In Defense of Capitalism

The political blabber on TV is really starting to drive me crazy. The two party system is supposed to work like a rope bridge over a canyon: both sides are tight and pull really hard and that brings everyone else up (like the middle of the bridge) Most people in the United States fall somewhere in the middle, but people tend to define themselves and others based on their stances on a few hot button issues.

For example, if you support late-term abortion, your pretty much considered far left even if you are right leaning on everything else. Or if you are completely against homosexuality and gay marriage, you are, more-often-than-not, considered a right winger.

Our differences and the two wings are supposed to bring everyone higher, not create a deeper chasm.

Right now, capitalism is a hot topic in the political sphere. But capitalism is about economics, not politics. It is an economic theory, or system, or whatever, that operates on a set of loose rules: if more people want iPods than Apple can make, the prices go up; if consumers are knowledgeable then a merchant who sells crappy goods won't last very long... etc.

It drives me crazy to hear about how capitalism is evil, or that the poverty in this country is due to "the free market." Capitalism isn't a faith, or a lifestyle, or a person--it's a description of how a system works. Capitalism isn't bad; greed and selfishness are bad. And for some reason, people who support some sort of hybrid socialistic capitalism think that greed and selfishness will go away if we have enough regulation. Does that really make any sense to anyone? Greed and selfishness only go away if people learn to be kind and loving, and if everyone in the world was kind and loving, it really wouldn't matter what economic system a country used.

Okay, I'll admit it: capitalism doesn't make everyone rich. I'll also admit that "poor" has to exist in order for "rich" to exist. Honestly, "rich" is always defined in relation to something else. And what we consider to be poor now would have been a luxurious lifestyle a few centuries ago. Capitalists generally understand that results aren't going to be even... but capitalists also understand most people would give up guaranteed mediocrity in exchange for nearly endless opportunity. And so we enter the classic debate of free markets vs. government.

Those who oppose freedo... ah hem...I mean, free markets, are quick to point out the underprivileged people who are left behind. The rich have better schools and better health care. Millions of Americans are uninsured, and millions more lost half of their retirement because of the free market. "If we just provide proper regulation and more government support, millions of Americans will have better lives." Well I think that's fantastic. I think everyone should have health care and everyone should have a great education. We can argue all day over whether the government or consumers would do a better job of deciding where money should go, but that's really not the point. The true issue concerns the future status of all of the amazing things the markets and capitalism have done. Almost every modern convenience you have in your lives was brought about by competing companies fighting for dollars. Universities in this country are generally regarded as the best in this world, and that is largely due to the fact that they have to compete for prestige and the best students. We need to address the 10% of the economy that isn't working very well, but we cannot do it at the expense of the other 90%.

Now, this isn't an argument against redistribution of wealth (we'll save that for later). This is an argument against the government getting in the way of freedom, innovation, and creativity. Every dollar the government spends is one dollar that someone else doesn't get to decide how to spend.

Lets examine the big bad wal-mart for a minute. First I want to compare walmart to the federal government.

Number of civilian employees--Federal Government: 1.8 million; Walmart 1.4 (approx)

Total Revenue--Federal Government about 2.5 trillion; Walmart: about 400 billion (Paid 7 billion in taxes)

Total Long Term Debt-- Federal Government: Approaching 12 trillion; Walmart: 32 billion.

Debt as a percentage of total revenue-- Federal Government: 480%; Walmart: 8%

So yeah... it's obvious that Walmart is the one stealing all of our money.

But really, even with the loosest lending of 2005 walmart could never have gotten away with the kind of debt that the federal government swims in. Walmart could pay off all of their debt in a year and a half with PROFIT only. The federal government doesn't have any profit.

Now I know some of you (like anyone is actually still reading) are saying that the government has a lot more to take care of... and you are right. But take another look at those numbers. Do you really think we will ever be able to pay that debt? Is that really a responsible way to run a country?

But wait... lets go back to assuming the federal government is this angelic think=tank of business superheroes for a moment. One of the problems with walmart and its domination of the free market is that it is allegedly forcing smaller stores out of business. "See what capitalism does! Pretty soon we'll only be able to shop at walmart, and soon they will raise their prices and enslave us all!" So what is the free market solution? Well, walmart dominates for a few more years and everyone shops there and everyone else goes out of business... and then walmart can get away with poor standards and greed because there isn't any competition, and then smaller stores have the opportunity to compete again. This would take a lot of time, and the damage would be done.

What's the government solution? Fine or tax?

So the government could just take money from Walmart and send it to the other stores. But would the other stores really have the incentive to improve? And even if they did, how would the government decide which stores get the money? Another question is whether that money would even make it down to the little stores, or would the debt machine eat it all first?

But there is another solution: The other stores could just figure out a way to compete. It's already happening all over the place. Grocery stores are becoming more specialized, and offering new products; many drugstores are going toe to toe with walmart and offering $4 prescriptions, and some retail chains are even willing to match walmart pricing.

The economy is just far too large for anyone to really understand completely. But capitalism is one of the freest forms of freedom. Elections only come around ever couple years, but you get to vote with your dollars every single day. If walmart has the best selection you can vote for them, if nebraska furniture mart has an innovative sale you can cast your ballot.

I understand that there are a lot more issues to discuss, and I'd be happy to talk to anyone about it. (i.e., the idea that a clean environment and growth are mutually exclusive, or that capitalism can't survive with the level of corruption in the country etc.)