Tag Archive for: capitalism

John Mackey: ‘Capitalism Is the Greatest Thing Mankind Has Ever Done’

The Whole Foods founder offered a clear message on capitalism at LibertyCON in Miami, where five hundred delegates from 50 countries recently gathered.


On October 14, LibertyCON kicked off with an interview between Students for Liberty CEO Wolf von Laer and John Mackey, founder of Whole Foods Market.

Mackey studied philosophy and religion for several semesters while working part-time at a vegetarian consumer cooperative. In 1978, he and his girlfriend founded a vegetarian supermarket, SaferWay, which evolved into Whole Foods Market two years later through a merger. He recounted how, after starting the company, he initially lived on $200 a month, and since he had no place to live, he and his girlfriend slept in the store. Since there was no shower, they had to wash in the sink. But he has fond memories of those days: He was in love, starting the business was a great adventure, and he didn’t actually need money privately. Later, he became very wealthy, taking the company public on the NASDAQ technology exchange and, in 2017, it was acquired by Amazon for $13.7 billion.

Today, Whole Foods operates more than 500 stores in the US, Canada, and the UK.

Whole Foods was the first grocery chain to commit to animal welfare. Mackey was influenced by animal rights activist Lauren Ornelas, who criticized Whole Foods’ animal welfare standards at a shareholder meeting in 2003. Mackey gave Ornelas his email address, and they corresponded on the issue of how the company treated ducks in particular. Mackey became concerned with the problems associated with factory farming and decided to switch to a mostly vegetarian diet that included only eggs from his own chickens. Since 2006, he has been living on an exclusively plant-based diet. He is an advocate of more humane animal treatment, a vegetarian, and an enthusiastic fan of capitalism—which I like, because I am all of those things myself.

To say Mackey is a proponent of free markets is an understatement.

“Capitalism is the greatest thing that mankind has ever done,” Mackey declared at the event.

The number of people living in extreme poverty, he reminds us, has dropped from about 90 percent to less than 10 percent since the capitalist era began 200 years ago.

Mackey’s support of capitalism inspired him to write a book on the subject titled Conscious Capitalism, but it has not been without consequences. He triggered a flurry of negative reaction when he wrote an article against Obamacare that was published by the Wall Street Journal in August 2009. He did not only offer criticism, he also made ten suggestions on how to reform America’s ailing healthcare system. But his solution was not more government – as with Obama – but more market, which prompted left-wing groups to organize boycotts of his businesses.

Wolf von Laer pays tribute to the modest, soft-spoken entrepreneur for his courage in taking political positions. But Mackey himself says he would no longer write such a political article after his experience in 2009, because the response to it was so damaging to his business. That’s how it is today, and not only in the United States: Political statements from business people are only tolerated if they are critical of capitalism or “woke.” Otherwise, there is the threat of negative reaction and boycotts, as was the case against Whole Foods.

“Cancel Culture” is the name given to this anti-culture, which is nothing less than an all-out attack on freedom of expression.

Libertarians are caught between two stools. By European standards, they combine both right-wing and left-wing policy positions. On the one hand, they are enthusiastic supporters of capitalism and stridently oppose socialism, the welfare state, and wealth redistribution. On the other hand, they passionately support LGBTQ rights and drug legalization. The drug issue marks a dividing line between conservatives and libertarians, according to a panel discussion on “It’s Time to End the Drug War.”

One participant used to oppose drug legalization and now supports it for all drugs, She said the turning point for her was realizing that what she personally liked or disliked had nothing to do with what should be legal and what should be illegal. The panelists taking part in this discussion at Students for Liberty agreed that the state has lost the war against drugs, and that legalizing drugs would lead to fewer drug deaths, less crime, and more freedom and personal responsibility.

The convention moved to another topic. Why are more and more countries in Latin America sliding into socialism? Daniel DiMartino is a Venezuelan who fled the socialist country – along with a quarter of the population. He has now lived in the United States for six years and speaks of an “epidemic of envy” in Latin America. But he also criticizes conservative governments who, when in power, have not seized the opportunity to introduce the kind of radical free-market reforms that truly change people’s lives. He cites Maurico Macri in Argentina as an example.

Martha Bueno, whose parents fled Cuba and who now lives in Miami, warns young American supporters of socialism not to be overconfident that what happened in Venezuela could not happen in their country. As she explains, Venezuela was a democracy and had one of the highest standards of living in the world. And, she reminds us, Venezuela has the largest oil reserves in the world. She is convinced that no one ever would have believed that the socialists could run the country into the abyss, robbing it of its freedom and prosperity, in such a short space of time. But that is exactly what happened. And, she warns, it can happen here too, in the United States.

It was worth coming to Miami, to this event with so many interesting discussions. Wolf von Laer, the CEO of Students for Liberty, has succeeded in building the organization into the world’s largest network for libertarian students. The annual convention, to which fewer students can come than one would wish, partly because of the costs involved, is not actually the most important thing Students for Liberty does: that would be the thousands of events the organization holds with students around the world every year.

AUTHOR

Dr Rainer Zitelmann

Dr. Rainer Zitelmann is a historian and sociologist. He is also a world-renowned author, successful businessman, and real estate investor. Zitelmann has written more than 20 books. His books are successful all around the world, especially in China, India, and South Korea. His most recent books are The Rich in Public Opinion which was published in May 2020, and The Power of Capitalism which was published in 2019.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Why the People of Vietnam Have Surprisingly Warm Views of Americans, Despite the History

Anti-Americanism in Vietnam is less pronounced than in many other parts of the world, and it likely stems from Vietnamese views about wealth and capitalism.


You would be forgiven for thinking—and it would be all too understandable if they were—that the people of Vietnam are anti-American. But the opposite is true.

One reason for this might stem from the culture’s views on wealth: the Vietnamese people admire the rich and experience very little social envy.

As most people know, the consequences of the Vietnam War were devastating for the country. The chemical weapons used by the United States, including the defoliant Agent Orange, not only struck the North Vietnamese Army, they also hit the civilian population. Napalm bombs also inflicted heavy casualties among the civilian population. The South Vietnamese alone lost 1.5 million people, including 300,000 civilians. The US military suffered 58,200 combat deaths, plus another 300,000 wounded. Civilian casualties in North Vietnam were far lower than in the South, but they lost far more soldiers.

In the north, major industrial centers and much of the infrastructure were destroyed. The region’s industrial manufacturing plants were decimated. Three of the six largest cities, 12 of the 29 provincial capitals, and two-thirds of all villages were destroyed. Virtually all power stations, railroad stations, ports, bridges, roads and the entire railroad network were also totally wiped out. In southern Vietnam, two-thirds of villages were also obliterated, five million hectares of forest were razed, and 20 million farmers lost their homes.

Given all of this destruction and suffering, it would not be surprising if Vietnam was a hotbed of anti-Americanism. But anti-Americanism in Vietnam is less pronounced than in many other parts of the world. In fact, anti-Americanism is not only stronger in Arab countries and Russia, it is also quite prevalent in many European countries, such as Germany and France.

In 1998, the US ambassador to Hanoi married a Vietnamese woman. He had flown 60 bombing raids on North Vietnam during the war before he was shot down in 1966. He then spent seven years in Vietnamese captivity as a prisoner of war. His wedding attracted a lot of attention at the time, but very little hostility.

This is not uncommon. I was in a relationship with a woman for several years whose parents were from Vietnam. I never once heard her or her parents talk badly about Americans.

Dinh Tuan Minh, a scholar from a think tank I met in Hanoi a few days ago said, explained to me why so many Vietnamese people have a positive attitude toward America.

“We Vietnamese do not look back to the past, but to the future. Unlike with China, we have no territorial disputes with the US. Many Vietnamese people also appreciate the fact that working conditions in US companies that invest here are often better than in Asian companies that invest in Vietnam. In addition, people in Vietnam know that the US has become our most important export market.”

Indeed, in 2020, Vietnam exported as much to the US as it did to China and Japan, its second and third largest export markets, combined.

I also spoke on this subject with the entrepreneur Xuan Ngyuen, who is from Ho Chi Minh City (Saigon).

“I was born in 1987. The war had already been over for 12 years. My parents and grandparents did talk about how terrible the war was, but they never had a bad word to say about the US and Americans,” Ngyuen told me while I was in Hanoi. “On the contrary, they told me, ‘You must learn to speak English, dress like Americans, eat the same food that Americans eat, and above all, learn to think like an American. Then you will be successful.’”

Independent surveys support these anecdotes.

In a survey conducted by the Pew Research Center, 76 percent of Vietnamese said they had a positive view of the US. Among more educated Vietnamese, the figure was as high as 89 percent, and among respondents aged 18 to 29, 89 percent had a favorable opinion of the US. Even among those over 50 who had lived through the war, more than 60 percent viewed the US positively.

Perceptions of China, which has frequently waged war against Vietnam in the past and also has territorial disputes with the country today, are a different story. Surveys show Vietnamese people have much more negative attitudes toward China.

