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Anyone who knows me knows that I sleep like a tranquilized sloth. I may not sleep very many hours a night, but the ones I do sleep couldn't be interrupted by a two-mile-long freight train passing three feet from my bedroom window.
But if there were something that could keep me up at night...or wake me in a cold sweat...it would be the incredible way in which the word "capitalism" has gone from describing our economic system into being some kind of cross between a cartoon shorthand and a swear word.
I really mean it. During the waning years of the Cold War, it was pretty simple. We had capitalism, they had Communism. They lost, and we won.
In the 1990s, the "peace dividend" and the massive growth in free trade and the surge in computing technology in the workplace all combined to make for a cheerful capitalist consensus. Bill Clinton may have been a Democrat, but he was a solid pro-business Democrat.
By the end of 2010, the world was trading about three times as much as it did in 1990. That means more goods and more services crossing borders, of course. But it also means more travel, more exchange, and more international understanding. We're all on this pale blue dot together out in the vast expanse of space; why wouldn't we all seek to cooperate and exchange when it's going to make us better off?
We're in a pretty shockingly peaceful world with better living standards than ever experienced before, and for the most part, we have market economics to thank for that. But you'd never, ever, ever get that idea if you listened to the White House on a regular basis.
- limits on retirement savings - taxes for Obamacare on everything capital - income inequality vs. wealth inequality
Now, the cartoonishness of the talk of capitalism is a problem in both ways. A free market needs the rule of law in order to work. There are some sectors of the economy that naturally require some regulation. There are certain services that can only be funded by taxes and user fees. And there are definitely areas in which a little sensible cooperation between the public and private sectors can help everyone get more of what they want. And, yes, there are cases to be made for tax-funded welfare programs. The people who just want to shut down government, period, aren't really advocating for capitalism...they're really trying to get something pretty close to anarchy.
To my mind, government is a lot like an antibiotic drug: Great at solving specific, focused problems, best in very limited doses, and hazardous when over-used...especially because we don't have a good alternative.
But it's really exhausting to hear that tireless drone of complaint that capitalism is at fault for everything. Because we've let the word devolve into a cartoonish stereotype, it's almost impossible to have a serious talk about fixing the problems that naturally come with a capitalist system, or to have an open-minded conversation about applying the things we've learned about how markets work towards solving the problems we have.
It is, for instance, colossally disingenuous for the President of the United States to have said that we couldn't have foreseen that some people would lose their existing health plans when the Affordable Care Act went into law. If government were to declare that all soft drinks had to include certain ingredients, then only an idiot would think we'd be able to get the exact same brands of pop after that law went into effect that we'd had before. Imposing requirements on what a consumer product has to contain is invariably going to change the kinds of choices that consumers are going to have. Now, that may be for better or for worse, but it's going to create change. And to think otherwise requires ignoring everything a reasonably intelligent adult should know about buying and selling things.
Similarly, it is completely inexcusable for people to make their way into the highest offices in the land while holding capital itself in utter contempt. Earlier this year, the White House proposed limiting the amount of money people could save in tax-advantaged savings to $3.4 million. Sounds like a lot, but it really isn't -- not at a time when the Federal government pays peanuts on Treasury bills. But taxing wealth itself seems to be a favorite pastime of the current administration. They seem to share a real hostility towards people who have assets.
It's that hostility that both confuses and angers me. It's confusing because that hostility is a classic case of cutting off one's nose to spite one's face. Unemployment in America is still higher than most people would like it to be. It's at about 7% now, while it was down in the 5% to 6% range between 2003 and 2008. There's always going to be some unemployment out there, since people quit jobs they hate before finding new ones, and for other reasons that reflect the fact we make choices and sometimes hold out for better things. But when there's more unemployment than you can explain away by natural life transitions, then there's a problem. Jobs are good as a source of income, of course, but they're also good for keeping us sharp, engaging us in social activities, enhancing a sense of self-worth, and generally making us productive people. When there are willing workers who can't find suitable jobs, that's a problem.
But what's also a problem is jumping from the conclusion that because some people don't have jobs, other people are at fault and should be punished for it. Solving unemployment generally means finding ways to bridge the gaps between what's in demand in the marketplace and what's in oversupply. That can take the form of government assistance, like unemployment insurance benefits, or the form of public-private partnerships, like job-training programs and grants for hiring certain types of workers. But those things happen mainly around the edges. The real thing preventing mass unemployment is, generally speaking, mass investment. Any kind of business requires two things: Capital and labor. Capital is everything from cash to ideas, patents to databases, trademarks to robots on assembly lines. Labor, of course, is the sea of workers.
When you have extra workers looking for something to do, what you naturally need is to bring more capital into the mix. The government tries to do this with "stimulus" plans, like the one we tried a few years ago with so-called "shovel-ready" construction projects. But stimulus programs like that one have several problems:
- They favor quick work rather than valuable work (yes, we put a lot of new asphalt on roads, but we didn't fix most of our country's actual infrastructure needs)
- They overheat the affected market in the short run, leading to a hangover later (see what happened with "Cash for Clunkers"; it cause sales to spike in 2009, but then there was the hangover -- and all for a huge cost per supposed job created)
- Because they're targeted at certain kinds of work that can't really be filled in a hurry, they don't really end up putting new people to work (like it or not, even basic construction jobs tend to require several months of training and development, and you can't just open the faucet overnight)
And that's really the problem at the root of it all: Ideology and feelings seem to be guiding many of the administration's actions, rather than thoughtful analysis of reality. We don't have to agree on our opinions to agree on taking a look at what actually works. And that's what's really the most appealing about a capitalist system: In general, it's the system that works best to raise the living standards of the largest number of people. It's not perfect, but it works much, much better than other systems. The problem with yelping endlessly to blame capitalism for things that aren't the way we like -- especially pointing out that some people seem to get an unfair portion of the results of capitalism -- is that it's not original.