“The problem is we don’t have enough free markets.”
Ron Paul
The U.S. economy is operating with the invisible hand tied behind its back. And that’s unlikely to change if we elect another President Clinton or a President Trump.
Unfortunately, capitalism has become unfashionable. Media, academia, some members of Congress and others would have you believe that “profits” are bad and income inequality is America’s biggest challenge (Note: Socialist actors like Sean Penn, Susan Sarandon and Jane Fonda also make plenty of profits and contribute little to the economy. When are they going to equalize their incomes?).
When’s the last time you heard a presidential candidate—or any politician, for that matter—extoll the virtues of capitalism? This year, we have a socialist running for president and millions of millennials supporting him.
The Animas River was clean before the EPA’s Gold King Mine disaster. Why aren’t activists protesting against the EPA?
Hillary Clinton reacted by moving almost as far to the left as Bernie Sanders. She did mention capitalism in the nearly ignored Democratic debates, but only to say that we need to save capitalism from itself. She’s half right … we need to save capitalism—from politicians, academics and the legion of “activists” who are clueless about economics.
You’d think that as a billionaire, presumed Republican nominee Donald Trump would be a die-hard capitalist, but he is a protectionist whose immigration policies, if enacted, would continue to stifle business formation. Given that he has also personally benefited from eminent domain, his support of capitalism appears to be of the crony type.
Other Republican candidates have spoken out against “crony capitalism,” but we have not seen a lot of support for honest-to-goodness, free-market capitalism. You know—the capitalism that made the United States the wealthiest, most successful country in history.
Why Capitalism Rules
The concept of capitalism is simple enough.
In a capitalist country, trade and industry are controlled by private owners, rather than by the state. The more private owners succeed, the greater the profit they make. Adam Smith noted that an “invisible hand” drives business owners to benefit society as they benefit themselves. When businesses succeed, they create jobs, benefit shareholders, pay more taxes and make charitable contributions.
While the private sector creates wealth, the public sector creates debt. With the federal debt approaching $19 billion, American taxpayers paid more than $400 billion in 2015 just to service the debt.
The only thing government creates is more government, which results in higher taxes and, ultimately, less freedom. Government provides security, infrastructure, help for the poor and many other valuable services, but it also destroys wealth by taxing income, capital gains, gasoline, purchases, your estate and everything but the air you breath.
Government also reduces and in some cases removes the incentive to work hard and innovate. This is true in America, but it’s even more evident in socialist countries. “Democratic socialism” is an oxymoron. Socialism, as Nobel Prize winner Friedrich Hayek noted, leads to fascism.
Consider the inventions that originated in the U.S.—the automobile, personal computer, telephone, electric light bulb, the Internet, various life-saving drugs, to name a few. Can you name a single innovation that originated in a socialist country?
Anti-Capitalism Riots
Until recently, capitalism thrived in the U.S. During the early ’80s, as technology was advancing toward the use of personal computers, President Reagan and the U.S. Congress approved a bipartisan tax reform package that spurred the economy through the end of the last century. Entrepreneurs innovated and companies went public.
Today, in contrast, we have anti-capitalism riots. A recent poll by Harvard University (it figures) shows that 51% of Americans who are 18 to 29 years old “oppose capitalism in its current form.”
Anti-capitalism riots are unnecessary, as capitalism is being strangled by regulators. The Affordable Care Act, aka Obamacare, all but eliminated free market participation in the healthcare industry, resulting in lower quality at a more expensive price. The website through which Americans without health insurance were supposed to obtain coverage failed to work properly and today exchanges created to implement Obamacare are closing down throughout the country.
And while the Affordable Care Act increases the cost of healthcare, the Food and Drug Administration fails to approve promising drugs that could save lives.
Over-regulation similarly is affecting manufacturing, as new regulations from the Environmental Protection Agency virtually outlaw the use of coal. Yet, in the name of environmentalism, we continue to increase the use of ethanol, which may cause more harm than benefit to the environment.
And while environmentalists seek to shut down fracking and other private industries, it was the EPA’s negligence that resulted in dangerous lead levels in Flint, Michigan, drinking water and it was the EPA that caused the Gold King Mine disaster, which last year caused millions of gallons of toxic chemicals from Colorado’s Gold King Mine to dump into the Animas River, which flows through four states.
Even the Internet, the greatest source of innovation for the past 20 years, is being stifled, as new regulations will regulate the Internet as if it were a utility, resulting in more taxes and less service.
Note that President Obama and his regulators have reshaped environmental regulations and approved plans to regulate the Internet like a utility without a single vote of Congress. That shouldn’t happen in a democracy.
Yet many Americans believe President Obama has not gone far enough. Why would anyone want more government control over their lives? Why would anyone want government not to provide equal opportunity, but to provide equal outcomes, regardless of individual effort?
As former U.S. Congressman Ron Paul put it, “We have a planned economy, we have a welfare state, we have inflationism, we have central economic planning by a central bank, we have a belief in deficit financing. It is so far removed from free-market capitalism that it’s foolish for people to label it free market and capitalize on this and say: ‘We know it’s so bad. What we need is socialism.’ That is a problem.”
Too much government is the problem, not too little government.