In a survey also conducted by the Pew Research Center, 64 percent of Vietnamese said, “China’s growing economy is a bad thing for our country.” By comparison, only 36 percent of the survey’s respondents in Japan said the same, 23 percent in Australia and 49 percent in South Korea. In addition, 80 percent of Vietnamese in the same poll also said, “China’s power and influence is a threat to our country.”

I admire people who manage to look more to the future than to the past. Such people are usually far more successful in life than those who constantly focus on the past.

This applies not only to individuals, but also to nations.

In 1975, the Vietnamese defeated the Americans, and this already proud country became even prouder, for they had defeated the greatest military superpower in history. But their pride suffered over the next ten years as the introduction of a socialist planned economy had a devastating effect on the south of the country. Vietnam was the poorest country in the region. While other Asian countries that took the capitalist path – South Korea, Hong Kong and Singapore, for example – achieved incredible growth and escaped poverty, most people in Vietnam lived in bitter poverty, even ten years after the war had come to an end.

Forced collectivization of agriculture had been no more successful in Vietnam than it had in China or Russia. In 1980, Vietnam produced only 14 million tons of rice, despite the fact that the county needed 16 million tons to meet its own population’s basic needs. During the period of the second five-year plan (1976 to 1980), Vietnam was forced to import eight to nine million tons of rice and other foodstuffs.

Production stagnated, and state-owned industrial production actually declined by 10 percent from 1976 to 1980. Until 1988, only small family businesses were allowed as private enterprises in Vietnam; otherwise, everything was state-owned.

The Vietnamese realized that they were at an impasse. At the VI Party Congress (incidentally, the party still calls itself “communist”) in December 1986, the country’s leaders adopted a comprehensive package of reforms known as “Doi Moi” (“renewal”). As in China under Deng Xiaoping, private property was allowed and the party increasingly focused on the development of a market economy.

Today, Vietnam has shaken off its past and reinvented itself. GDP per capita has increased six-fold since the reforms (in constant dollars), from $577 to $3,373. Vietnam is now one of the world’s largest rice exporters, after India and only slightly behind Thailand. But Vietnam has long been much more than a country that exports agricultural products and textiles. It has now become a major producer of electronic goods and exported $111 billion worth of electronic products in 2020 alone.

Under the socialist planned economy, the majority of people in Vietnam lived in extreme poverty. As recently as 1993, 80 percent of the Vietnamese population were still living in poverty. Over the last decade in particular, poverty declined sharply in Vietnam, falling from 16.8 percent to 5 percent, lifting an estimated 10 million people out of poverty, according to the World Bank’s formula.

Poverty in Vietnam was not eliminated by wealth redistribution, but by a more free-market economy. Redistribution has never been a successful tool in the fight against poverty anywhere in the world. Capitalism works, and most workers in Vietnam benefit from tax rates that are comparatively low, ones that can only be dreamed of in Germany or New York. Sure, the top tax rate for individuals in Vietnam is 35 percent, but for that you have to earn about 14 times more than an average earner. In any case, social envy directed at the rich is a foreign concept in Vietnam. Here, wealth is admired and celebrated.

Of eleven countries where I commissioned Ipsos MORI to conduct a survey on attitudes toward the rich, Japan was the only other country in which opinions were as positive as in Vietnam.

In a paper from the Vietnamese social scientists Nguyen Trong Chuan, Nguyen Minh Luan and Le Huu Tang, which was published in the book Socioeconomic Renovation in Viet Nam, the authors explain how labor incentives work in the country.

“Those households who have good opportunities, better experience, talent for working and trading, and healthy labor, will be richer. Thus the polarization does not represent inequity but equity,” the authors write. “Those who work hard and well earn more, while those who are lazy and work inefficiently and ineffectively will earn less.”

The scholars also strongly oppose redistribution strategies: “In comparison with the subsidy system, where distribution was egalitarian, the current polarization between the rich and the poor shows the reestablishment of social equity.”

Inequality is not worthy of criticism and the pursuit of wealth should be encouraged, they argue: “Polarization has itself become an important motivating force behind the recent considerable economic growth.”

It would be a mistake to abandon the pursuit of free-market reforms simply because inequality between rich and poor is increasing, the Vietnamese sociologists and philosophers conclude. You won’t often find similar remarks from sociologists in the US and Europe.

The Vietnamese do not look enviously on rich people; they aspire to be rich. One of the questions in my aforementioned study in Vietnam was, “How important, if at all, is it for you personally to be rich?” The result: In Europe and the US, on average, only 28 percent of respondents said it was important to them to be or become rich. In the four surveyed Asian countries, in contrast, the figure was 58 percent. And nowhere did as many people say it was important to them to be or become rich as in Vietnam, where it was 76 percent.

Although Vietnam calls itself a socialist country, the way people here think is more in tune with capitalism than is the case in Europe. Incidentally, the ratio of government expenditure to gross national product in the US was 41.2 percent last year. In Vietnam, it was 21.2 percent.

AUTHOR

Dr. Rainer Zitelmann

Dr. Rainer Zitelmann is a historian and sociologist. He is also a world-renowned author, successful businessman, and real estate investor. Zitelmann has written more than 20 books. His books are successful all around the world, especially in China, India, and South Korea. His most recent books are The Rich in Public Opinion which was published in May 2020, and The Power of Capitalism which was published in 2019.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

U.S. State GDPs Compared to Entire Countries

It’s pretty difficult to even comprehend how ridiculously large the US economy is.


Click here to view the U.S. State GDPs Compared to Entire Countries map.

The map above (click to view and enlarge) matches the economic output (Gross Domestic Product) for each US state (and the District of Columbia) in 2018 to a foreign country with a comparable nominal GDP last year, using data from the BEA for GDP by US state (average of Q2 and Q3 state GDP, since Q4 data aren’t yet available) and data for GDP by country from the International Monetary Fund. Like in past years, for each US state (and the District of Columbia), I’ve identified the country closest in economic size in 2018 (measured by nominal GDP) and those matching countries are displayed in the map above and in the table below. Obviously, in some cases, the closest match was a country that produced slightly more, or slightly less, economic output in 2018 than a given US state.

It’s pretty difficult to even comprehend how ridiculously large the US economy is, and the map above helps put America’s Gross Domestic Product (GDP) of $20.5 trillion ($20,500,000,000,000) in 2018 into perspective by comparing the economic size (GDP) of individual US states to other country’s entire national output. For example:

  1. America’s largest state economy is California, which produced nearly $3 trillion of economic output in 2018, more than the United Kingdom’s GDP last year of $2.8 trillion. Consider this: California has a labor force of 19.6 million compared to the labor force in the UK of 34 million (World Bank data here). Amazingly, it required a labor force 75% larger (and 14.5 million more people) in the UK to produce the same economic output last year as California! That’s a testament to the superior, world-class productivity of the American worker. Further, California as a separate country would have been the 5th largest economy in the world last year, ahead of the UK ($2.81 trillion), France ($2.79 trillion) and India ($2.61 trillion).
  2. America’s second largest state economy—Texas—produced nearly $1.8 trillion of economic output in 2018, which would have ranked the Lone Star State as the world’s 10th largest economy last year. GDP in Texas was slightly higher than Canada’s GDP last year of $1.73 trillion. However, to produce about the same amount of economic output as Texas required a labor force in Canada (20.1 million) that was nearly 50% larger than the labor force in the state of Texas (13.9 million). That is, it required a labor force of 6.2 million more workers in Canada to produce roughly the same output as Texas last year. Another example of the world-class productivity of the American workforce.
  3. America’s third largest state economy—New York with a GDP in 2018 of $1.68 trillion—produced slightly more economic output last year than South Korea ($1.65 trillion). As a separate country, New York would have ranked as the world’s 11th largest economy last year, ahead of No. 12 South Korea, No. 13 Russia ($1.57 trillion) and No. 14 Spain ($1.43 trillion). Amazingly, it required a labor force in South Korea of 28 million that was nearly three times larger than New York’s (9.7 million) to produce roughly the same amount of economic output last year! More evidence of the world-class productivity of American workers.
  4. Other comparisons: Florida (about $1 trillion) produced almost the same amount of GDP in 2018 as Mexico ($1.19  trillion), even though Florida’s labor force of 10.2 million less than 20% of the size of Mexico’s workforce of 59 million.
  5. Even with all of its oil wealth, Saudi Arabia’s GDP in 2018 at $683 billion was below the GDP of US states like Pennsylvania ($793 billion) and Illinois ($863 billion).

Overall, the US produced 24.3% of world GDP in 2017, with only about 4.3% of the world’s population. Four of America’s states (California, Texas, New York and Florida) produced more than $1 trillion in output and as separate countries would have ranked in the world’s top 16 largest economies last year. Together, those four US states produced nearly $7.5 trillion in economic output last year, and as a separate country would have ranked as the world’s third-largest economy.

Adjusted for the size of the workforce, there might not be any country in the world that produces as much output per worker as the US, thanks to the world-class productivity of the American workforce. The map above and the statistics summarized here help remind us of the enormity of the economic powerhouse we live and work in.

So let’s not lose sight of how ridiculously large and powerful the US economy is, and how much wealth, output, and prosperity is being created every day in the largest economic engine there has ever been in human history. This comparison is also a reminder that it was largely free markets, free trade, and capitalism that propelled the US from a minor British colony in the 1700s into a global economic superpower and the world’s largest economy, with individual US states producing the equivalent economic output of entire countries.

