, capitalism) have improved the way fish is caught and brought to market. Now it is caught, cleaned, deboned, and flash frozen right on the boat.”
In my own case, I thought for years I would only eat fish at a restaurant. Only they know how to do it right, I thought. Surely I could never replicate that process at home. At most, I could make those awful breaded fish sticks Mom would drag out on dreaded occasions.
The Glorious Fishy World
Well, dramatic things have happened to the market for fish over the past 10 years. It is wholly changed. Now you can get incredibly great fish at nearly every supermarket. At Wal-Mart, I recently found a vast selection — tilapia, flounder, swordfish, salmon, whiting, halibut, lobster, and so much more. The prices were ridiculously low. I’ve been sampling them all for months.
What’s the secret? Head to the freezer section. I know it sounds inferior. Wouldn’t you rather have fresh? Not any more.
Hardly any time passes between swimming around and landing in a separately sealed individual packet, ready for eating. Massive improvements in technology (thank you, capitalism) have improved the way fish is caught and brought to market. Now it is caught, cleaned, deboned, and flash frozen right on the boat. Hardly any time passes between swimming around and landing in a separately sealed individual packet, right there ready for the eating.
And you don’t have to worry about timing. In the old days, when you bought fish, you had to eat it that night or risk having it become slimy and gross. Now it can stay in your freezer and be ready for you when you want it.
For the first time, the equivalent of fresh fish, stunningly yummy, is available to nearly everyone at low prices, ready for preparation right in your own kitchen. And despite the reputation that fish once had of being difficult to prepare, now it is easier than pork or beef, and even faster.
In other words, cut open the bag, and it is ready to go.
I find this just amazing. That’s a shorter period than it took the burger place yesterday to make me lunch.
Why the destructive philosophy continues to attract followers.
Thomas Sowell writes: Socialism sounds great. It has always sounded great. And it will probably always continue to sound great. It is only when you go beyond rhetoric, and start looking at hard facts, that socialism turns out to be a big disappointment, if not a disaster.
“Facts are seldom allowed to contaminate the beautiful vision of the left. What matters to the true believers are the ringing slogans, endlessly repeated.”
While throngs of young people are cheering loudly for avowed socialist Bernie Sanders, socialism has turned oil-rich Venezuela into a place where there are shortages of everything from toilet paper to beer, where electricity keeps shutting down, and where there are long lines of people hoping to get food, people complaining that they cannot feed their families.
“In 2015, the 400 richest people in the world had net losses of $19 billion. If they had rigged the system, surely they could have rigged it better than that.”
With national income going down, and prices going up under triple-digit inflation in Venezuela, these complaints are by no means frivolous. But it is doubtful if the young people cheering for Bernie Sanders have even heard of such things, whether in Venezuela or in other countries around the world that have turned their economies over to politicians and bureaucrats to run.
“The great promise of socialism is something for nothing. It is one of the signs of today’s dumbed-down education that so many college students seem to think that the cost of their education should — and will — be paid by raising taxes on ‘the rich.'”
The anti-capitalist policies in Venezuela have worked so well that the number of companies in Venezuela is now a fraction of what it once was. That should certainly reduce capitalist “exploitation,” shouldn’t it?
From the dustbin of history, the zombie socialists
But people who attribute income inequality to capitalists exploiting workers, as Karl Marx claimed, never seem to get around to testing that belief against facts — such as the fact that none of the Marxist regimes around the world has ever had as high a standard of living for working people as there is in many capitalist countries. Read the rest of this entry »
Mark J. Perry writes: Two of my all-time most favorite economists — Thomas Sowell and Frederic Bastiat – share the same birthday — they were both born on June 30. To recognize Bastiat’s birthday today I posted some of his quotes on CD yesterday, and I’ll now do the same for Thomas Sowell, who turned 86 today. Here is Thomas Sowell’s webpageand here is his Wikipedia entry. Milton Friedman once said, “The word ‘genius’ is thrown around so much that it’s becoming meaningless, but nevertheless I think Tom Sowell is close to being one.”
