Punchinello’s Chronicles

December 29, 2009

American Capitalism is Just Fine

Have you heard this ongoing statistic that here in America we have only 5% of the world’s population, but we use 25% of the world’s resources? I hear it all the time when someone wants to “prove” that capitalism doesn’t work; capitalism is a total failure; capitalism is the reason we have terrorists and foreign governments mad at us. One logic step: We use 25% of the world’s resources, therefore capitalism is a failure. Oh really!

Upon serious questioning, we hear the next part of the so-called argument; that the gap between the rich and poor is “too wide.” We hear that it just isn’t fair that so many people in the world are starving, they don’t have health care, they don’t have clean water, they don’t have this or don’t have that. And if we didn’t buy into the premise that 25% of the world’s resources are causing all this, then we should at least buy into the argument that life isn’t fair.

It’s a complicated logic argument, but the entire thing rests on one, single edifice: America today is a full-fledged capitalist society.

The argument holds that under the assumption that we are capitalists, the rest of the world is failing and therefore we “must have” stolen or “taken” what “could have” been used by foreign nations.

To unravel the argument requires knowing for a fact that America today is NOT a capitalist society!

One of, if not the fundamental principles of capitalism is a so-called free market. That doesn’t mean total anarchy, nor does it mean a completely amoral society. It means a market that’s free to act and react in accordance with market forces. Those forces are simply another word for “events.”

For example; if you’re buying your gasoline from a gas station at $2.89 per gallon you’re in “the market.” You’re a customer, the gas station is a merchant. Driving down the road you notice another gas station selling gas for $2.69 per gallon. The “noticing” is an event. Additionally; the decision by each gas station owner to set the price of the product is also a set of events.

A free market means that you can freely decide to buy your gas at either station. If you want cheaper gas, you choose the second station. But perhaps the first station offers full service and an oil change after you buy X amount of gasoline. Perhaps you prefer that as an option. Either way, you’re free to react to what you see “out there” in the market.

Suppose too many people decide to buy gas at the less expensive station. It’s just not fair because the first station isn’t getting any business. They’re losing customers. They’re going broke. They’re “too big to fail!” When the government or some other regulating authority steps in to change the market forces; to change the events, what happens?

The entire market gets screwed up.

A free market means that business owners should be free to set the basic components of their operations. They can set the volume, prices, quality, inventory and so forth without being forced to do something. The business owners can also choose who they will or won’t sell their product to, based on all sorts of their own personal choices.

Where it gets into the gray areas of total free choice is when we start to consider racial stereotypes, product safety and other such choices. Without a moral society, we can easily have amoral business owners choosing to sell tainted medicine to non-caucasian customer in order to improve race supremacy. Or perhaps a business owner chooses to sell bacteria-infected food because they don’t feel like spending the money to provide a safe product.

The problem is that given enough time, market forces would also correct those problems. Unfortunately, it takes enough time for those natural forces to work that many people can be injured during the waiting period. So there should be some regulation over business. The regulation, though, should be on basic health and safety issues. It should not be on ordinary reactions and responses by the customers.

Customers must be free to choose which business transactions they’ll make. At the most basic level, ALL customer transactions must be based on whether or not the customer can afford the product or service. Anyone has the option to get more or less money, and that should be the only determining factor as to using a business. On the other hand, various factors can interfere with some number of people being able to gain more or less money.

Again, we have to consider the morality of the overall society. In the past, private charities allowed good-hearted people with money to help out those less fortunate. That was before government intervention began to forcibly take any extra money from those “wealthy” individuals who liked helping out.

Then there’s the issue of monopolization. A business might monopolize either a resource or choose not to develop something. What if the few oil companies in the world all decided to stop drilling for oil? With no oil, it wouldn’t matter who could afford to buy it, there wouldn’t be any.

So should the government then force oil companies to drill for more oil?