This article is reprinted with permission from The American Enterprise Institute.

AUTHOR

Mark J. Perry

Mark J. Perry is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.

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EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Will ESG Reform Capitalism—or Destroy It?

What “stakeholder capitalism” really means for the world.


Stakeholder capitalism has taken the global economy by storm in recent years. Its champions proclaim that it will save—and remake—the world. Will it live up to its hype or will it destroy capitalism in the name of reforming it?

Proponents pitch stakeholder capitalism as an antidote to the excesses of “shareholder capitalism,” which they condemn as too narrowly focused on maximizing profits (especially short-term profits) for corporate shareholders. This, they argue, is socially irresponsible and destructive, because it disregards the interests of other stakeholders, including customers, suppliers, employees, local communities, and society in general.

Stakeholder capitalism is ostensibly about incentivizing business leaders to take these wider considerations into account and thus make more “sustainable” decisions. This, it is argued, is also better in the long run for businesses’ bottom lines.

Today’s dominant strain of stakeholder capitalism is the doctrine known as ESG, which stands for “environmental, social, and corporate governance.” The label was coined in the 2004 report of Who Cares Wins, a joint initiative of elite financial institutions invited by the United Nations “to develop guidelines and recommendations on how to better integrate environmental, social and corporate governance issues in asset management, securities brokerage services and associated research functions.”

Who Cares Wins operated under the auspices of the UN’s Global Compact, which, as the report states, “is a corporate responsibility initiative launched by Secretary-General Kofi Annan in 2000 with the primary goal of implementing universal principles in business.”

Much progress has been made toward that goal. Since 2004, ESG has evolved from “guidelines and recommendations” to explicit standards that hold sway over huge swaths of the global economy.

These standards are set by ESG rating agencies like the Sustainability Accounting Standards Board (SASB) and enforced by investment firms that manage ESG funds. One such firm is Blackrock, whose CEO Larry Fink is a leading champion of both ESG and SASB.

In December, Reuters published a report titled “How 2021 became the year of ESG investing” which stated that, “ESG funds now account for 10% of worldwide fund assets.”

And in April, Bloomberg reported that ESG, “by some estimates represents more than $40 trillion in assets. According to Morningstar, genuine ESG funds held about $2.7 trillion in managed assets at the end of the fourth quarter.”

To access any of that capital, it is no longer enough for a business to offer a good return on investment. It must also report “environmental” and “social” metrics that meet ESG standards.

Is that a welcome development? Will the general public as non-owning “stakeholders” of these businesses be better off thanks to the implementation of ESG standards? Is stakeholder capitalism beginning to reform shareholder capitalism by widening its perspective and curing it of its narrow-minded fixation on profit uber alles?

To answer that, some clarification is in order. First of all, “shareholder capitalism” is a misleading term for laissez faire capitalism. It is true that, as Milton Friedman wrote in his 1970 critique of the “social responsibility of business” rhetoric of the time:

“In a free‐enterprise, private‐property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.”

Since the owners of a publicly traded corporation are its shareholders, it is true that they are and ought to be the “bosses” of a corporation’s employees—including its management. It is also true that corporate executives properly have a fiduciary responsibility to maximize profits for their shareholders.

But that does not mean that shareholders reign supreme under capitalism. As the great economist Ludwig von Mises explained in his book Human Action:

“The direction of all economic affairs is in the market society a task of the entrepreneurs [which, according to Mises’s technical definition includes shareholding investors]. Theirs is the control of production. They are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain’s orders. The captain is the consumer.”

The “sovereign consumers,” as Mises calls them, issue their orders through “their buying and their abstention from buying.” Those orders are transmitted throughout the entire economy via the price system. Entrepreneurs and investors who correctly anticipate those orders and direct production accordingly are rewarded with profits. But if one, as Mises says, “does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him.”

Under laissez faire capitalism, consumers, not shareholders, are the principal stakeholders whose preferences reign supreme. And shareholder profit is a measure of—and motivating reward for—success “in adjusting the course of production activities to the most urgent demand of the consumers,” as Mises wrote in his paper “Profit and Loss.”

This is highly relevant to the “stakeholder capitalism” discussion, because it means that, to the extent that the profit-and-loss metric is discounted for the sake of competing objectives (like serving other “stakeholders,” the sovereign consumers are dethroned, disregarded, and relatively impoverished.

Now it’s at least conceivable that ESG standards are not competing, but rather complementary to the profit-and-loss metric and thus serving consumers. In fact, that’s a big part of the ESG sales pitch: that corporations who adopt and adhere to ESG standards will enjoy higher long-term profits, because breaking free of their fixation on short-term shareholder returns will enable them to embrace more “sustainable” business practices.

In a free market, whether that promise would be fulfilled or not would be for the sovereign consumers to decide, and ESG would rise or fall on its own merits.

Unfortunately, our market economy is far from free. The State has rigged capital markets for the benefit of its elite lackeys in the financial industry: like the “Who Cares Wins” fat cats who started the ESG ball rolling in 2004 under the auspices of the United Nations.

One of the prime ways the State rigs markets is through central bank policy.

The prodigious amount of newly created money that the Federal Reserve and other central banks have pumped into financial institutions in recent years has transferred vast amounts of real wealth to those institutions from the general public. As a result, those institutions—big banks and investment companies—are now much more beholden to the State and much less beholden to consumers for their wealth.

As they say, “he who pays the piper calls the tune.” So it’s no surprise that these institutions are stumbling over themselves to get on board the State’s ESG bandwagon.

And that means that non-financial corporations also have to get with the ESG program if they want access to the Fed’s money tap and thus to capital. Especially as the average consumer becomes increasingly impoverished by disastrous economic policies, the incentive for corporations to earn market profit by pleasing consumers is being progressively superseded by the incentive to gain access to the Fed’s flow of loot by meeting the State’s “social” standards.

By increasingly controlling capital flows, the State is gaining ever more control over the entire economy.

This may explain the recent willingness of so many corporations to alienate customers and sacrifice profits on the altar of “green” and “woke” politics.

It is no coincidence that Klaus Schaub, the preeminent champion of the “Great Reset” also co-authored a book titled Stakeholder Capitalism. The upshot of stakeholder capitalism is that the State supplants the consumer as the supreme stakeholder in the economy. The sick joke of stakeholder capitalism is that it “reforms” capitalism by transforming it into a form of socialism.

AUTHOR

Dan Sanchez

Dan Sanchez is the Director of Content at the Foundation for Economic Education (FEE) and the editor-in chief of FEE.org.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

19 Nuggets of Wisdom from the Best Economics Writer You’ve Never Heard Of

Americans would do well to make up the deficit in their knowledge of the works of Arthur Seldon and his “life for liberty.”


May 29 marks the birth of Arthur Seldon. While too-little known to American readers, he was editorial director of the London-based Institute of Economic Affairs for more than thirty years, during which, The Economist wrote, it “brought to the lay reader the ideas of all the leading free-market economists and thinkers of the day.”

Seldon produced a seven-volume set of collected works, including books, monographs, essays and articles, as well as editing hundreds of papers, monographs, and pamphlets.

In such a vast body of work, one cannot easily winnow out the best of Arthur Seldon’s insights. Therefore, consider some of the wisdom in just one of his books—Capitalism—winner of the Fisher Arts Literary Prize and celebrating its 30th anniversary this year:

  1. “Capitalism…creating high and rising living standards for the masses without sacrificing personal liberty speaks for itself. Only the deaf will not hear and the blind will not see.”
  2. “Even bad men are led by the market process to do good, but good men are induced by the political process to do harm. [So] discipline the writ of politics to the bare minimum.”
  3. “Private property is a potent working institution. Public ownership is…political power cornered by handfuls of irresponsible non-ownerships.”
  4. “Capitalism…allows individuals to take the risks of living their lives as they see best.”
  5. “The capitalist market…puts power–effective purchasing power–directly into the hands of the common man and woman for them to use where they wish…That is why the market is more essentially democratic than government.”
  6. “Changing private identifiable property into public unidentifiable property is to destroy the incentives to protect, conserve, improve and render it productive by using it profitably in making goods and services for which consumers will pay.”
  7. “Pricing is the peaceful way of resolving argument and conflict.”
  8. “It was the development and refinement of the law of private property rights that explains… modern progress.”
  9. “That in practice markets are imperfect has obscured the more fundamental truth that they are the best-known way of enabling individuals to meet for mutual benefit . . . World practice and experience…show no better, less imperfect, mechanism.”
  10. “As government has been inflated…It has undermined the instrument that could have done more for the common man.”
  11. “Capitalism embraces the self-correcting mechanisms of open discussion in free society to identify error and open competition in free markets to apply the corrections.”
  12. “The market does not require people to be good: it takes people as they are and induces them to do good by using their capabilities to provide what others want.”
  13. “Wherever it is used, government is so disappointing or worse—inefficient, unaccountable and corrupt—that it is best not to use it at all except for functions where all its faults have to be tolerated to obtain the services required…In short, the price of government is so high that it should be avoided wherever possible.”
  14. “The state has shown itself the false god of all who have looked to it.”
  15. “Capitalism…requires the eventual withdrawal by government from most of its accumulated activities.”
  16. “The inducements of capitalism compel the money-makers to do good; the inducements of socialism enable the power-holders to do harm.”
  17. “The political process…has become the master rather than the servant of the people.”
  18. “Individuals are smothered by collective decisions in the political process.”
  19. “The market of capitalism treats people as individuals; the political process of socialism herds them into categories. Capitalism makes for harmony, socialism for friction.”

