The economic benefit of the people is what’s important, not capitalism

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April 2009

            The responses to my earlier columns about the economy prompt me to write again about this timely topic.

Capitalism

Capitalism is a system of private ownership of property that allows owners to use their property to obtain an income for themselves by providing merchandise or services. I have a problem with people who claim it is God’s gift to us and must be protected and venerated at the altar of business. The word capitalism belies a fundamental bias in the system. Capitalism is based on wealth. It assumes that the owners of capital (wealth) have all the rights. No wealthy person would succeed however without a healthy number of employees who deserve respect.  Resources too are important for an owner of wealth to operate a business. Adam Smith presumed morality would guide capitalism. Even back in the late eighteenth century he chastised owners who took excessive profits.

            For any system to work properly the people in it must have a moral compass to guide them. That compass must point to something more than the bottom line of profit for the owners and/or executives.  Therein lies the first reason for our economic circumstances today. Too many people have used the system to their own advantage to the harmful effect of others. While I cannot judge you, the reader, I say that all of us are responsible to some degree for our current economic downturn.

            At the top of the list of those responsible are the executives who think they deserve excessive salaries and bonuses even if the company is floundering near bankruptcy. Witness the recent bonus payaments to executives at AIG after receiving $170 billion from the federal government – that means you and me! Witness too the hundreds of million dollars paid to the CEO of Merrill Lynch just before it went bankrupt. One of my readers defended these payments.

            At the other end of the list however are people like you and me who expect our savings and retirement funds to continue to grow at a fast pace.

Socialism

A reader told me that, according to the Merriam-Webster dictionary, socialism is

 “any of various social systems based on shared or government ownership and administration of the means of production and distribution of goods”. Given this definition we already have a socialist economy.  Ever since the beginning of our country the government has been doling out financial benefits to business. There have been and are tariffs, for example, to protect American business from foreign competition. We have been supporting farming for many years with subsidies. Airlines have benefited from the government dole. The entire oil industry still reaps enormous tax benefits while taking in billions of dollars of profit. The railroads of the nineteenth century were given millions of acres of land along the track right of way which they sold for much profit. They were even paid one million dollars per mile of track laid. While capitalism fails the common good by allowing wealth to accumulate among the top five percent, socialism fails in not compensating hard work enough.

            Many Republicans and others on the right, like Rush Limbaugh and Mike Huckabee, claim that President Obama is a socialist. I wrote in January that progressive policies and programs are not socialism. Capitalism is not a god to be adored but a system to be used for the common good. Billy Wharton, editor of the Socialist magazine, analyzed Obama’s policies from a Socialist Party position in an article in the Washington Post on March 12, 2009. Wharton emphatically states that Obama is no Socialist. He also added that all the talk by Huckabee, Limbaugh and others about socialism is bringing new members to the Socialist Party in numbers he hasn’t seen in decades. (*)

            On the other hand, I too am concerned about the “generational deficit” that Sen. John McCain and our own Rep. Dave Camp accused the President of generating with his stimulus plan and spending budget for 2010. But I find it hypocritical of Republicans to be talking of the danger of deficits when the Republicans are responsible for the growth of the national debt from 1 trillion in 1980 to over 10 trillion in 2008, except for 1 trillion under Democrat Bill Clinton. 

            There is enough blame and confusion for everyone. Let’s not make matters worse by hurling the label of “socialist” at Obama. It is time to stop it all and get this country back on track. That will take innovative thinking and planning on many levels, which President Obama is doing.

 

* Billy Wharton, “Obama's No Socialist. I Should Know”, The Washington Post, Sunday, March 12, 2009; Page B01

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/13/AR2009031301899.html

 

Responses:

On OurMidland on line. Reprinted with permission.

Jen Z wrote on Apr 19, 2009 10:41 AM:

" BRAVO! This one of few articles written by MDN that I agree with. Thank you for explaining the difference in ways that are easy to understand and make it clear that the present administration have a very clear grasp on the complexiity and gravity of the economic situation that they inherited. This mess was caused by the policies of the failed "trickle down" mentality and the drive for instant gratification of the American people fueled by greed. I hear the reps. talking about the free market and how capitalism should rule but this article/opinion makes it very clear that the one element that is missing is the one "value" that the far-right keeps claiming as their own: morality and values.
Thank you for clarrifying this issue, God bless you. "

 

Chris Riffert wrote on Apr 19, 2009 11:56 AM:

 

" I agree that the demonizing of Obama by Republicans is hypocritical considering that they did not rein in spending and the size/scope of government when given a chance. In fact, they increased it with No Child Left Behind and Medicare Part D. I have no use for Republicans who have all of a sudden seen the light.

