Dumping capitalizam for other failed economic systems

Obama and his Democrat partners in Washington are working hard to make the new economy described in one of those progressive columns I ran a few weeks ago calling for a “new design for the economy,” a reality. Having taken over the banks and the car industry, they have now set their sites on the health care industry. They apparently plan to regulate wages, especially for the fat cat executives and to tell all of these greedy businesspeople how to run their companies.

This past week I received another submitted story for a new book called, Cost of Freedom. I haven’t read the book but the book review was enough to tell me the dreamers and economically challenged feel empowered by the current economic troubles and the movement to dismantle free market capitalism. Consider the following endorsement for the book:

“Cost of Freedom” vividly documents the actions of citizens challenging corporate government. It leaves readers with hope-the hope that citizens will get organized and take back their government. For too long, corporations have dominated government, and when it comes to issues of war and peace the military-industrial complex, big oil and international corporations have used the U.S. military to enforce their form of corporate globalization-trade that puts corporate profits ahead of the basic necessities of the people, saving the environment and a fair economy where wealth is distributed equitably. We need active participants in U.S. democracy if we are going to ever really have a government of, by, and for the people..” –Kevin Zeese, Director of Democracy Rising, and Chair of Voters For Peace.

Obviously, none of these dreamers have a grasp of history, economics, corporations or capitalism. What they are proposing is nothing more than a rehashed and whitewashed version of already failed economic systems like communism and socialism. I am convinced most don’t even realize their dreamland proposals have been tried. These ideas are not new and they are not progressive. Some of the proponents are bold enough to say they recognize that these ideas have failed to work in the past but they say we can do it better. We can learn from the mistakes of the past.

The problem with all of these utopian dreamers is that they are woefully uneducated about human nature and the capitalistic system in particular. Humans are extremely competitive and often self-centered. Capitalism is not perfect, but it has proven to be the only economic system that works to take advantage of those basic human traits in a way that will work for the benefit of the greater society. It is a lie that central government control results in a better and more just allocation of economic resources. In fact, look at the dictators who have claimed to seize control of the economy for the benefit of the people. Then ask why those countries are still the poorest in the world. People like Castro in Cuba or Hugo Chavez in Venezuela are perfect examples. They live in luxury while their people become victims of their systems.

The other problem with systems that rely on centralized government control to “spread the wealth” around is they leave no room for innovation or competition. Unable to really compete with a free market economy they find it necessary to eliminate private sector competition through regulation and price controls. The central planners ultimately become arbiters of who will succeed and who will fail. So those who would assume the risk to compete either go underground or they give up because the incentive to succeed is no longer there.

Centralized planners attack corporations and profit as the ultimate evil of the capitalistic system. Profit is not evil in fact your wages are the profit of your individual labor. And corporations are nothing more than a legal organization of human beings who have agreed to work together for some common purpose. In this country the classic corporation is the publicly held company whose stock, or ownership shares, are traded on exchanges like the New York Stock Exchange. Anybody can buy shares in those companies and share in the financial success and the governance of those companies. If individual citizens invest wisely they may become wealthy or they can lose it all if the company does poorly. But they have the individual freedom to choose how to invest their wealth.

Contrast that freedom with the lack of freedom in a system dominated by centralized government control of the engines of the economy. Individual citizens personal wealth is often confiscated for the “good of the community.” The ruling class or their designated bureaucrats decide what you need including how much wealth you should be allowed to accumulate. The dreamers believe that such a system results in a more balanced and “fair” distribution of wealth. But the net result is there is no incentive for innovation or initiative. There is no incentive to work harder to get ahead because if you do too well the government will confiscate your wealth. Such a system goes against our human nature for competition and to work for our own self-interest.

Progressives or liberals who are attempting to eliminate the abuses of some free market capitalists by replacing one imperfect system with another will only succeed in reducing our individual freedom and will ultimately find their demons are now their rulers. Every society that has tried this has ended up poorer for the effort, except of course the planners and bureaucrats that end up deciding what is best for you and your family. Is this the “hope and change” you voted for?