Americans would do well to make up the deficit in their knowledge of the works of Arthur Seldon and his “life for liberty,” as his biographer, Colin Robinson, described it. As the IEA website put it, “Seldon highlights the improvements of mankind which came about not through some central plan or social organization but through individuals recognizing an opportunity to produce goods and services which met a need expressed by the demand in the market.”

In so doing, he advanced every individual’s potential, which is expanded by private property and voluntary market arrangements, but constricted when political power hinders the freedom and cooperation they engender.

AUTHOR

Gary M. Galles

Gary M. Galles is a Professor of Economics at Pepperdine University and a member of the Foundation for Economic Education faculty network. In addition to his new book, Pathways to Policy Failures (2020), his books include Lines of Liberty (2016), Faulty Premises, Faulty Policies (2014), and Apostle of Peace (2013).

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Capitalism Is Good for the Poor

Markets Beat Back Poverty.


Critics frequently accuse markets and capitalism of making life worse for the poor. This refrain is certainly common in the halls of left-leaning academia as well as in broader intellectual circles. But like so many other criticisms of capitalism, this one ignores the very real, and very available, facts of history.

Nothing has done more to lift humanity out of poverty than the market economy. This claim is true whether we are looking at a time span of decades or of centuries. The number of people worldwide living on less than about two dollars per day today is less than half of what it was in 1990. The biggest gains in the fight against poverty have occurred in countries that have opened up their markets, such as China and India.

If we look over the longer historical period, we can see that the trends today are just the continuation of capitalism’s victories in beating back poverty. For most of human history, we lived in a world of a few haves and lots of have-nots. That slowly began to change with the advent of capitalism and the Industrial Revolution. As economic growth took off and spread throughout the population, it created our own world in the West in which there are a whole bunch of haves and a few have-more-and-betters.

For example, the percentage of American households below the poverty line who have basic appliances has grown steadily over the last few decades, with poor families in 2005 being more likely to own things like a clothes dryer, dishwasher, refrigerator, or air conditioner than the average household was in 1971. And consumer items that didn’t even exist back then, such as cell phones, were owned by half of poor households in 2005 and are owned by a substantial majority of them today.

Capitalism has also made poor people’s lives far better by reducing infant and child mortality rates, not to mention maternal death rates during childbirth, and by extending life expectancies by decades.

Consider, too, the way capitalism’s engine of growth has enabled the planet to sustain almost 7 billion people, compared to 1 billion in 1800. As Deirdre McCloskey has noted, if you multiply the gains in consumption to the average human by the gain in life expectancy worldwide by 7 (for 7 billion as compared to 1 billion people), humanity as a whole is better off by a factor of around 120. That’s not 120 percent better off, but 120 timesbetter off since 1800.

The competitive market process has also made education, art, and culture available to more and more people. Even the poorest of Americans, not to mention many of the global poor, have access through the Internet and TV to concerts, books, and works of art that were exclusively the province of the wealthy for centuries.

And in the wealthiest countries, the dynamics of capitalism have begun to change the very nature of work. Where once humans toiled for 14 hours per day at backbreaking outdoor labor, now an increasing number of us work inside in climate-controlled comfort. Our workday and workweek have shrunk thanks to the much higher value of labor that comes from working with productive capital. We spend a much smaller percentage of our lives working for pay, whether we’re rich or poor. And even with economic change, the incomes of the poor are much less variable, as they are not linked to the unpredictable changes in weather that are part and parcel of a predominantly agricultural economy long since disappeared.

Think of it this way: the fabulously wealthy kings of old had servants attending to their every need, but an impacted tooth would likely kill them. The poor in largely capitalist countries have access to a quality of medical care and a variety and quality of food that the ancient kings could only dream of.

Consider, too, that the working poor of London 100 years ago were, at best, able to split a pound of meat per week among all of their children, which were greater in number than the two or three of today. In addition, the whole family ate meat once a week on Sunday, the one day the man of the household was home for dinner. That was meat for a week.

Compare that to today, when we worry that poor Americans are too easily able to afford a meal with a quarter pound of meat in it every single day for less than an hour’s labor. Even if you think that capitalism has made poor people overweight, that’s a major accomplishment compared to the precapitalist norm of constant malnutrition and the struggle even 100 years ago for the working poor to get enough calories.

The reality is that the rich have always lived well historically, as for centuries they could commandeer human labor to attend to their every need. In a precapitalist world, the poor had no hope of upward mobility or of relief from the endless physical drudgery that barely kept them alive.

Today, the poor in capitalist countries live like kings, thanks mostly to the freeing of labor and the ability to accumulate capital that makes that labor more productive and enriches even the poorest. The falling cost of what were once luxuries and are now necessities, driven by the competitive market and its profit and loss signals, has brought labor-saving machines to the masses. When profit-seeking and innovation became acceptable behavior for the bourgeoisie, the horn of plenty brought forth its bounty, and even the poorest shared in that wealth.

Once people no longer needed permission to innovate, and once the value of new inventions was judged by the improvements they made to the lives of the masses in the form of profit and loss, the poor began to live lives of comfort and dignity.

These changes are not, as some would say, about technology. After all, the Soviets had great scientists but could not channel that knowledge into material comfort for their poor. And it’s not about natural resources, which is obvious today as resource-poor Hong Kong is among the richest countries in the world thanks to capitalism, while Venezuelan socialism has destroyed that resource-rich country.

Inventions only become innovations when the right institutions exist to make them improve the lives of the masses. That is what capitalism did and continues to do every single day. And that’s why capitalism has been so good for the poor.

Consider, finally, what happened when the Soviets decided to show the film version of The Grapes of Wrath as anticapitalist propaganda. In the novel and film, a poor American family is driven from their Depression-era home by the Dust Bowl. They get in their old car and make a horrifying journey in search of a better life in California. The Soviets had to stop showing the film after a short period because the Russian audiences were astonished that poor Americans were able to own a car.

Even anticapitalist propaganda can’t help but provide evidence that contradicts its own argument. The historical truth is clear: nothing has done more for the poor than capitalism.
AUTHOR

Steven Horwitz

Steven Horwitz is the Distinguished Professor of Free Enterprise in the Department of Economics at Ball State University, where he also is Director of the Institute for the Study of Political Economy. He is the author of Austrian Economics: An Introduction.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

How Socialism Discourages Work and Creates Poverty

Socialism diminishes people’s incentive to work to improve their circumstances by depriving them of the fruits of their effort.


Advocacy for “socialism,” which the Socialist Party USA defines as a “social and economic order in which workers and consumers control production,” has made a comeback in American politics in recent years. Public figures such as Vermont Senator Bernie Sanders sing its praises. But the truth is that socialism deeply undermines people’s ability (and motivation) to improve their own living conditions. The misery socialism has caused for millions of people refutes its promises—horrifically.

Socialism, advocates claim, will bring prosperity and better living conditions for everyone, a claim also made for communism, in which the government controls the means of production and the distribution of the results. British philosopher Bertrand Russell wrote that socialism is “calculated to increase the happiness, not only of proletarians, but of all except a tiny minority of the human race.” As have its advocates throughout history, the now-defunct Socialist Labor Party of America depicted socialism as utopian, writing: “Under socialism our farmlands would yield an abundance without great toil; the factories, mines and mills would be the safest, the most modern, the most efficient possible and productive beyond our wildest dreams—and without laborious work.” The website doesn’t specify how such magic would occur.

The website further insists that socialism would improve virtually every aspect of life, stating: “Our natural resources would be intelligently conserved. Our schools would have the finest facilities and they would be devoted to developing complete human beings, not wages [sic] slaves who are trained to hire themselves out for someone else’s profit. Our hospitals and social services would create and maintain the finest health and recreational facilities.”

But socialist policies, when enacted, have catastrophic effects on the lives of the people living under them. To enforce such policies, governments must take control of people’s property—whether by fully nationalizing businesses, mandating what and how much a company must produce, or seizing and distributing their products—thereby violating people’s right to the product of their own effort. The victims include entrepreneurs who have built or purchased businesses, landlords who maintain and manage properties, and everyone who earns a wage, from construction workers to artists.

By violating these rights, socialism diminishes people’s incentive to work to improve their circumstances by controlling or taking away the results of their effort. However hard you work, whatever you achieve, whatever value you create—it won’t be reflected in your earnings.

