January 19, 2021

Capitalism Under Attack?

Posted on 14. Dec, 2011 by Stephan Helgesen in Economy, Politics

Question #1: Do you believe that America’s prosperity is due to capitalism? (If you answered yes, then go directly to question two. If you answered no, where do you think this newspaper came from?)

Question #2: Why are Americans not taking up the discussion of capitalism on a more massive scale, challenging the criticisms of the ‘Occupy Wall St. types’ (whether they’re in uniform on the streets or suited up on our media)?

It could be because the conversation is being framed by ideological purists who base it on a premise that cannot be debated by supporters of capitalism. For example, “We all know that big business is bad because big dominates small, therefore big business must be bad,” or “Capitalism and the imperialistic desire to dominate world markets is what brought us to our current economic situation,” or maybe, “One person profiting from his labor without sharing it ‘fairly’ with his neighbors is abhorrent in a modern society when so many are suffering.”

These may not be the exact talking points you’re hearing from left-wing politicians, labor union leaders, tenured professors, youthful protestors and those supporting class warfare or race baiting politics, but they do undergird their rantings.

Did you notice the use of certain volatile words in that last sentence like: left-wing, class warfare, race-baiting and rantings? I purposely used them to illustrate how rhetoric can be used to inflame rather than illuminate, igniting people’s emotions and moving them away from a debate on the facts.

History shows us the error of mankind’s ways and helps us prove that capitalism, when coupled with democracy and a pretty damned good Constitution like ours, works. Maybe it doesn’t work perfectly, but if you want perfect, you need to go back to school and comfort yourself by reading economic theory. Monarchies were great for the kings, princes, dukes, earls, counts and feudal lords who held the land but a bad system for everybody else. Collectivism (Communism and Socialism) looks impressive on paper, but is incredibly impractical and contrary to human motivation in reality. What do you do with the slackers? Gulag them? Then there is the enormous bureaucracy needed to administer the system. What a waste, as the former Soviet Union will agree.

Social Democracies (SD) are the apparent preference of our current President and have struck a responsive chord among his administration’s people and that’s why the debate is getting so heated. The noble SD experiment began after WWI, shifted into higher gear during the Great Depression in the 1930s, was temporarily suspended during WWII but re-emerged in the 50s and 60s in Scandinavia, Germany and elsewhere in Europe.

It focused on the creation of a new social contract that included welfare, unemployment compensation, pensions, collective bargaining and state-sponsored education decided on the basis of social need using democratic principles. What went haywire was government’s belief that it could manage private companies just as well as the private sector. The most notable of which was the airline industry (SAS was co-owned by the governments (people) of Denmark, Sweden and Norway, and KLM was owned by the Dutch people). There were other nationally-owned carriers, but the principle that state-ownership of key industries was in the citizens’ best interest was unmistakable.

On the education front, it might appear the SDs have found the answer. With state-run universities and state-sponsored tuitions and stipends to defray dormitory costs, education is free. Not quite. The taxpayers pay for their kids (and their neighbors’) to go to college…if they can get in, that is. The downside of state-run education is that the state determines how many students are allowed to study medicine, psychology, architecture, etc.  They do it by establishing rigid quotas and high grade point qualifiers (to sustain them) based on how many graduates the economic system can absorb 3-4 years hence.

If the graduates were unable to find work they would receive unemployment compensation which would cost the governments plenty. Therefore, it is a state-determined economic motive that decides the outcomes not a scholastic one.

Is that really what we want in America, an educational system run by the government that decides who can study what and when?

The other ‘trophy industry’ SD proponents point to is Europe’s rail system, impressive in its network of rail connections and high speed trains. What we forget is that 19th and 20th century Europe’s primary transportation WAS railroads, and the devastation of much of the system in WWII enabled Europe to rebuild and in some case re-draw areas for tracks and incorporate new technology while we were busy building a federal highway system.

Isn’t this really more about which governments have understood their national advantages and priorities, had a plan for developing them and then chose wisely instead of which political system is the best? In point of fact, there are few SD-owned industries anymore. Why? Because the Europeans now realize that the system doesn’t work well. The grand bargain of the Common Market (which was based on a higher level, multi-country version of SD) has morphed into today’s ‘Eurozone.’

That compact, and subsequent common currency, has made these countries extremely vulnerable BECAUSE of their linkages to one another, due in part to the expensive liberal social welfare contract with its citizens. Today, they are literally teetering on insolvency.

The bottom line is that we cannot transplant European-style social democracy to America because our economic organism is vastly different from that of our European cousins. Thankfully, we have a Constitution that guarantees the right of private ownership and that protects us from any potential unlawful governmental intrusion into business or does it? What about General Motors, AIG, Fannie Mae and Freddie Mac, Goldman Sachs, Merrill Lynch, Solyndra, National Healthcare? If we think we can just sit back and rely on common sense or our Constitution to protect us, we are not seeing the ideological handwriting on the wall. The 2012 election is right on our doorstep.

-  Editor

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