In my opinion, there is no economist alive today who has done more to eloquently, articulately, and persuasively advance the principles of economic freedom, limited government, individual liberty, and a free society than Thomas Sowell. In terms of both his quantity of work (at least 40 books and several thousand newspaper columns) and the consistently excellent and crystal-clear quality of his writing, I don’t think any living free-market economist even comes close to matching Sowell’s prolific record of writing about economics. Even at 86 years old, Thomas Sowell is still active and writes two syndicated newspaper columns almost every week (one column in some weeks) and recently released his 40th book last fall Wealth, Poverty and Politics: An International Perspective — which amazingly was his 13th book in the last decade! To honor Thomas Sowell’s 86 birthday today, I present here 15 of my favorite quotations from Dr. Thomas Sowell and a bonus video:
1. Knowledge. The cavemen had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today.
2. Obamacare. If we cannot afford to pay for doctors, hospitals and pharmaceutical drugs now, how can we afford to pay for doctors, hospitals and pharmaceutical drugs, in addition to a new federal bureaucracy to administer a government-run medical system?
3. Economics vs. Politics I. Economics and politics confront the same fundamental problem: What everyone wants adds up to more than there is. Market economies deal with this problem by confronting individuals with the costs of producing what they want, and letting those individuals make their own trade-offs when presented with prices that convey those costs. That leads to self-rationing, in the light of each individual’s own circumstances and preferences.
4. Economics vs. Politics II. The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” Read the rest of this entry »
What are the biggest misunderstandings about capitalism? Deirdre McCloskey, professor at the University of Illinois at Chicago, argues that contrary to common belief, it’s not the amount of capital that has been amassed which sets the last two centuries apart, but rather the explosion of innovation—which in turn has made the capital investment worth it.
Like life, markets will generally find a way to survive. Socialism can harass and suppress what it calls capitalism—now, often just by calling it capitalism—but it can never replace it.
James Bowman writes: They’re demonstrating in Seattle about “capitalism” again. Young people, presumably of the hip variety now famed for supporting Bernie Sanders, rioted there on May Day.
“You’ve got to wonder how, for all those centuries, nobody realized that they were either oppressed or oppressing merely by marrying and having children—just as it never occurred to either employers or employees that they were part of a system, whether called ‘capitalism’ or something else, until patently self-interested socialist theorists came up with a rival system that, they said, would solve all their problems.”
The Seattle Timesreported nine arrests and several injuries to police, including one officer who was bitten. Meanwhile, James Pethokoukis of the American Enterprise Institute, noting that a recent survey found 51 percent of young people, aged 18–29 described themselves as not supporting capitalism, wondered if the c-word “really isn’t the right word for the free enterprise system, the deep magic that has made America the richest, most powerful nation on Earth.”
“The system should rather be called ‘technological and institutional betterment at a frenetic pace, tested by unforced exchange among all the parties involved.’ Or ‘fantastically successful liberalism, in the old European sense, applied to trade and politics, as it was applied also to science and music and painting in literature.’ The simplest version is ‘trade-tested progress.’”
I hope it will not sound immodest in me if I mention that this is what I have been saying for years. As I wrote back in June of 2002, “capitalism” is simply the socialist word for life. You can tell because even under socialism there is still capitalism, in the form of the black market.
Like life, markets will generally find a way to survive. Socialism can harass and suppress what it calls capitalism—now, often just by calling it capitalism—but it can never replace it.
Contrary to popular myth, the environment over the past 200 years has become less polluted and toxic for humans.
In July 1924, Calvin Coolidge Jr., the Presdient’s 16-year-old son, died of an infection from a toe blister he got playing tennis on the White House lawn. The bacteria that took young Calvin’s life is staphylococcus aureus, known as “staph.” …
Were health-care products such as antibiotics, antibacterial ointments, and inexpensive clean and disposable bandages available 92 years ago, Calvin Coolidge Jr., would have escaped the bacterial pollution that killed him. Factories and vehicles used to produce and distribute these items use energy, and dispense waste. But capitalist production and consumption are not destroying a pristine Eden. Instead, capitalist production and consumption are replacing more immediate and more lethal forms of environmental pollution for less immediate and less lethal forms.