The novelist Ayn Rand dramatized the effects of such a doctrine in her magnum opus, Atlas Shrugged. In the novel, a small town factory enacted Marx’s slogan “From each according to his ability, to each according to his need” as policy, so that each person’s pay depended on what managers considered as their level of need compared to their colleagues’. They did this based on such factors as the number of children the employees supported, family members’ illnesses, and so on. People began to spend more time sharing their woes with the management than working, and many of the best employees left the company entirely. Within four years, the factory closed. One character explained the hopelessness the policy created: “What was it we were supposed to want to work for? For the love of our brothers? What brothers? For the bums, the loafers, the moochers we saw all around us? And whether they were cheating or plain incompetent, whether they were unwilling or unable—what difference did that make to us? If we were tied for life to the level of their unfitness, faked or real, how long could we care to go on?”

He explained that the company had once been a thriving one that people were proud to work for, but now hard times were the status quo: “We were beasts of burden struggling blindly in some sort of place that was half-hospital, half-stockyards—a place geared to nothing but disability, disaster, disease—beasts put there for the relief of whatever whoever chose to say was whichever’s need.”

This story, although fictional, points to an important fact about human nature: If people can’t change their situation, they won’t try to. Knowing the outcome in advance, they will feel no motivation to make Herculean efforts for miniscule or nonexistent rewards. As economist Ludwig Von Mises put it:

To make a man act, uneasiness and the image of a more satisfactory state alone are not sufficient. A third condition is required: the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness. In the absence of this condition no action is feasible. Man must yield to the inevitable. He must submit to destiny. [emphasis added]

Socialist policies severely restrict individuals’ ability to improve their conditions, so productivity suffers and living conditions plummet. Historical examples of socialism, as well as modern-day Venezuela and North Korea, show the misery that results.

In Soviet Russia, the government attempted to distribute the results of sixty years of steady GDP growth equally by seizing personal fortunes and dictating wages. But buying power for the average person dropped sharply, and whether a person could actually spend his or her wages was largely dependent on knowing the right people. Economist Mark Harrison explains: “The distribution of consumer goods and services was characterized by shortage and privilege. Every Soviet adult could count on an income, but income did not decide access to goods and services – that depended on political and social status.”

People who lived under the Soviet regime and now live in modern Russia appreciate that they have more opportunities to improve their lives than they used to. Back in 2007, interviewers asked Russians about their memories and opinions of life under the Soviet regime; many of them recalled that the USSR had “fewer possibilities.” One respondent explained, “Now there are so many chances. You can earn enough money even to buy an apartment. Certainly it is very, very difficult, but possible.” Another participant elaborated, “Now I can earn money and there are many ways of doing so. . . . In the Soviet Union, engineers and other technical employees of middle and high rank did not have [a] right to a second job. People who had the time and energy and wanted to provide more for their families could not do it.”

In other words, people were willing to work extremely hard to improve their conditions—but weren’t allowed to.

In Venezuela, socialism has driven a once-prosperous country into the ground. University professors juggle multiple jobs to keep food on the table. Others try to escape a desperate situation; more than six million have fled in recent years, and in 2017 the suicide rate was nearly double the global average. Venezuelans are willing to work to improve their circumstances—but the socialist regime’s oppression and economic destruction consistently frustrate their efforts.

North Korea was conceived as a communist nation following the Second World War, but formally switched to a form of “self-reliant” socialism following the Korean War. The leadership of the Worker’s Party of Korea has brought widespread misery in the form of horrific rights violations, including torture, severe censorship, forced labor, and arbitrary detention. Their policies have also led to nearly half the country suffering from inconsistent access to food and water—in stark contrast to their far more capitalist neighbor, South Korea, which has flourished in recent decades.

Advocates of socialism protest that historical examples of socialism were not “true socialism” or “the right kind of socialism.” But it is socialism—people giving government control of producing things—that undermines people’s ability and willingness to produce and provide for themselves in all these examples.

With free markets, by contrast, people are free to own private property and run businesses without the government dictating production or distribution. People are rewarded for their hard work and ability. By innovating, excelling at work, and creating more and better products or services, they can make more money, which they can use to pay for better living quarters, education, electronics, travel, or other life-improving goods or services produced by others. Hence, in mostly free and capitalistic countries, such as the US, the United Kingdom, Ireland, and Hong Kong, people have enjoyed massive economic growth, which has corresponded with a major increase in average living standards.

When human beings struggle, create, and innovate, but their efforts do not improve their own circumstances, they burn out or give up. Marx, Russell, Sanders, and other proponents of socialism and communism claim that their preferred systems are “for the people”—but the truth is that they work against the nature and needs of human beings.

AUTHOR

Angelica Walker-Werth

Angelica Walker-Werth is an Ayn Rand Fellow with FEE’s Hazlitt Project and a recent graduate of Clemson University. She is an assistant editor and writer at The Objective Standard and a fellow and research associate at Objective Standard Institute. Her hobbies include gardening and travel.

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EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Capitalist Giant American Express: Capitalism Is Racist

My latest in PJ Media:

What could be more capitalist than American Express? After all, the credit card behemoth made $2.3 billion in profit last quarter alone.  Since the social media giants are massive corporations, too, and they seem to be all in on the woke corporate nanny state, why not Amex? Christopher F. Rufo of the Manhattan Institute revealed in the New York Post Wednesday that Amex invited Khalil Muhammad, a professor at Harvard Kennedy School and the Radcliffe Institute and the great-grandson of the founder of the Nation of Islam, Elijah Muhammad, to give a lecture to employees on “race in corporate America.”

Yes, Amex is pushing critical race theory (CRT) in a big way. Rufo notes that the company established an “Anti-Racism Initiative” last year after the death of George Floyd, and since then has been “subjecting employees to a training program based on the core CRT tenets, including intersectionality, which reduces individuals to a tangle of racial, gender and sexual identities that determine whether he is an ‘oppressor’ or ‘oppressed’ in a given situation.”

Employees were made to enter their “race, sexual orientation, body type, religion, disability status, age, gender identity [and] citizenship” onto “an official company worksheet” and use this data to determine whether they were “privileged” or “marginalized,” no doubt in full accord with the Left’s hierarchy of good to evil, in which white American males are the carriers of the original sin of racism. Amex offers resources (including, of course, the timeless classic writings of Ibram X. Kendi) to “learn about covert white supremacy” and take up “the lifelong task of overcoming our country’s racist heritage.” Some of the featured resources call for efforts to “force white people to see and understand how white supremacy permeates their lives.”

As in other places, the CRT training at Amex identifies even the renunciation of racism as racist, stigmatizing as “microaggressions” phrases including “I don’t see color,” “We are all human beings” and “Everyone can succeed in this society if they work hard enough.”

Everyone can succeed in this society if they work hard enough, but Khalil Muhammad, Harvard professor, was having none of that and was determined to make sure the Amex employees, or at least the white male ones, became aware that they were racist oppressors. He told his captive audience of credit card wonks that capitalism was “founded on racism” and that the Western world had been profoundly influenced by “racist logics and forms of domination” for centuries. “American Express,” he declared, “has to do its own digging about how it sits in relationship to this history of racial capitalism.” He laid the guilt on extra thick: “You are complicit in giving privileges in one community against the other, under the pretext that we live in a meritocratic system where the market judges everyone the same.”

There is more. Read the rest here.

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AOC: ‘Freeing People’ From ‘Existential Havoc’ of Capitalism

In a conversation with the online Interview Magazine published Tuesday, Rep. Alexandria Ocasio-Cortez (AOC) promoted fellow Democratic Socialist Jabari Brisport from New York as another candidate who hopes to fundamentally transform the country.

AOC asked the openly gay, black nominee for the New York State Senate what Democratic Socialist means to him, Brisport replied, “For me, it’s really about getting people out from underneath the thumb of capitalism, and freeing them from the very small group of people that manage—or I should say mismanage—our economy and our society for their own wealth and benefit. It’s about freeing up people to truly experience all the joys in life by making sure they don’t have to worry about whether or not they’ll be able to keep their home from month to month, or whether or not they’ll be able to pay for health care when they get sick.

“It’s about freeing people from all the existential havoc that capitalism wreaks on us, and allowing them to truly thrive,” Brisport added.

The duo didn’t offer any examples of where and when in history people have truly thrived under socialism.


Alexandria Ocasio-Cortez

27 Known Connections

Lauding the Protesters and Rioters in America’s Streets

In an August 2020 photo essay in which Vanity Fair magazine “celebrat[ed] the founders of Black Lives Matter [BLM] … and more on the forefront of change,” Ocasio-Cortez called it “profoundly exciting” that the Marxist/anarchist revolutionaries of BLM and Antifa were “discovering their own power” by participating in the massive wave of protests and violent riots that had swept the country since late May. Some excerpts:

  • “I believe that people are really discovering their own power in a broader sense that we have not seen in a very long time. So, yes, we’re starting to see some of this emerging power at the ballot box and at the polls, but we’re also starting to see it in the streets, and people standing up for themselves in the workplace, in organizing themselves and their labor, and it’s profoundly exciting. And it’s really incredible to see how people are really taking the reins for themselves in the direction of systemic change.”
  • “I think that all these people in the streets that are educating others, that are engaging in this elevated and amplified way, have really emboldened me, and it’s given me a lot of courage and encouragement to try to match the energy of everyone else right now who’s really fighting for progressive change.”

