Tag Archives: Capitalism

Articles concerning business, commerce, and capitalism in general.

Free Arabs

Arabs Are Free In Israel And Other Links

Telling it like it is:

Free ArabsHT Sense of Events

President Obama has outlined a new plan to ease the strain of student loan debt, and it does benefit some people. Like most of his plans, those it benefits aren’t necessarily those who you and I might agree most need it.

“The people who will see the biggest reductions are people earning higher incomes,” Delisle said. “That is the effect of this change. You put that together with the loan forgiveness, and this is tailor-made for graduate students.”

From The Washington Examiner: The Surprising Winners of Obama’s Student-Loan Program

My question: Were these students lied to about the costs of repaying their debt? Were they bamboozled or were they idiots? No one compelled them to take that debt upon themselves. As free adults they entered into legally binding arrangements where all the terms were known by all parties before signatures were laid to the page.

What are we teaching these people about reality by allowing them to freely enter into transactions and then protecting them from the natural and expected outcomes of those transactions?

Want to help people? Be a capitalist.

Capitalism is the greatest engine for the production of wealth the ingenuity of man has ever invented. Are you interested in helping the poor? Embrace capitalism. Do you want to help clean up the environment? Embrace capitalism. Are you interested in obliterating the scourge of malnutrition or some ghastly African disease or illiteracy or [fill in your personal do-good desideratum here]: yep, embrace capitalism. The global poverty rate, Kevin reminds us, has been cut in half  in the last 20 years. Think about that. Then think about the sorrowful history of our species up to about 1830.  How much progress against widespread — really, near total — poverty had there been from the beginning of time until then — until, that is, capitalism started to take off? Not much.

When someone comes to you decrying the rapacious greed of evil capitalists, crying “foul!” at the business man, ask them what good the Good Samaritan would have done if he didn’t have the medicine (from capitalist medical research), the donkey (a possession of his own that he used as a resource), and money to pay the inn keeper?

Also, if they are Christian, ask them if God would be happier that they themselves helped the needy, or if they forced someone else to help the needy?

From Roger Kimball: Catholics & Capitalism

Wrapping things up: Hillary Clinton, probably in some attempt to raise her likability numbers before her likely run for President, is trying to tell us she and Bill (does anybody believe he’s any more faithful to her now than he was then?) were broke.

I have news for your Mrs. Clinton: Your definition of “broke” and my definition of “broke” are two very, very different things.

Working Well

Is capitalism evil? Many today think it is, or at least believe it is more likely to cause harm than good.

Despite the incredible evidence surrounding us in the West in general and the United States in particular, many who have benefited greatly from capitalism still decry it. Theodore Malloch attempts to show that idea for the deceit that it is.

He’s not the clearest in debate, nor the strongest in argument, but you cannot deny that his argument carries weight. But what is his argument?

Michael Novak, writing in the foreward of Theodore Malloch’s book Doing Virtuous Business, claims that it was Adam Smith who asked the most important revolutionary question. Not “What is the cause of poverty?” which could have only showed how to create more poverty, but “What is the nature and cause of the wealth of nations?” This question showed the path to create wealth, not for Adam Smith, but for billions of people across the world.

In the intervening years much has been lost about the connection between doing what is right and doing what is profitable. Ayn Rand began with Nietzsche and ended in cold, heartless, and frankly mindless pursuit of gain for gains’ sake. Rand has supplanted Smith as the prime purveyor of the principles of capitalism, and this is a travesty because one cannot get human worth from Rand. Neither can one get human worth from Smith, but Adam Smith knew that there was more to profit than making money, and more to business than making profit.

Theodore Malloch, in Doing Virtuous Business, attempts to bring to life the original thoughts and ideals of Adam Smith, expanding with his own idea of Spiritual Capital, to point the way for those who wish to pursue business while maintaining their humanity. While I felt most of the book fell rather flat, the argument itself stood well. Reading the first two chapters, the last two chapters, and the appendices, which catalog businesses started and run well with goals beyond the bottom line or the shareholders, will provide as good an argument as you’ll get from reading the rest of the book. But the book is a rather short one, so reading the whole thing doesn’t put one too far behind.

All in all I do recommend this book, not to those who think capitalism is evil and need convincing otherwise, but to those who know it cannot be inherently evil but are batted about by those who do.

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Unchecked Free Market Problems

Unrestricted free market

Gary A writes article on the investing opinion site SeekingAlpha.com claiming that while limited government sounds good, it’s not a reasonable policy if the goal is market stability:

I support the free market but unlike them I don’t trust the free market. I don’t think that having just capitalists in charge of the free market can possibly keep it free very long. Capitalists cannot police themselves. Every game has rules. Try playing baseball without umpires. Try playing tennis without line judges. There are even rules when racing at the Indianapolis 500.