We denizens of modern market economies are today largely free not only of the filth of lethal staph infections, but also of other up-close and dangerous pollutants that our ancestors routinely endured, or died of. We sleep, in sturdy buildings, on beds that rest on hard floors beneath hard roofs. Our pre-industrial ancestors did not. Save for the tiny fraction of people in the nobility and clergy, nearly everyone slept in flimsy huts on dirt floors beneath thatched roofs. (Sometimes these dirt floors would be strewn with hay, thresh, to make them less unpleasant.)
Not only were thresh-strewn dirt floors obvious sources of regular up-close pollution of a sort that is unknown to a typical first-world person today, thatched roof themselves were ferments of filth. They kept out rain and cold less effectively than our modern dwellings. Worse, they were home to rats, mice, birds, spiders, hornets, and other animals, which would drop their own wastes onto the huts’ inhabitants. They were also highly flammable.
Of course these pre-industrial huts contained no running water or indoor plumbing. Daily bathing and other routines of personal hygiene that we moderns take for granted were largely unknown to most before the industrial revolution.
For heat in the winter families would bring farm animals into the huts, especially at night. To shield themselves from the droppings of these farm animals, each of these families would cut a trench in the floor across the width their hut. They’d sleep on the side of the trench opposite where the animals slept. Unfortunately, the trench did little to protect the family from whatever insects the animals brought into the huts with them. Read the rest of this entry »
Here’s the good news: The chaos and upheaval we see all around us have historical precedents and yet America survived. The bad news: Everything likely will get worse before it gets better again.
Michael Goodwin writes: That’s my chief takeaway from “Shattered Consensus,” a meticulously argued analysis of the growing disorder. Author James Piereson persuasively makes the case there is an inevitable “revolution” coming because our politics, culture, education, economics and even philanthropy are so polarized that the country can no longer resolve its differences.
“How, Piereson wonders, was it possible that Fidel Castro and Che Guevara became heroes to the American left when it was a committed communist who killed the left’s beloved Kennedy?”
To my knowledge, no current book makes more sense about the great unraveling we see in each day’s headlines. Piereson captures and explains the alienation arising from the sense that something important in American life is ending, but that nothing better has emerged to replace it.
The impact is not restricted by our borders. Growing global conflict is related to America’s failure to agree on how we should govern ourselves and relate to the world.
Piereson describes the endgame this way: “The problems will mount to a point of crisis where either they will be addressed through a ‘fourth revolution’ or the polity will begin to disintegrate for lack of fundamental agreement.”
He identifies two previous eras where a general consensus prevailed, and collapsed. Each lasted about as long as an individual’s lifetime, was dominated by a single political party and ended dramatically.
“Piereson also deftly demolishes the myth of Camelot by recounting how a grieving first lady created the legend on a single weekend after the president’s funeral…White and his editors resisted the grandiose and sentimental story line, but finally relented to the grieving widow. White later expressed regret for helping to create the Camelot myth.”
First came the era that stretched from 1800 until slavery and sectionalism led to the Civil War. The second consensus, which he calls the capitalist-industrial era, lasted from the end of the Civil War until the Great Depression.
Author James Piereson
“That’s not to say he’s pessimistic — he thinks a new era could usher in dynamic growth, as happened after the previous eras finally reached general agreement on national norms. But first we must weather a crisis that may involve an economic and stock-market collapse, a terror attack, or simply a prolonged and bitter stalemate.”
It is the third consensus, which grew out of the depression and World War II, which is now shattering. Because the nation is unable to solve economic stagnation, political dysfunction and the resulting public discontent, Piereson thinks the consensus “cannot be resurrected.”