To learn more about Ocasio-Cortez, click on her profile click here.

EDITORS NOTE: This Discover the Networks column is republished with permission. ©All rights reserved.

Of Workers and Wealth

Pope Leo XIII: Whether we have wealth or lack it makes no difference. What matters is to justly use what we have, especially if we are rich.


The great mistake made in regard to the matter now under consideration is to take up with the notion that class is naturally hostile to class, and that the wealthy and the working men are intended by nature to live in mutual conflict. So irrational and so false is this view that the direct contrary is the truth.

Just as the symmetry of the human frame is the result of the suitable arrangement of the different parts of the body, so in a State is it ordained by nature that these two classes should dwell in harmony and agreement, so as to maintain the balance of the body politic. Each needs the other: capital cannot do without labor, nor labor without capital. Mutual agreement results in the beauty of good order, while perpetual conflict necessarily produces confusion and savage barbarity.

Now, in preventing such strife as this, and in uprooting it, the efficacy of Christian institutions is marvellous and manifold. First of all, there is no intermediary more powerful than religion (whereof the Church is the interpreter and guardian) in drawing the rich and the working class together, by reminding each of its duties to the other, and especially of the obligations of justice.

Of these duties, the following bind the proletarian and the worker: fully and faithfully to perform the work which has been freely and equitably agreed upon; never to injure the property, nor to outrage the person, of an employer; never to resort to violence in defending their own cause, nor to engage in riot or disorder; and to have nothing to do with men of evil principles, who work upon the people with artful promises of great results, and excite foolish hopes which usually end in useless regrets and grievous loss.

The following duties bind the wealthy owner and the employer: not to look upon their work people as their bondsmen, but to respect in every man his dignity as a person ennobled by Christian character. They are reminded that, according to natural reason and Christian philosophy, working for gain is creditable, not shameful, to a man, since it enables him to earn an honorable livelihood; but to misuse men as though they were things in the pursuit of gain, or to value them solely for their physical powers – that is truly shameful and inhuman.

Again justice demands that, in dealing with the working man, religion and the good of his soul must be kept in mind. Hence, the employer is bound to see that the worker has time for his religious duties; that he be not exposed to corrupting influences and dangerous occasions; and that he be not led away to neglect his home and family, or to squander his earnings.

Furthermore, the employer must never tax his work people beyond their strength, or employ them in work unsuited to their sex and age. His great and principal duty is to give every one what is just. Doubtless, before deciding whether wages are fair, many things have to be considered; but wealthy owners and all masters of labor should be mindful of this – that to exercise pressure upon the indigent and the destitute for the sake of gain, and to gather one’s profit out of the need of another, is condemned by all laws, human and divine.

To defraud any one of wages that are his due is a great crime which cries to the avenging anger of Heaven. “Behold, the hire of the laborers. . .which by fraud has been kept back by you, crieth; and the cry of them hath entered into the ears of the Lord of Sabaoth.”

Lastly, the rich must religiously refrain from cutting down the workmen’s earnings, whether by force, by fraud, or by usurious dealing; and with all the greater reason because the laboring man is, as a rule, weak and unprotected, and because his slender means should in proportion to their scantiness be accounted sacred. Were these precepts carefully obeyed and followed out, would they not be sufficient of themselves to keep under all strife and all its causes?

But the Church, with Jesus Christ as her Master and Guide, aims higher still. She lays down precepts yet more perfect, and tries to bind class to class in friendliness and good feeling. The things of earth cannot be understood or valued aright without taking into consideration the life to come, the life that will know no death.

Exclude the idea of futurity, and forthwith the very notion of what is good and right would perish; nay, the whole scheme of the universe would become a dark and unfathomable mystery.

The great truth which we learn from nature herself is also the grand Christian dogma on which religion rests as on its foundation – that, when we have given up this present life, then shall we really begin to live. God has not created us for the perishable and transitory things of earth, but for things heavenly and everlasting; He has given us this world as a place of exile, and not as our abiding place.

As for riches and the other things which men call good and desirable, whether we have them in abundance, or are lacking in them-so far as eternal happiness is concerned – it makes no difference; the only important thing is to use them aright. . . .

Therefore, those whom fortune favors are warned that riches do not bring freedom from sorrow and are of no avail for eternal happiness, but rather are obstacles; that the rich should tremble at the threatenings of Jesus Christ – threatenings so unwonted in the mouth of our Lord – and that a most strict account must be given to the Supreme Judge for all we possess.

– from Rerum Novarum (1891)

Beware of Politicians who Covet Your Stuff!

Image may contain: 1 person, suit and text
Image from Facebook.

On Facebook there is a meme (right) based upon what President Donald J. Trump said at his “Choose Greatness” 2019 State of the Union. President Trump said:

America was founded on liberty and independence, and not government coercion, domination, and control. We are born free and we will stay free. 

Tonight, we renew our resolve that America will never be a socialist country. 

Coveting

When I saw this meme I posted this:

Exodus 20:2-17 NKJV – “You shall not covet your neighbor’s house; you shall not covet your neighbor’s wife, nor his male servant, nor his female servant, nor his ox, nor his donkey, nor anything that is your neighbor’s.”

A Facebook friend Randy Rioux asked, “What is that for?”

I responded to Randy with, “Communism and Socialism is based upon the core belief of coveting other peoples things. It is a violation of the Tenth Commandment. At some point Communists and Socialists run out of other peoples things.” Randy replied, “Thanks for clarifying.” I believe Randy got it.

Merriam Webster defines coveting as, “to desire (what belongs to another) inordinately or culpably.”

Synonyms for covet include: ache (for)cravedesideratedesiredie (for)hanker (for or after)hunger (for)itch (for)jones (for) [slang], long (for)lust (for or after)pant (after)pine (for)repine (for)salivate (for)sigh (for)thirst (for)wantwish (for)yearn (for)yen (for).

The Individual vs. The Collective

Ayn Rand’s 1946 monograph “Textbook of Americanism” explains in the simplest terms possible what made America unique and great.

Rand opens with an explanation of two starkly contrasting ideas.

What Is the Basic Issue in the World Today?

The basic issue in the world today is between two principles: Individualism and Collectivism. Individualism holds that man has inalienable rights which cannot be taken away from him by any other man, nor by any number, group or collective of other men. Therefore, each man exists by his own right and for his own sake, not for the sake of the group.

Collectivism holds that man has no rights; that his work, his body and his personality belong to the group; that the group can do with him as it pleases, in any manner it pleases, for the sake of whatever it decides to be its own welfare. Therefore, each man exists only by the permission of the group and for the sake of the group.

These two principles are the roots of two opposite social systems. The basic issue of the world today is between these two systems.

President Trump clearly threw the gauntlet down against the “collective” when he said, “America was founded on liberty and independence, and not government coercion, domination, and control. We are born free and we will stay free.” 

2020 Presidential Primary

This is what every America should be alert for as we enter the 2020 Presidential primaries. There will be dozens of debates as both political parties field candidates at the national, state and local levels.

The defining issue in 2020 will be coveting.

Coveting takes on many forms. Here are some core coveting issues to watch out for:

  1. Coveting other peoples freedom of speech. There are those politicians who hunger for the power to limit free speech. Many social media giants have become gate keepers and salivate over denying some freedom of expression.
  2. Coveting other peoples ability to defend themselves. This ongoing battle will heat up as politicians use tragedies to yearn for the day that all Americans are disarmed and unable to defend themselves from thieves, criminals and the government.
  3. Coveting other peoples religious beliefs. Some politicians will use hatred of Jews to promote their political agenda.
  4. Coveting other peoples wealth. Taxes is the tool of politicians at every level to take what is not theirs and redistribute it as they wish.
  5. Coveting other peoples individualism. The great battle since the beginning of mankind is the struggle between the individual and the collective (government).
  6. Coveting other peoples children. This is perhaps the most dangerous form of coveting. This form of coveting takes on many forms: the brainwashing of children to turn on their parents, the sexual assaults on children to feed a craving (pedophilia and pederasty) and the using of children for personal gain (human trafficking and prostitution).
  7. Coveting another persons life. The law recently passed in New York and the law proposed in Virginia are the definition of infanticide.

All of these forms of coveting, and many more, will be on full display during the 2020 Presidential primaries.

Coveting leads to worshiping false images (the earth), disrespecting your parents, adultery, stealing, lying (bearing false witness) and even murder.

Watch for them. Beware of them. Vote to end coveting.

EDITORS NOTE: The featured image is by Pixabay.

End of the Democratic Party: Meet the Faces of the Socialist Democrat Party of America

The Democratic Party is fielding candidates that show just how far they have moved away from the party of Thomas Jefferson.

The National Consortium for the Study of Terrorism and Responses to Terrorism, a Department of Homeland Security Center of Excellence led by the University of Maryland, in a 2013 article in the Journal of Terrorism and Political Violence titled “The Emerging Red-Green Alliance: Where Political Islam Meets the Radical Left” noted:

No matter how unlikely it may seem, radical Leftists and Islamists have come closer in recent years. Drawing on substantial ideological interchange, and operating at both state and non-state levels, the two movements are building a Common Front against the United States and its allies. In this article, we use framing theory to examine the contemporary convergence of political Islam and the radical Left. Both radical Leftists and Islamists have utilized the master frame of anti-globalization/anti-capitalism and the master frame of anti-colonialism/anti-imperialism to elicit support from the widest possible range of people. The emerging Red-Green alliance presents a complex challenge that will require careful attention from U.S. and European policymakers.