I agree with him, to an extent:

I agree that having capitalists in charge of capitalism can and has caused many a problem. Having Marxists in charge of a market causes even more.

The issue is that there is no suitable force acting upon the individuals that make up a government capable of restraining their choices actions.

And the more levels of government that are constructed to check and balance any system of man only lead to more levels of waste and corruption as they, in turn, fall to the very same forces.

The brilliance of the original American system was that it pitted this thirst for power against itself by building three branches of government with competing but not overlapping responsibilities.

This system worked well enough, for in that inherent tension there was stability left for those under it.

As the government’s greatest enemy was itself, instead of the people, the people were free to go about their ways.

As the government power alignment adjusted, mainly beginning with Lincoln’s power consolidation in the Civil war the forces of government were aligned and now could seek to take power, not from each other, but from the populace.

So is it a perfect system? No. Is it better than the alternatives? It depends on how you define better. I would say it is, with better being that state where there is least government intrusion into my affairs and then only so much as is necessary to prevent me from infringing unjustly on another’s affairs.

Of course, then you get into what is just and unjust.

The whole problem is that unless you accept a sovereign moral force who/which defines morality for us unsovereign beings, there is really no way to define right except through might.

Those in power get to define morality apart from that sovereign moral entity. And without an acceptance of a sovereign moral entity there is no legitimate basis for a universal and effective set of ethics to guide the behaviors of individuals, groups, corporations, societies, or nations.

Yes, I believe it all boils down to whether or not you subscribe to the idea there is a higher power who will judge you for your actions and your intentions and the results.

Net Neutrality: Taken For Fools

I, Pandora has had a mixed history on Network Neutrality.

Network what?

Network Neutrality is one response to fears that infrastructure and service companies, such as AT&T, Verizon, and Comcast, spell doom for the freedom of the internet as they inevitably begin controlling access to content, enhancing access to content they own, control, or partner with, and limiting access to content they deem contrary to their best interest.

The majority of Network Neutrality supporters want the FCC to step in and set rules requiring the infrastructure/service companies provide equal access to all content and forbidding them from interfering in any way with the freedom of the internet.

Sounds good, right?

As with any other debate, you have to get to the deeper issues. And this debate is rife with deeper issues.

When I first heard of Network Neutrality I was gung-ho for it. I did not understand the goals at the heart of this push.

“Don’t be hasty, master Hobbit!”

There was a reason liberal Democrat leaders were more for this program than Republicans and conservatives. Liberals dream of more regulation and control and private and free systems. The freer the system the stronger the urge to a liberal to regulate it.

My confusion over Network Neutrality did not continue long. I supported it in March of 2007, and by August of that year I wrote about the inherent conflict between government regulation and innovation.

Government regulation is the enemy of innovation.

In the arguments over Net Neutrality, I feel for the plebes. I don’t want my traffic throttled any more than it already is by the ISP. But is it the government’s responsibility to control this? And if we allow the government to say who can access the internet and at what speed, where is our moral authority when the government wants to say who can’t access the internet?

Perhaps I am more libertarian than I like to think myself to be.

Later I quoted Rep. John Sununu (R – New Hampshire) regarding the slippery slope of wishing for government interference:

If the Internet has taught us anything, it’s that it’s pretty presumptuous to predict what the future will be. We should be very, very cautious about imposing regulations based on what we think competitors will do in the future and how we think consumers will respond based on what we think competitors will do.

Gee, that sounds familiar.

Oh, yea. Attorney General Eric Holder, in a 60 minutes spot on healthcare and specifically Medicare and Medicaid’s extremely high levels of fraud made perhaps the most blind statement regarding human nature I’ve ever heard from a lawman:

People didn’t think that something as well-intentioned as Medicare and Medicaid would necessarily attract um… fraudsters.

People not thinking. Not considering the implications of what they want.

Just because it’s well intentioned doesn’t mean it’s right and good and free of the failings that so plague us mortals.

Are Verizon, AT&T, and Comcast completely good in their actions so far regarding the internet? No.

Comcast has been slapped once for purposely throttling connections to certain types of content during peak times load times.

But is the government the solution?

In my article regarding regulation versus innovation I make it clear that while there is a place for regulation, that regulation is best applied to the government itself, limiting it’s ability to tamper with our system of free enterprise.

There is a question I’d ask of anybody regarding this issue. If Thomas Edison were alive today which entity would be the greatest enemy of his innovation: Government or Business?