“The problems will mount to a point of crisis where either they will be addressed through a ‘fourth revolution’ or the polity will begin to disintegrate for lack of fundamental agreement.”
That’s not to say he’s pessimistic — he thinks a new era could usher in dynamic growth, as happened after the previous eras finally reached general agreement on national norms. But first we must weather a crisis that may involve an economic and stock-market collapse, a terror attack, or simply a prolonged and bitter stalemate. Read the rest of this entry »
Is capitalism moral or greedy? If it’s based on greed and selfishness, what’s the best alternative economic system? Perhaps socialism? And if capitalism is moral, what makes it so? Walter Williams, a renowned economist at George Mason University, answers these questions and more.
“Only a truly exceptional and powerful economic system would be capable of producing so many limited-edition and holiday-themed flavors of a single cookie brand, such as these extraordinary Key Lime Pie Oreos and Candy Corn Oreos. This is not a force of global impoverishment at all, but one of endless enrichment.”
WASHINGTON—Admitting the startling discovery had compelled him to reexamine his long-held beliefs, His Holiness Pope Francis announced Tuesday that he had reversed his critical stance toward capitalism after seeing the immense variety of Oreos available in the United States.
“Oh, my goodness, look at all these! Golden Oreos, Cookie Dough Oreos, Mega Stuf Oreos, Birthday Cake Oreos—perhaps the system of free enterprise is not as terrible as I once feared,” said the visibly awed bishop of Rome while visiting a Washington, D.C. supermarket, adding that the sheer diversity of flavors, various colors and quantities of creme filling, and presence or absence of an outer fudge layer had led to a profound philosophical shift in his feelings toward the global economy and opened his eyes to the remarkable capabilities of the free market….(read more)
The free market: best anti-monopoly weapon ever developed.
“In New York, we are seeing a collapse as inexorable as the fall of the Soviet Union itself.”
Jeffery A. Tucker writes: An age-old rap against free markets is that they give rise to monopolies that use their power to exploit consumers, crush upstarts, and stifle innovation. It was this perception that led to “trust busting” a century ago, and continues to drive the monopoly-hunting policy at the Federal Trade Commission and the Justice Department.
“No more standing in lines on corners or being forced to split fares. You can stay in the coffee shop until you are notified that your car is there.”
But if you look around at the real world, you find something different. The actually existing monopolies that do these bad things are created not by markets but by government policy. Think of sectors like education, mail, courts, money, or municipal taxis, and you find a reality that is the opposite of the caricature: public policy creates monopolies while markets bust them.
For generations, economists and some political figures have been trying to bring competition to these sectors, but with limited success. The case of taxis makes the point.
“Think of sectors like education, mail, courts, money, or municipal taxis, and you find a reality that is the opposite of the caricature: public policy creates monopolies while markets bust them.”
There is no way to justify the policies that keep these cartels protected. And yet they persist — or, at least, they have persisted until very recently.
“In less than one year, we’ve seen the astonishing effects. Not only has the price of taxi medallions fallen dramatically from a peak of $1 million, it’s not even clear that there is a market remaining at all for these permits.”
In New York, we are seeing a collapse as inexorable as the fall of the Soviet Union itself. The app economy introduced competition in a surreptitious way. It invited people to sign up to drive people here and there and get paid for it. No more standing in lines on corners or being forced to split fares. You can stay in the coffee shop until you are notified that your car is there.
In less than one year, we’ve seen the astonishing effects. Not only has the price of taxi medallions fallen dramatically from a peak of $1 million, it’s not even clear that there is a market remaining at all for these permits. Read the rest of this entry »
More than any other outlet, Whole Foods has reconfigured what and how America eats and the chain’s commitment to high-quality meats, produce, cheeses, and wines is legendary. Since opening his first store in Austin, Texas in 1980, Mackey now oversees operations around the globe and continues to set the pace for what’s expected in organic and sustainably raised and harvested food.