Here’s a video flashback when Chris Matthews asks key leaders of the Democratic Party about the difference between a Socialist and Democrat:

Today America’s Democratic Party resembles a real red/green alliance.

The Democrats are truly the party of Karl Marx and Mohammad. The new faces of the Democratic Party are either Socialist Democrats, like Ocasio-Cortea or Islamists, like Linda Sarsour and Rep. Keith Ellison. Many have written about the coming Red/Green alliance. We are now seeing it in the form of candidates who are winning Democratic Party primaries.

Watch Ocasio-Cortex try to describe the difference between Socialism and Democratic Socialism on ABC’s The View:

The Oxford Dictionary defines Socialism and Democratic Socialism as follows:

Socialism:

A political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole. Policy or practice based on the political and economic theory of socialism. (in Marxist theory) a transitional social state between the overthrow of capitalism and the realization of Communism.

Democratic Socialism:

A form of socialism pursued by democratic rather than autocratic or revolutionary means, especially by respecting a democratically elected legislature as the source of political change; (also more generally) moderate or centrist socialism.

Groups like Black Lives Matter, Antifa, Occupy Wall Street, Women’s March and Families Belong Together all demand radical changes to American policies.

The July/August 2017 issue of The Atlantic had an article titled “What’s Wrong With the Democrats?” by Franklin Foer. Foer wrote:

Leaderless and loud, the Resistance has become the motive power of the Democratic Party…  The feistiness and agitation of the moment are propelling the party to a new place.

But where? The question unnerves Democrats, because the party has no scaffolding… Resistance has given the Democrats the illusion of unity, but the reality is deeply conflicted…

To produce a governing majority, the party will need to survive an unsettling reckoning with itself. Donald Trump didn’t just prevail over the Democrats; he called into doubt their old truths. [Emphasis added]

The Democratic Party is eating its own. Watch this video about how Hispanic Democratic Socialist candidate Ocasio-Cortex won the Democrat primary in New York because she targeted her Democratic opponent was white.

As a young man I was a JFK Democrat. He was my American idol. It was the time of Camelot and at the peak of American economic, political and military power. JFK embodied a vision of the future that Americans embraced.

The party of JFK is long gone. Rising from its ashes is the red/green alliance.

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Red-Green Axis: The Agenda to Erase America! [Video]

REPORT: ‘Red-Green Axis’ the Existential Threat to America

End of the Democratic Party: Meet the Face of the Socialist Democrat Party of America

“Girl From The Bronx” Ocasio-Cortez Called Out In Fact Check; Actually Grew Up In Wealthy Enclave – Tea Party News

Left-Wing Politicians Wage War on Plastic

RELATED VIDEO: American Media, Soviet Tactics

EDITORS NOTE: The featured image is titled “Red Green Axis, Alliance, Flag A” by CaciqueCaribe.

Why Capitalism is a fundamental Right of Man

Thomas Paine wrote a book titled Rights of Man. The Rights of Man posits that popular political revolution is permissible when a government does not safeguard the natural rights of its people. The Rights of Man begins thusly:

To

GEORGE WASHINGTON

PRESIDENT OF THE UNITED STATES OF AMERICA

SIR,

I PRESENT you a small Treatise in defense of those Principles of Freedom which your exemplary Virtue hath so eminently contributed to establish.–That the Rights of Man may become as universal as your Benevolence can wish, and that you may enjoy the Happiness of seeing the New World regenerated the Old, is the Prayer of

SIR,

Your much obliged, and Obedient humble Servant,

THOMAS PAINE

Paine was addressing the Declaration of the Rights of Man and of the Citizen written in France after their revolution. The basic principle of the Declaration was that all “men are born and remain free and equal in rights” (Article 1), which were specified as the rights of liberty, private property, the inviolability of the person, and resistance to oppression (Article 2).

Capitalism is defined as:

A social system based on the principle of individual rights. Politically, it is the system of laissez-faire (freedom). Legally it is a system of objective laws (rule of law as opposed to rule of man). Economically, when such freedom is applied to the sphere of production its result is the free-market.

Therefore capitalism is a basic right of man or in more modern terminology a human right.

To take away one’s property is to take away their ability to survive. Take away a farmer’s land and you take away a farmer’s ability to reap what he has sown. The farmer can no longer feed his family nor sell what he has reaped to feed others. If the state (government) controls the dirt (land) then it controls the people.

This is what the American Revolution was all about. Unchaining the people from serfdom to the King of England. 

As Friedrich A. Hayek, in his book The Road to Serfdom wrote:

It is true that the virtues which are less esteemed and practiced now–independence, self-reliance, and the willingness to bear risks, the readiness to back one’s own conviction against a majority, and the willingness to voluntary cooperation with one’s neighbors–are essentially those on which the of an individualist society rests.

Collectivism has nothing to put in their place, and in so far as it already has destroyed then it has left a void filled by nothing but the demand for obedience and the compulsion of the individual to what is collectively decided to be good.

Capitalism is the opposite of obedience and compulsion.

Capitalism can exist even in the most repressive societies, such as in Communist Cuba. In my column My Visit to Cuba — An American in Havana I wrote:

What I observed is that the Cuban people have great potential if they are unleashed and allowed to earn what they are truly worth. Socialismo (socialism) is slowly but surely killing their lives and doing them great harm. I noticed on the ride West of Havana through the rural areas of Cuba hundreds of people waiting along the road trying to get a ride. Some were nurses in their white uniforms thumbing rides to the hospital where they are needed. I saw horse drawn carriages along the major highway carrying people because the public transportation system cannot keep up with the demand. The horses and cattle we saw were emaciated. The roads were in poor shape including the national highway system.

As one Cuban man put it, “the people have no love for their work.” They have no love for their work because Cuba needs a change in direction.

A love for work comes from the rewards of one’s efforts. Take that away and you remove the soul of the individual. You remove his purpose in life. You remove the one of the fundamental rights of man.

There are those who believe the polar opposite. There are those who believe that central control trumps individual freedom. There are those who are being taught that capitalism is evil, until the time that they must earn enough to feed themselves.

There was a time in America when there were only two classes of citizens, the working class and the non-working class. The working class took care of the non-working class. Economic classification is identity politics (a.k.a. Cultural Marxism) writ large. It is designed to put the poor (those earning below a certain wage determined by government) against the rich (those earning above a certain wage determined by the government).

During his inaugural address President Trump stated:

Today’s ceremony, however, has very special meaning. Because today we are not merely transferring power from one Administration to another, or from one party to another – but we are transferring power from Washington, D.C. and giving it back to you, the American People.

For too long, a small group in our nation’s Capital has reaped the rewards of government while the people have borne the cost.

[ … ]

The establishment protected itself, but not the citizens of our country.

[ … ]

That all changes – starting right here, and right now, because this moment is your moment: it belongs to you.

President Trump is an American. He believes in the rights of man. He is a capitalist. He is everything that Washington, D.C. hates.

RELATED ARTICLE: The Origins of the ‘Cult of Political Correctness’ [a.k.a. Cultural Marxism]

Capitalism Is Good for the Poor by Steven Horwitz

Critics frequently accuse markets and capitalism of making life worse for the poor. This refrain is certainly common in the halls of left-leaning academia as well as in broader intellectual circles. But like so many other criticisms of capitalism, this one ignores the very real, and very available, facts of history.

Nothing has done more to lift humanity out of poverty than the market economy. This claim is true whether we are looking at a time span of decades or of centuries. The number of people worldwide living on less than about two dollars per day today is less than half of what it was in 1990. The biggest gains in the fight against poverty have occurred in countries that have opened up their markets, such as China and India.

If we look over the longer historical period, we can see that the trends today are just the continuation of capitalism’s victories in beating back poverty. For most of human history, we lived in a world of a few haves and lots of have-nots. That slowly began to change with the advent of capitalism and the Industrial Revolution. As economic growth took off and spread throughout the population, it created our own world in the West in which there are a whole bunch of haves and a few have-more-and-betters.

For example, the percentage of American households below the poverty line who have basic appliances has grown steadily over the last few decades, with poor families in 2005 being more likely to own things like a clothes dryer, dishwasher, refrigerator, or air conditioner than the average household was in 1971. And consumer items that didn’t even exist back then, such as cell phones, were owned by half of poor households in 2005 and are owned by a substantial majority of them today.

Capitalism has also made poor people’s lives far better by reducing infant and child mortality rates, not to mention maternal death rates during childbirth, and by extending life expectancies by decades.

Consider, too, the way capitalism’s engine of growth has enabled the planet to sustain almost 7 billion people, compared to 1 billion in 1800. As Deirdre McCloskey has noted, if you multiply the gains in consumption to the average human by the gain in life expectancy worldwide by 7 (for 7 billion as compared to 1 billion people), humanity as a whole is better off by a factor of around 120. That’s not 120 percent better off, but 120 times better off since 1800.