Free market capitalism also rests on the “assumption” (no longer valid) that ALL businesses will act in the own financial best interests. In other words, it would be irrational for an oil company to stop producing oil because then they wouldn’t be in business.

So how is it that banks don’t lend money, oil companies don’t drill for oil, insurance companies don’t insure people and so on and so forth? How can those companies stay in business if they don’t operate their businesses?

And how is it that customers with no money become a large segment of a business market?

Government intervention is creating some sort of economy, but it certainly isn’t capitalism and free markets! Government subsidies for food, health care and housing provide money to people for nothing in return. That money is either printed out of whole cloth, or taken from those who have money (through taxes and fees). Government subsidies also provide money to businesses to prevent them from feeling or experiencing any penalties for not doing business.

Any company that fails to meet the demands of the market should and MUST go out of business! That’s the natural law of survival of the fittest. That law didn’t come out of biology and genetics, it came out of economic theory a couple of hundred years ago! If AIG, Bank of America, Citigroup, JP Morgan or any other massive financial institution is failing, they should fail!

What it comes down to is that America uses 25% of the world’s resources because until a couple of decades ago, we also created most of the world’s technological advances. We bought the products produced by other countries (e.g., China) and shipped here by ships and trains developed in America. We produced pharmaceuticals and medical devices that have helped people everywhere, using resources to produce those things.

In fact, it’s the billions and billions (hundreds of billions) of dollars that are being used to prop up the failing mega-corporations that are the problem. Those billions and trillions of dollars are being stolen from every other nation around the world and being funneled into the Too Big To Fail financial institutions of the first world. America, Japan, the UK, Russia all are dominated by massive corporations that are failing. Yet they’re being propped up by dollars.

The housing industry was manipulated by the government, all for the sake of providing houses (not just apartments) to people who couldn’t possibly afford to pay for them. Fannie Mae and Freddie Mac, along with the Department of Agriculture invested hundreds of billions of dollars in loan guarantees, and now they’re failing. The money being used to keep them afloat is being stolen from every second- and third-world nation on the planet.

Instead of saying something idiotic like we’re only 5% of the population using 25% of the resources, why not speak the truth? Why not say that a fraction of the super-economic politically connected corporations are sucking 90% of the world’s money out of the system? Why not say that!

Why not let those super corporations fail? Oh, but that would be a disaster, you might say! People would lose their jobs! Oh no, oh my! Which is better: to have a job but no money to enjoy life because of taxes, or to not have a job and have no money to enjoy life? Either way, are you going to enjoy life?

Let the mega-corporations fail! Let the institutional investment banks fail! Sure, initially a lot of people would be hurt very badly. But over time, if we ALSO keep the government out of the mess, entrepreneurs would move in to buy up individual banks. Small business owners would take the broken-up industrial corporate farms and return to localized, family farms. Slowly but surely, we would open the doors to countless new jobs as those small entrepreneurs needed to hire help to run the individual and local businesses.

Capitalism doesn’t exist today. Nowhere on Planet Earth will you find true capitalism excepting in perhaps some e-commerce. Everywhere else, governments are propping up cancerous, disease-ridden disasters we call zombie banks, ghost malls, and graveyard neighborhoods. The money being used to keep those pustulous boils on the face of the world economy in operation is coming directly out of the mouths of starving nations.

You want a more fair world? You want a more fair distribution of wealth? Then let those third-world nations keep their own money and distribute it to their citizens. You want government intervention? Then help get rid of the tick-brained blood-suckers that are the dictators and tyrants running those small countries. Let’s stop first-world governments from propping up those tyrants in the name of “it’s good for business.”

We’re seeing the pillage and plunder of 75% of the world by a minute fraction of the world’s population. That fraction wouldn’t have the money to stay in business if they weren’t propped up by the trillions of dollars in fake currency, market and debt derivatives, and the fantasy delusion of a so-called “stock market.” But don’t go babbling about how American capitalism has failed! It hasn’t! It was put out of business decades ago, starting right about in 1913.

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