Because of Whole Foods’ trendy customer base and because Mackey is himself a vegan and champions collaboration between management and workers, it’s easy to mistake Mackey for a progressive left-winger. Indeed, an early version of Jonah Goldberg‘s best-selling 2008 book Liberal Fascismeven bore the subtitle “The Totalitarian Temptation from Mussolini to Hillary Clinton and The Totalitarian Temptation from Hegel to Whole Foods.”
Yet nothing could be further from the truth—and more distorting of the radical vision of capitalism at the heart of Mackey’s thought. A high-profile critic of the minimum wage, Obamacare, and the regulatory state, Mackey believes that free markets are the best way not only to raise living standards but also to explore new ways of building community and creating meaning for individuals and society.
“We treat the physical results of capitalism as though they were an inevitability. In 1955, no captain of industry, prince, or potentate could buy a car as good as a Toyota Camry, to say nothing of a 2014 Mustang, the quintessential American Everyman’s car. But who notices the marvel that is a Toyota Camry? In the 1980s, no chairman of the board, president, or prime minister could buy a computer as good as the cheapest one for sale today at Best Buy. In the 1950s, American millionaires did not have access to the quality and variety of food consumed by Americans of relatively modest means today, and the average middle-class household spent a much larger share of its income buying far inferior groceries. Between 1973 and 2008, the average size of an American house increased by more than 50 percent, even as the average number of people living in it declined. Things like swimming pools and air conditioning went from being extravagances for tycoons and movie stars to being common or near-universal. In his heyday, Howard Hughes didn’t have as good a television as you do, and the children of millionaires for generations died from diseases that for your children are at most an inconvenience. As the first 199,746 or so years of human history show, there is no force of nature ensuring that radical material progress happens as it has for the past 250 years. Technological progress does not drive capitalism; capitalism drives technological progress — and most other kinds of progress, too…”
Dana has good taste. (And a great laugh) In a comment to Dana, Kevin D. Williamson notes: “It’s actually an old piece that’s been making the rounds…” Fooled me, too. I also thought it was new column. Good to see it circulation again.
Seattle’s socialists continue to have fascinating problems abiding by the labor laws they themselves champion
Eric Owens reports: Kshama Sawant, a socialist and a member of the Seattle, Wash. City Council, is paying no fewer than five campaign staff employees as independent contractors — thus evading the payment of payroll taxes, overtime, social security and other insurance.
The avowed protector of workers from the evils of capitalist exploitation has spent $12,000 paying her employees so far as she fights for reelection, according to KIRO Radio.
“Kshama does not take a penny in corporate cash,” her volunteer-sign-up page explains, for example. “We are building a grassroots alternative to corporate politics.”
Locker also noted that Sawant doesn’t want large corporations to pay employees exactly the same way she pays her own employees.
“We are absolutely against that,” Locker said according to KIRO. However, he rationalized, there are “times when it is appropriate for someone to be an independent contractor.”
Back in 2010, The New York Times cited a federal study which found that up to 30 percent of employers across the United States misrepresent regular workers as independent contractors. Some 3.4 million employees are affected.
Sawant was first elected to Seattle’s municipal legislature in 2013. Before that, she taught economics at a local community college.
The socialist council member proudly takes credit for the fact that Seattle’s nine-member city council passed an ordinance raising the local minimum wage to $11 as of this April. The law will raise the city’s minimum wage annually in one dollar increments to $15 each hour for all businesses by 2019.
Join Professor Tabarrok in exploring the mystery and marvel of prices. We take a look at how oil prices signal the scarcity of oil and the value of its alternative uses. Following up on our previous video, “I, Rose,” we show how the price system allows for people with dispersed knowledge and information about rose production to coordinate global economic activity. This global production of roses reveals how the price system is emergent, and not the product of human design. Read the rest of this entry »
Today, capitalism is blamed for our current disastrous economic and financial situation and a history of incessant booms and busts. Support for capitalism is eroding worldwide. In a recent global poll, 25 percent (up 2 percent from 2009) of respondents viewed free enterprise as “fatally flawed and needs to be replaced.” The number of Spaniards who hold this view increased from 29 percent in 2009 to 42 percent, the highest amongst those polled. In Indonesia, the percentage went from 17 percent to 32 percent.