 

However, I must disagree that what we need is innovative thinking and planning. Planned economies do not work and have NEVER worked. They have always collapsed at some point, usually when there are not enough goods available to provide the basics-especially food- for the people. Thinking that those in charge (especially Obama) can think, innovate, and plan his & our way back to prosperity will only encourage more centralization of powers in what has already become an unconsitutionally powerful executive branch.

 

Adam Smith argued that people were going to be greedy regardless of the system we are in. Regulation will not stop them. The only way to deal with this, is to let all people be greedy and do the best they can for themselves, which in turn usually benefits society.

 

Millions of people doing their best (via their abilities) will mostly improve society in general. Millions of people being rewarded for not doing their best (via their need)will mostly harm society in general. "

 

Observer wrote on Apr 19, 2009 12:51 PM:

 

" Great read.. It was nice to be able to agree with a well written article. Looking forward to reading the comments. "

 

jay wrote on Apr 19, 2009 4:12 PM:

 

" merriam-webster - socialism:

1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods

 

2. a system of society or group living in which there is no private property b: a system or condition of society in which the means of production are owned and controlled by the state

 

3: a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done "

 

Kathryn wrote on Apr 19, 2009 5:30 PM:

 

" If you want real innovatinve thinkly, you'd have to go to www.mises.org to get it. Prez. Obama is merely pushing the same ol' tax and spend (or its variation...spend, spend, spend and we'll tax you later) that has been going on since at least the 60's. "

 

Stan wrote on Apr 19, 2009 6:41 PM:

 

" Kathtryn,

 

Good point. Mises.org is a fantastic site full of great information. I'd also suggest reading Hayek.

 

The abject failure of Keynsianism under FDR should have been enough of a lesson, but unfortunately the purple party (there is no more red and blue, Congress is basically one big party) seem he** bent on repeating it all.

 

I also disagree with the characterization of Obama's policies as socialism. It's obvious they are much closer to fascism, particularly its aspects of "rigid one-party control," (see purple above) and "private economic enterprise under centralized government control," (just ask Chrysler and GM). "

 

cliff wrote on Apr 20, 2009 1:22 PM:

 

" Great editorial. And then our local extremist calls Obama a facist! I'm sure all the folks at the Tea Party and Fox News agree with you, Stan. The rest of us are a bit more sane. Although, as bad as the Republicans are doing now, they better catch up with the 21st century or the Libertarians will replace them as the challenge to the Democrats. "

 

 

Stan wrote on Apr 20, 2009 1:34 PM:

 

" Cliff,

 

Nowhere did I call Obama a fascist. I said the policies he is pursuing that some are labeling socialist are actually closer to fascism by definition. If you're going to discuss an issue with intellectual honest, please don't put words in other people's mouths.

 

Thanks. "

 

cliff wrote on Apr 20, 2009 4:57 PM:

 

" So he is trying to make the government facist but HE is not a facist. That makes all the difference, right, Stan? (Rolling my eyes) "

 

From Jim E by email April 20, 2009

Norbert Bufka,

 

            Re. Sunday 04/19/09 Midland Daily News Capitalism article.

 

The view that capitalism fails the common good while allowing wealth to accumulate among the top five percent is simply not true. The view that Socialism does not compensate hard work, while correct, does not even consider the larger issues involved in the common good.

 

American capitalism cannot be defined in purely financial terms as the Merriam-Webster dictionary does. The peripheral issues involved in capitalism are far and away more important than the monetary ones. Even the monetary issues are in much better balance than the stated view implies. It's even possible, that within that five percent, the apparent selfishness and greed is offset by well known philanthropic and benevolence practices.

 

"The poor will always be with us, so long as they are defined as the bottom 20 percent, even if yesterday’s bottom 20 percent are now among “the rich” as such terms are defined by those with a stereotyped vision of a static world”.  Thomas Sowell  (A noted economist and scholar)

 

A definition of "the common good" is the key to this discussion and is referred to as "Why We Work"  in a second book that I hope to have published called "Liberty: the Power of Choice". No hard copies exist but I can provide electronic excerpts if further discussion is appropriate.

 

Best regards

Jim E

Midland

 

 

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