by Robert Arvay, Contributing Writer
I am a free market capitalist through and through, make no mistake about it. More specifically, I am a proponent of the kind of capitalism described by the late economist, Dr. Milton Friedman, winner of the Nobel Prize in Economics. So then, why would I write about the evils of capitalism?
I do this to contrast them with the far worse evils of socialism. Most conservatives are well aware that socialism involves imposing the will of those in government upon those in the rest of society. It is small wonder, then, that in socialist France, a huge percentage of young people state that their greatest ambition is to work for the government, with the word, “work,” being a misnomer.
Even though capitalism is the best form of economic policy, it is vulnerable to abuses. It is these abuses which draw the ire of liberals, and help them to remain distracted from the evils of socialism.
To be fair, the abuses of capitalism are actually departures from capitalism. They occur when so-called capitalists deign to impose socialist policies on everyone except themselves. Sarah Palin has popularized the term, “crony capitalism,” to describe this distortion. George W Bush revealed his ignorance of the dangers of crony capitalism when he infamously declared, near the end of his presidency, “I’ve abandoned free market principles to save the free market system.”
That blunder gave us TARP, the Troubled Asset Relief Program, the massive, multi-trillion dollar bailout of financial institutions which were thereby shielded from the consequences of their own corporate incompetence. Worse, it opened the door for Obama-style socialism, which for more than six years has crushed the once-great American economy.
One of the results of capitalism is that when it is practiced, money tends to move toward the most productive activities, and away from the least productive. This happens because private citizens have a personal stake in their decisions, and therefore, they are much more careful with their own money than the government is with yours.
I have worked both in government and for private companies, and both for big companies and small ones. One thing I learned was that big companies are much like small governments, and the bigger they get, the more like big government they become.
It is because of this negative economy of large scale that formerly small, upstart companies like Apple, were able to challenge giant established companies like IBM. IBM, the standard of the computer industry, had eventually become (like government) an inefficient bureaucratic maze of rules and pointless procedures. This resulted in IBM losing vast amounts of money to the smaller upstart companies. Because of that competition, IBM was forced to streamline its management, and implement commonsense reforms that kept it in business.
That kind of reform does not happen in socialist economies, where the government bails out the giant corporations, while imposing barriers that prevent small upstart companies from competing— or even getting started.
Crony capitalism allows big companies to lobby for rules that pretend to “protect the public,” but in fact harm the public by preventing would-be competitors from producing better, less expensive products.
The proper role of government is to enforce capitalist principles, not to violate them. Government should preserve access to the marketplace for all who come to it, both sellers and buyers, both large and small. This means enforcement of contract law, punishment of fraud, and regulation that stimulates competition instead of stifling it.
When big businesses fail, the small guy gets hurt. He loses his job. He suffers. Then he may vote for the anti-capitalist politician who only multiplies the problem and makes it long term.
If instead the big business is allowed to collapse, there is short term suffering, followed by long term benefit to the fellow who lost his job. During that short term, capitalism seems to have failed, but in fact it has created more prosperity for more people than before.
The Great Depression is considered by many to have been the clearest indication of the failure of capitalism. It is said to have demonstrated that big government is the friend of the suffering worker. History shows us, however, that the Great Depression was only one in a long line of short-term depressions that were called “panics,” prior to 1929. Each one was followed quickly by a recovery. The Great Depression was different; it was worse, because government intervention made it deeper and longer than any of the panics which had preceded it.
No doubt there are capitalists who have defrauded the system, who have lied and cheated their way to riches, and done so at the expense of ordinary workers. In past years, these problems were more difficult to detect and remedy. Modern technology, however, gives us the opportunity to prevent such problems, and to correct them quickly when they occur.
That technology can benefit the worker, but only when government promotes free market capitalism. When big government promotes big government, it turns that technology against us.
Yes, capitalism has many flaws, but to adapt a phrase from Winston Churchill, it is the worst form of economics, except for all the others.