Most, if not all, booms and busts originate with excess credit creation from the financial sector. These respondents, incorrectly, assume that this financial system structured on fractural reserve banking is an integral part of capitalism. It isn’t. It is fraud and a violation of property rights, and should be treated as such.
This legalization of fraud is essentially one of the main reasons no one went to jail after the debacle of 2008.
In the past, we had deposit banks and loan banks. If you put your money in a deposit bank, the money was there to pay your rent and food expenses. It was safe. Loan banking was risky. You provided money to a loan bank knowing funds would be tied up for a period of time and that you were taking a risk of never seeing this money again. For this, you received interest to compensate for the risk taken and the value of time preference. Back then, bankers who took a deposit and turned it into a loan took the risk of shortly hanging from the town’s large oak tree.
During the early part of the nineteenth century, the deposit function and loan function were merged into a new entity called a commercial bank. Of course, very quickly these new commercial banks realized they could dip into deposits, essentially committing fraud, as a source of funding for loans. Governments soon realized that such fraudulent activity was a great way to finance government expenditures, and passed laws making this fraud legal. A key interpretation of law in the United Kingdom, Foley v. Hill, set precedence in the financial world for banking laws to follow:
Money, when paid into a bank, ceases altogether to be the money of the principal; it is then the money of the banker, who is bound to an equivalent by paying a similar sum to that deposited with him when he is asked for it. … The money placed in the custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal; but he is, of course, answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.
In other words, when you put your money in a bank it is no longer your money. The bank can do anything it wants with it. It can go to the casino and play roulette. It is not fraud legally, and the only requirement for the bank is to run a Ponzi scheme, giving you the money deposited by someone else if they lost your money and you happen to come back asking for your money. This legalization of fraud is essentially one of the main reasons no one went to jail after the debacle of 2008. Read the rest of this entry »
A great find. For Reason.com, Emily Ekins writes:A 1940s capitalism cartoon is making a comeback with over 7 million views on YouTube. The cartoon “Make Mine Freedom” was produced by Harding University, a private university in Arkansas in 1948 extolling the virtues of free-market capitalism and inveighing against “isms” particularly communism and statism more generally.
The cartoon mixes humor with serious philsophy as it defines what freedom means: “America is the freedom to work at the job you like, freedom of speech and to peacefully assemble, freedom to own property, security from unlawful search and seizure, the right to a speedy and public trial, protection against cruel punishments and excessive fines, the right to vote, and worhip God in your own way.” Read the rest of this entry »
Seattle Mayor Ed Murray, right, announces his proposed increase of the city’s minimum wage.Steve Ringman / AP
For the Los Angeles Times, Maria L. La Ganga reports:Five Puget Sound business owners and a trade group based in Washington, D.C., filed suit in federal court Wednesday to stop Seattle from enacting a $15-an-hour minimum wage, which would be the highest in the nation when it takes effect.
“The city’s minimum wage statute arbitrarily and illegally discriminates against franchisees and significantly increases their labor costs in ways that will harm their businesses, employees, consumers and Seattle’s economy.”
The suit, filed by the International Franchise Assn. and five local franchisees, argues that the new minimum wage discriminates against the owners of franchised businesses because it treats them like national corporations instead of the small businesses that they really are.
Calling a thing what it is: 1930s-era Socialist wage and price controls in a 21st-century economy. Seattle Mayor Ed Murray signs a bill raising the city’s minimum wage to $15 an hour.(David Ryder / Getty Images)
The ordinance, which was passed unanimously by the Seattle City Council on June 2 and signed into law by Mayor Ed Murray a day later, violates the U.S. and Washington state Constitutions, the suit says, along with federal statutes and state law, and could put some small franchisees out of business. Read the rest of this entry »