Tuesday, January 5, 2010

Capitalism And Our Economic Future

Jonah Goldberg has an outstanding column on capitalism at NRO, and it's well worth reading the whole thing:

On the last day of 2009, that awful year, I was listening to a report on National Public Radio (yes, I'm a listener). Reporter Tamara Keith presented a by-now-familiar recap of the worst financial and corporate scandals of the decade, from Enron and Martha Stewart to Tyco and Bernie Madoff. It was a depressing slog of greed, venality, and theft. When the report was over, Morning Edition host Steve Inskeep summarized the report with a tart: "The decade in capitalism."  

I don't want to single out Inskeep, since he was doing what pretty much the entire media establishment has done, particularly of late: reducing "capitalism" to its alleged sins.

And that's the point. There are few areas of life where a thing responsible for so much good gets so little credit for it.

Imagine if I were to collect the most infamous deeds of African Americans over the last decade — say, Michael Vick's dog-fighting scandal and O. J. Simpson's most recent criminal exploit — and then put a bow on it with the phrase "the decade in black America." What if I did the same thing with Jews? Bernie Madoff, the face of Jewish America! Do the scandals of Rod Blagojevich, Charlie Rangel, and John Edwards define the Democratic party from 2000 to 2010? Do Abu Ghraib and the balloon boy sum up America?

Consider NPR. As a brand, it claims to be standing athwart capitalism because it's "public." What that means exactly is a bit unclear, since it still allows corporations to fund its programming in exchange for audio endorsements none dare call commercials and relies on the kindness of listeners to keep it afloat — listeners who, one way or another, make their money from you-know-what.

Indeed, speaking of the decade in capitalism, National Public Radio failed to mention that Joan Kroc, widow of Ray Kroc, the founder of McDonald's, left more than $200 million to NPR in 2003. Mrs. Kroc's generosity of spirit was her own, but the wampum is all capitalism's, baby.

In a similar vein, the decade of capitalism saw one of the world's richest men, Warren Buffett, pledge more than $30 billion to a foundation created by another offspring of capitalism, Bill Gates, for the purpose of aiding the world's poor. Surely capitalism should get some of the credit, since the book on philanthropy in non-capitalist systems is shorter than the guide to cities without Starbucks.

Capitalism doesn't just create generous wealthy people, but generous poor people, too. Americans give twice as much to charity as the most generous European nations, and the most generous Americans are, in fact, poor Americans.

But forget philanthropy. Since 2000, hundreds of millions of people in China and India — home to a plurality of the world's poor — have lifted themselves out of poverty and illiteracy thanks to capitalism.

China started to embrace markets as a last resort in the late 1970s. And by last resort, I mean last resort. First they tried murdering tens of millions of their own people through collectivism and oppression. When that didn't work, they embraced markets, and the poverty rate dropped from 64 percent to around 8 percent today.

As it always does, capitalism drove innovation over the last decade. The BlackBerry was introduced in 1999, but the iPhone didn't exist in 2000, nor did the iPod. YouTube was a fantasy, and no one could even imagine why you'd ever need something like Facebook or Twitter (in fairness, some people still ask that question). iTunes was launched in 2003, and five years later it was outselling Wal-Mart as the No. 1 music retailer. Government-funded basic research in medical science deserves some credit for breakthroughs, but it's worth remembering that lots of countries invest in basic research. America, with its markets, stands alone as the leading, arguably sole, source of medical innovation. Breakthrough drugs are as American as apple pie.

Every good thing capitalism helps produce — from singing careers to cures for diseases to staggering charity —  is credited to some other sphere of our lives. Every problem with capitalism, meanwhile, is laid at her feet. Except the problems with capitalism — greed, theft, etc. — aren't capitalism's fault, they're humanity's. Socialist countries have greedy thieves, too.

Free markets are in disrepute these days, particularly by the people running Washington. For them, government is the solution and capitalism is the problem. If they have their way over the next decade, they won't cure what allegedly ails capitalism — people will still steal and lie — but they will impede everything that makes capitalism great. And that will be bad for everyone, even NPR.


I always love good examples of the irony of liberals who condemn capitalism nevertheless enjoying the benefits of it.  It amazes me that they don't see the connection between killing the golden goose and running out of golden eggs.

So, what do we make of this?  First, I think, we need to boldly defend capitalism.  Embrace it.  Love it.  Profit is a good thing, and a righteous incentive to innovate, develop, and produce.  It's what lifts the poor into the middle class, the middle class into the wealthy, and the wealthy into the sort of life that allows for the incoherent idiocy of liberalism.  In short, it's good for everyone.  Well, except for the incoherent idiocy of liberalism, but if we embrace capitalism, that probably won't be a big factor.  Regardless, let's not demonize it, and let's not accept such demonization from the snoots who are jealously guarding their own position as richer than you and I.

Second, I think we need to examine what happens when capitalism is knee-capped.  Though we're still largely a capitalist economy, we've been slowly moving toward a socialist system for a very long time, incrementally, with more and more government intervention and control.  Barack Obama blew away the incremental and slow parts, catapulting America headlong toward liberals' utopian vision of socialist Europe.  And what does that get us?  This headline of a recent Reuters story says it all:

U.S. growth prospects deemed bleak in new decade

Not the next year, mind you...the next decade.  Barack Obama's policies have, in just one year, debilitated a powerhouse mostly-capitalist economy to such an extent that economic forecasts are bleak for the next decade.  Can we snap out of the capitalist-bashing fog now, please?

And how about Europe?  How's their model going after decades of open socialism?  Hmmm:

...Germany, long considered the cornerstone of eurozone fiscal discipline, forecasts public debt at around 78 per cent of GDP this year, while in France, the second biggest eurozone economy, public debt jumped to a record 75.8 per cent in the third quarter of 2009.

Greece says its shortfall come to 120 per cent of output in 2010.

Debt is raising the cost of borrowing for many countries and adding to the weight of reimbursing obligations on future budgets.

With unemployment rising and weak growth expected in 2010, officials cannot count on increased tax revenues for much help in paying down debt, a lot of which is owed abroad.

"The (economic) crisis is weighing on the sustainability of public finances and potential growth," the EU commission has warned as economists leave open the possibility of a "double dip" recession this year...

They're in even worse shape than we are.

We really need to demand that fiscal sanity retake control of our nation.  It starts with the right attitudes, both in our own personal finances and in the national consciousness.  We have to display responsibility in ourselves, and demand the same from our elected leaders.

I think we're doing fairly well on the first part, as evidenced by a recent Rasmussen poll showing that 55% say it's better for California to go bankrupt than to get bailed out.  Normal people understand that in capitalism you should be rewarded for success, but you should also be punished for mismanagement, and that's exactly what is going on in California.

The second part is a much tougher nut to crack.  The bottom line is that we must deal with our elected reps accordingly, voting for those who do display fiscal responsibility and sending the rest home, regardless of party or tenure in Washington.  There's simply too much at stake not to take ownership of our country like this, and if we do not, our children and grandchildren will truly be the first generations to be worse off than their parents.  If things aren't brought under control soon,
Barack Obama's epic fail of 2009 will last for years.

There's my two cents.

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