Certain canards just get me going. When I read any of these my blood pressure spikes and I see red, and I seem to be reading a variation of one or another of these all the time.
- Capitalism requires low wage workers. This is generally expressed in the context of “why the establishment favors unlimited immigration, both legal and illegal.” Capitalism requires private property, enforceable contracts, and rule of law. If you have those, then the natural desire of people to better their situation takes over and arranges the things that are present in better arrangements over time.
Japan has few immigrants but a very high first world standard of living. The economy of Japan is stagnating, but that may be because they abrogated the rule of law to prevent their banks from going belly up. One can keep zombie financial intermediaries alive forever with the brute force of unlimited government but you can’t expect the efficient allocation of capital thereafter.
Similarly, I often see “the modern economy relies on cheap energy, with energy getting more expensive to produce the good times are over.” In truth, the cost of various things are sometimes cheap and sometimes dear. If something gets too expensive people substitute other things. Running a household once required one or more servants. Even poor Raskolnikov had a landlady who prepared meals and tea. When servants became prohibitively expensive, people substituted refrigeration, washing machines, appliances, etc. Try asking your landlady in Manhattan to do your daily shopping and serve you a snack.
Capitalism, because it embodies freedom, merely rearranges the building blocks available in an order that increases value.
- Rampant Consumerism is a great evil somehow destroying America. In reality, consumerism means the average person gets to buy services and things that he very much desires, just as rich people have always been able to.
- Financialization is destroying us. Truly, I don’t even know what is meant by financialization. Online sources seem to feel part of it is the increasing size of the financial services part of the economy. Believe me, I remember when “industrial” was a respected word: The Dow Jones Industrial Average, The US Savings Bonds Industrial Payroll Savings Committee. These names were not accidents, industry was the business of America; bankers were 3-5-3 people, take deposits at 3 percent interest, loan the money out at 5 per cent interest and go home by three o’clock.
Truly, things have changed. The Dow Jones Industrial Average includes Facebook, Amazon and Google, not industries in anyone’s book, maybe it includes Bank of America and Goldman Sachs. Industry created value and bettered people’s lives, but so do other things. Would you like to live in a world with no literature, or musical performances, or interior design services? Anything that satisfies people’s wants or needs is a valid subject of capitalistic enterprise.
Another criticism is over the increased influence of finance institutions over other aspects of business. Under this view, financial institutions and financial elites have way too much influence over the business of America. Just let Henry Ford produce the cars that got America on the road, not have Steve Jobs forced out of his own company once it went public and the finance people didn’t like the rate of return.
In my humble opinion, (IMHO in the old school Internet) the allocation of capital is the most difficult and the most value adding aspect of a free market. The US Government has allocated capital as it sees fit. There was the synthetic fuel corporation under Jimmy Carter. During the oil embargo who could not better humanity by creating synthetic oil? Well, you haven’t heard of the synthetic fuel corporation because millions of dollars were sunk into it with 100% loss. Then there is the strategic oil reserve. The US government bought oil when it was expensive and scarce (driving up the cost to taxpayers and to drivers, home owners, and everyone else who used oil). Now oil is overabundant and cheap. The reserve could be filled at half the cost, but the government is thinking of selling a portion of it. Great investing. The solution to high prices are high prices. The market produced more oil and lowered prices. The government intervention was unneeded, costly and wasteful.