In Defense of Capitalism: What it is and what it is not

Capitalism has been one of the greatest achievements of mankind. It is a non-zero sum game where all can participate and gain something. The constant attacks on capitalism as being “exploitative” are unfounded, as true capitalism exploits no person. It is a voluntary exchange of goods and services in a system of free interaction. There is no economic system more beneficial and moral than capitalism.

This may not sit well with many people in today’s world though. People are now molded to think that capitalism is an evil that must be purged from our society.

“We are the 99%!”

“Corporations are destroying America!”

“They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.”

“They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.”

If one name comes to mind, and that name is Occupy Wall Street, good. These are the very people that believe that capitalism is evil, and causes all the problems in our society; and in particular that corporations have taken advantage of that capitalist system to subjugate we the people.

I contend that they might be on to something, but they miss what is at the heart of American problems. Capitalism is not to blame for our economic woes, crony capitalism is! (Or as I and others like to call it, Crapitalism)

Yes, there are others to blame besides the “greedy capitalist corporations” that subjugate us. At the root of the problem is the unity of the government and those corporations. This fusion of state and corporate power is what leaves us with the woes that we experience today.

Let’s take that last quote from the Occupy Wall Street’s Declaration. Is it really the corporations that have burdened students with loan debt? First off, we must ask where this massive loan debt came from. The only plausible answer is that the government’s hand in education has caused the exorbitant costs of education and the ever-more dangerous student loan bubble. The government’s continued involvement in education, such as the continuing availability of student loans, has incentivized schools to raise tuition so that more money can be brought in.

It is not simply the universities that have done this, but government overreach enabling them to do so. And one day this student loan bubble will burst, just as the housing bubble did in 2008.

Reason- The meltdown was the consequence of a combination of the easy money and low interest rates engineered by the Federal Reserve and the easy housing engineered by a variety of government agencies and policies. Those agencies include the Department of Housing and Urban Development (HUD) and two nominally private “government-sponsored enterprises” (GSEs), Fannie Mae and Freddie Mac. The agencies — along with laws such as the Community Reinvestment Act (passed in the 1970s, then fortified in the Clinton years), which required banks to make loans to people with poor and nonexistent credit histories — made widespread homeownership a national goal. This all led to a home-buying frenzy and an explosion of subprime and other non-prime mortgages, which banks and GSEs bundled into dubious securities and peddled to investors worldwide. Hovering in the background was the knowledge that the federal government would bail out troubled “too-big-to-fail” financial corporations, including Fannie and Freddie.

It is government regulation and mandating that has caused economic hardships in recent years. This is not due to a failure of capitalism, but a failure of a fundamentally flawed economic ideology; that central planning of an economy and redistribution of wealth makes a people prosperous. In no society has that worked, at least for the common man; for the corporations and politicians backing it, socialism has worked quite well.

But people don’t seem to recognize, for some reason, that more control does not mean more prosperity. It means the exact opposite, because when one cannot pay for more employees due to excessive taxation, or expand their operations because of extreme economic regulation. Jobs become more scarce, not common.

This is where capitalism comes in. In a truly capitalist economy, corporations and government do not become embedded in each other, creating an elite class with special privileges. Regulations are made as guidelines to ensure safety of products and workers while pursuing economic well-being and prosperity. And there is nothing wrong with being rich!

If I make one million dollars a year, what difference does it make to you? Are you envious of the fact that I make a million dollars annually and you don’t? Well quite frankly, that’s your problem, not mine!

If you’ve got a problem with me making a million dollars a year, why don’t you go an make two million rather than asking the government to steal from me? We don’t have to legalize robbery for you to have more money in your pocket, we need to empower people economically!

In a capitalist society, the opportunity for everyone to become wealthy is the goal. In a corporatist society, that opportunity slowly disappears, gradually diminishing into nothing less than a neo-feudal economic system with little to no upward mobility. That is economic injustice for you right there.

That is not capitalism. Anyone who believes that does not have capitalism rightly understood. Capitalism is why people flocked to the United States from all over the world. Here, one could start with barely anything but the clothes on their back and become the richest person in the world by simply working really hard. And along the way, that person’s hard work benefited countless other people who would be able to have jobs. How about that!

How possible is that kind of thing today? I beg to say not very. Who the hell knows how many economic regulations there are, and what is in the tax code. What we have now is not capitalism. It’s Crapitalism.

Corporations are part of the problem, but there is an even bigger aspect that the folks over at Occupy Wall Street aren’t catching on to. It’s the government that must be controlled and reigned in more than corporations.  Strip that bond between the government and the corporations, the lobbyists and the Congressman, and what do you have left? Businessmen and women who will have nothing left but to turn to people for help.

When corporations hire people, there is prosperity. When corporations hire government, there is poverty. Know the difference.

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