The competitive market process has also made education, art, and culture available to more and more people. Even the poorest of Americans, not to mention many of the global poor, have access through the Internet and TV to concerts, books, and works of art that were exclusively the province of the wealthy for centuries.

And in the wealthiest countries, the dynamics of capitalism have begun to change the very nature of work. Where once humans toiled for 14 hours per day at backbreaking outdoor labor, now an increasing number of us work inside in climate-controlled comfort. Our workday and workweek have shrunk thanks to the much higher value of labor that comes from working with productive capital. We spend a much smaller percentage of our lives working for pay, whether we’re rich or poor. And even with economic change, the incomes of the poor are much less variable, as they are not linked to the unpredictable changes in weather that are part and parcel of a predominantly agricultural economy long since disappeared.

Think of it this way: the fabulously wealthy kings of old had servants attending to their every need, but an impacted tooth would likely kill them. The poor in largely capitalist countries have access to a quality of medical care and a variety and quality of food that the ancient kings could only dream of.

Consider, too, that the working poor of London 100 years ago were, at best, able to split a pound of meat per week among all of their children, which were greater in number than the two or three of today. In addition, the whole family ate meat once a week on Sunday, the one day the man of the household was home for dinner. That was meat for a week.

Compare that to today, when we worry that poor Americans are too easily able to afford a meal with a quarter pound of meat in it every single day for less than an hour’s labor. Even if you think that capitalism has made poor people overweight, that’s a major accomplishment compared to the precapitalist norm of constant malnutrition and the struggle even 100 years ago for the working poor to get enough calories.

The reality is that the rich have always lived well historically, as for centuries they could commandeer human labor to attend to their every need. In a precapitalist world, the poor had no hope of upward mobility or of relief from the endless physical drudgery that barely kept them alive.

Today, the poor in capitalist countries live like kings, thanks mostly to the freeing of labor and the ability to accumulate capital that makes that labor more productive and enriches even the poorest. The falling cost of what were once luxuries and are now necessities, driven by the competitive market and its profit and loss signals, has brought labor-saving machines to the masses. When profit-seeking and innovation became acceptable behavior for the bourgeoisie, the horn of plenty brought forth its bounty, and even the poorest shared in that wealth.

Once people no longer needed permission to innovate, and once the value of new inventions was judged by the improvements they made to the lives of the masses in the form of profit and loss, the poor began to live lives of comfort and dignity.

These changes are not, as some would say, about technology. After all, the Soviets had great scientists but could not channel that knowledge into material comfort for their poor. And it’s not about natural resources, which is obvious today as resource-poor Hong Kong is among the richest countries in the world thanks to capitalism, while Venezuelan socialism has destroyed that resource-rich country.

Inventions only become innovations when the right institutions exist to make them improve the lives of the masses. That is what capitalism did and continues to do every single day. And that’s why capitalism has been so good for the poor.

Consider, finally, what happened when the Soviets decided to show the film version of The Grapes of Wrath as anticapitalist propaganda. In the novel and film, a poor American family is driven from their Depression-era home by the Dust Bowl. They get in their old car and make a horrifying journey in search of a better life in California. The Soviets had to stop showing the film after a short period because the Russian audiences were astonished that poor Americans were able to own a car.

Even anticapitalist propaganda can’t help but provide evidence that contradicts its own argument. The historical truth is clear: nothing has done more for the poor than capitalism.

Steven HorwitzSteven Horwitz

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions.

He is a member of the FEE Faculty Network.

Why Students Give Capitalism an ‘F’ by B.K. Marcus

bernie sanders half of a sign socialismNot only are young voters more likely to support Democrats than Republicans, they are also more likely to support the most left-wing Democrats. In recent polls of voters under 30, self-declared democratic socialist Bernie Sanders beats the more mainstream Hillary Clinton by almost six-to-one.

Former professor Mark Pastin, writing in the Weekly Standard, acknowledges some of Clinton’s flaws as a candidate, but concludes that “the most compelling explanation” for young Democrats’ overwhelming preference for Sanders “is that young voters actually like the idea of a socialist revolution.”

I’m embarrassed to confess that when I was a young voter, I probably would have been among the “Sandernistas.”

I don’t think Pastin is right about the revolution, though. Much of Sanders’s success in defanging the word socialism is in pairing it with an emphasis on democracy, as George Bernard Shaw and the Fabians did in an earlier era. Democratic socialists — at least among my comrades — preferred the idea of evolutionary socialism, and we tried hard to distance ourselves from the revolutionary folks.

Whether by evolution or revolution, however, what we all sought was less competition and more cooperation, less commerce and more compassion. Above all, we wanted greater equality.

“When I asked my students what they thought socialism meant,” Pastin writes, “they would generally recite some version of the Marxist chestnut ‘from each according to ability and to each according to need.'” That sounds about right, but add to that the assumption that it’s government’s job to effect the transfer.

My father, gently skeptical of my politics, pointed out a problem confronting American socialists: we tended to imagine ourselves on the receiving end of the redistribution — rob from the rich and give to the rest of us. “However poor we may think we are in the United States,” he told me, “we would have to give up most of what we now have in order to make everyone in the world equal.” This was strange to hear from someone always behind on the rent and facing ever-growing debt.

Pastin makes a related point: “I’ve always thought that socialism appealed to students because they have never not been on the receiving end of government largesse.”

As an informal test of his students’ egalitarian beliefs, Pastin “would offer to run the class along socialist principles, such as the mandate to take from the able and give to the needy.” Specifically, he proposed subtracting points from the A students and transferring them to those who would otherwise earn lower grades.

Even the most ardent socialist students balked at this arrangement. In fact, according to Pastin, the highest-performing students were both more likely to be self-declared socialists and more likely to meet his proposal with outrage: grading, they argued, should be a matter of merit.

Is it pure hypocrisy on the part of these rhetorical radicals, or is there a logical consistency behind this apparent contradiction in their values?

Trying to recall the details of my own callow political folly, I seem to recall three main issues behind my anti-capitalistic mentality:

  1. “Capitalism” was just the word we all used for whatever we didn’t like about the status quo, especially whatever struck us as promoting inequality. I had friends propose to me that we should consider the C-word a catchall for racism, patriarchy, and crony corporatism. If that’s what capitalism means, how could anyone be for it?
  2. Even when we left race and sex out of the equation, our understanding of commerce was zero-sum: the 1 percent grew rich by exploiting the 99 percent.
  3. For whatever reason, none of us imagined we’d ever be business people, except on the smallest possible scale: at farmer’s markets, as street vendors, in small shops. Those things weren’t capitalism. Capitalism was big business: McDonald’s, IBM, the military-industrial complex.

I don’t know how many of today’s young socialists hold these same assumptions, but a question recently posted to Quora.com sounds like it could have been written by one of my fellow lefties in the 1980s: “Should I drop out of college to disobey the capitalist world that values a human with a piece of paper?” (See Praxis strategist Derek Magill’s withering advice to the would-be dropout.)

Even if a different array of confusions drives the radical chic of millennial voters, what is clear is that they see American capitalism as rigged. “Crony capitalism,” from their perspective, is redundant — and “free market” is an oxymoron. They’re not necessarily opposed to meritocracy; they just don’t see what merit has to do with the marketplace.

Grading that would penalize the studious to reward the slackers is obviously unfair, and a sure-fire strategy to kill anyone’s incentive to do the homework. It’s not that the socialist students are applying the principle inconsistently; it’s that they don’t see what merit has to do with commerce. Some of that may be intellectual laziness, some is the result of indoctrination by anti-capitalist faculty, but much of it is also based in the reality of America’s mixed economy.

Not only have young voters spent most of their lives sheltered from the productive side of the commercial world, schooled by men and women who are themselves deliberately insulated from the marketplace, but time spent in the reality of the private sector is hardly an education in what the advocates of economic freedom have in mind when we talk about the free market.

If my own experience is any guide, today’s democratic socialists will have to spend a lot of time unlearning much of what they’ve been taught.

Pastin’s informal experiment is an illuminating first step, and it’s a powerful way to expose the conflict between his students’ understanding of merit and the socialists’ understanding of equality. But there’s also a danger in comparing the economy to the classroom. By offering his grade redistribution as an analogy for socialism, Pastin seems to imply that the merit-based grade system better resembles a free market. But that’s silly.

For one thing, studying hard for your next exam may improve your own GPA, but it probably doesn’t help your classmates. In contrast, an unhampered marketplace makes everyone better off, however unequally.

More significantly, in a free economy, there is no one person in the role of the grade-giving professor. In the absence of coercion, power has a hard time remaining that centralized. Yes, wealth can be seen as a kind of grade, but in the free market, an entrepreneur’s profits and losses are like millions of cumulative grades from the consumers. A+ for improving our lives. F for wasting time and resources.

That kind of spontaneous, decentralized, self-regulating prosperity is every bit as radical as the visions of young socialists, minus the impoverishing effects of coerced redistribution. It’s almost certainly not what they imagine when they say they oppose “capitalism.”

B.K. MarcusB.K. Marcus

B.K. Marcus is editor of the Freeman.