Obscene Wealth – Myths About Capitalism
Recently I tweeted a quote from John Stossel (who was quoting Michael Medved):
"If you believe that when the rich get richer, the poor get poorer, then you believe that creating wealth causes poverty, and you're an idiot"
This is the old zero-sum fallacy, which ignores that when two people engage in free exchange, both gain -- or they wouldn't have traded. That’s the way business works.
I received a number of responses to that tweet, mostly espousing the leftist concept that Capitalism is bad and somehow that the concept of getting wealthy is “obscene” and it seems to occur “at the expense of others”.
When does wealth (or the creation of wealth) become "obscene"? Is there some measuring stick we can hold against it with a red line on it that says "Obscenity Level"? Or is it just somebody's subjective, biased jugement?
Other responses seemed to focus on the "deductive argument" logic of the statement, completely ignoring the point (and further indicating the difficulty some people seem to have with this concept)
One only needs to look at the recent recession to see the corollary that when the rich get poorer, the poor certainly don’t get richer.
Then there are those who claim, for example, that Walmart comes in and wipes out local grocers and other businesses. Obscene Wealth? Maybe, but they also bring new jobs to the community. That’s capitalism. If you try to regulate this kind of thing, you don’t make any improvements. All you do is create more Socialism and Collectivism – the hallmarks of the current Obama Adminstration. More regulation, more big government programs and agencies, and printing five times more money in one year than predecessor Bush did in two terms of office. Not that Bush was any angel- he almost singlehandedly dismantled Reaganomics, virtually assuring an economic collapse of one sort or another.
The bottom line is, this is one of the biggest lies -- the idea that because of capitalism, we're all suffering. Poor people in America today -- people who are officially in poverty -- have a higher standard of living in terms of medical standards, the chances of going to college, the way people live -- than middle-class people did 30 years ago. It's an extraordinary achievement of technology and of the profit sector, and it comes from the creation of wealth by hard - working entrepreneurs.
Here’s the thing: Capitalism works. It’s worked just fine in the US of A for over 250 years. If it ain’t broke, then don’t try to fix it.
"If it ain’t broke, then don’t try to fix it."
ReplyDeleteLOL, it is broke my friend, wake up. It's what got us here today. Those in finance have the motivation of improving profits over the short term or even mid term. Those kind of incentives lead to short cutting just about everything possible while ignoring the long term effects. After the .com crash in 01 they shifted their speculation to housing and crashed that as well.
Capitalism can be good, as long as the bottom line has and altruistic purpose where the XO's are invested for the long term.
@Marc you aren't talking so much about Capitalism as you are about human nature.
ReplyDeleteCapitalism, like any other system, can be abused by unchecked greed and fear to the point where the results make it *appear* that the system is broken when in fact it's not.
In fact is was our own government that precipitated the recent dot-com and housing busts because of Fed policy. The "Fat Cats" simply took advantage of the goodies being heaped on their plates. That's human nature.
True, when the rich get richer the poorer don't HAVE TO get poorer. When capitalism is rooted in innovation and progress then poorer in fact get richer by virtue of having increased possibilities and market capacity. Case in point, recent iPad’s release is something I’ll call capitalism done right, it broke new ground, created new markets, increase completion, and in some scenarios increased productivity. And that’s a win-win, also the poorer got richer in the “opportunity cost” sense of having a technology that might have been out of their hand previously is now less so.
ReplyDeleteOn the other hand, there is a face of capitalism that is rooted in greed and deceit. And you can look no further than Goldman Sachs’s recent case of pitting a portfolio which was designed to be shorted as a winner to its own client. What did it achieve, well other than Goldman Sach’s making a decent cut, it just transferred wealth from the defrauded investor(s) to the seller. This is capitalism done at someone’s expense, Goldman Sachs did not invent or produce anything, they cooked books and fabricated fudge. I identify-with and welcome services industries when they incrementally add-value or serve some purpose (like increase efficiency or reduce cost via pooling etc.), but here it’s one group taking advantage of information it had and yielding misinformation to profit.
Also as much you can/should aspire to great principles, understand than markets/companies don’t exist in a vacuum – as history shows, a point inevitably comes where the some of the rich leverage their power/position to game the system against everyone else. This can take the form of generating algorithms to root out Breast Cancer suffers or buying political influence to dilute legislation that might them more competitive. And if you think the answer to this is crying socialism, then I don’t think it’s worth having this conversation. And honestly, the least socialist country in the world is Somalia, not only do you have minimal Govt. interference but you also have the unbeatable tax rate of exactly zero. If you truly believed in capitalism, I’m looking forward to your migration in the capitalism-paradise else check your rhetoric.
If America has come so far in 250 years, it more because capitalism was exercised in more or less the spirit of fairness, and if there is sustained and malevolent attack on that underpinning then correcting it is more important than clinging to some cherished principle on Govt.’s role. Lastly, have you thought about the opposite of what Michael Medved said – if you believe that helping the truly impoverished and poor is done at the expense of capitalism, then you believe that decreasing poverty reduces wealth and you’re are an idiot too..
Rishi
Unregulated Big Capitalism is evil, that is all there is to it. For example, when Windows 95 came out, "Ah, Wordperfect does not work with Win95!" "Too bad!" Now, MS Word stinks, we all know that, and Wordperfect is very good, we all know that. Netscape was good, too. But the MS monopoly wiped them out. This is evil. Intel paying Dell $1 Billion to NOT use AMD processors is "legal", but evil. The U.S. media completely owned by 5 humongous companies is evil. See, we need regulated capitalism, 'cause big Corp. is just as evil as big Gov.
ReplyDeleteAAG