Sonia Ericson, writing in TechNewsWorld today provides a meaningful and realistic and proven alternative to network neutrality: private control.

ICANN is currently the organization closest to being “in control” of the internet.

It’s a private organization which controls the distribution and changes to the domain names which make the internet navigable.

(A)sking the FCC to “protect” the Internet means inviting government oversight, which injects more politics — not less — into the operation of the Net.

Sonia then talks about someone I’ve met:

Ashwin Navin, cofounder of BitTorrent, also says he doesn’t support government regulation of the Net, even though his name appears on an OIC letter. He says he’d rather see Internet service providers come up with a self-regulatory plan based on a pledge to keep the Net open and the creation of a third body to arbitrate. Indeed, Navin says that his own company’s scuffle with Comcast was ultimately solved without formal rules after a netizen noticed that Comcast was degrading service and brought the matter to the public’s attention.

“The problem is disclosure,” Navin says. “Consumers need to know if the ISP, which is the most invisible layer in the stack, is responsible for an improved or degraded experience for any of the services they use.”

Geek Out Alert!

In my days working for Fry’s Electronics, Ashwin’s step-dad hired us to build and repair his wireless network. He introduced me to Horchata and I watched the Blue Angels practice over his backyard. Ashwin and his brother came by once while I was there and I basked in the presence of those gods of the internet, the business minds behind BitTorrent.

But Ashwin has a point. A good point. A point I may elaborate on further in the future.

Suffice to say that information is the grease for the wheels of the free market and capitalism. And the internet, above all else in the history of markets, has enabled the dissemination of information more efficiently and the finding and gauging of information more easily.

Why do we trust the government to act in our best interest when it comes to such a powerful information force as the internet? The government has no competitors to blow the whistle on it’s misdeeds. The government self-interest lies in a dearth of information.

Trust the government and be taken for a fool. I’ll not be joining you in your foolishness.

Walmart And The Healthy Free Market

In case you had trouble guessing: I like businesses.

If there weren’t business there wouldn’t be internet, iphones, cars, bicycles, buildings, tents, sleeping bags, fresh produce in the middle of winter, heat and A/C, in cars too, hospitals, medication, surgery…

You get the picture.

We’ve had government since the beginning of time, and it hasn’t done a thing directly to benefit or develop beneficent products and services (except nuclear energy and other war-related items).

We’ve also had businesses since the first person decided he’d rather spread and grow his wealth instead of laboring over the same rows in the same farm for his own families sustenance.

Chipotle is an excellent example of a good business.

Our wealth allows us to pay premium price for food raised and prepared in a reasonably environmentally conscious and sustainable manner.

And it tastes good, too.

Walmart is not too different from Chipotle.

The monstrous store chain that’s easy to hate until we need cheap razer blades and jeans and socks and hand towels and garbage can liners. Then everybody loves it.

Except the unions, who are never going to love Walmart until it caves to their regressive and stiflingly stupid and anti free market strong man tactics and effects.

I pray Walmart never does, and for good reason.

When Walmart enters an area, consumers win as the often cheaper prices at Walmart “encourage” the other stores to moderate their own prices.

The prices are not always better, but they are better enough of the time and for enough products to justify the crowds you normally find at these supercenters.

Does Walmart Save You Money? (read the comments, many people report savings in the $1000’s each year while others disagree with their perception of the business practices)

But enough about prices already, Walmart benefits your health!

Huh?

Indeed, studies are showing that people living near a Walmart or “club store” (Costco, Sam’s Club, etc) are lighter on average.

But don’t all the fat and ugly people shop at Walmart? No, it’s just the ugly people and me.

In an article published in Forbes Magazine, Art Carden, an Professor of Economics at Rhodes College in Memphis TN, reports on studies showing that the increased buying power people experience when benefiting from the Walmart effect has a direct and close correlation to the health of those people.

There are several reasons this may be, and the why or how is always a bit murkier than fact of correlation, but all of the possibilities enjoy sound economic sense.

Those benefiting most from the Walmart affect are…

…women, the poor, African-Americans and people who live in urban areas.

The arguments as to why and how and many, as I noted earlier, and some may find them difficult. Read it a few times if necessary.

Our evidence is indirect, but we think it shows that price changes can have subtle and sometimes hard-to-detect consequences. Any change in price results in two phenomena. The first is the substitution effect: a change in consumption mix due to a change in relative prices. If a bag of salad is $2 and a bag of potato chips is $1, then the price of salad in terms of chips is two bags and the price of a bag of chips is half a bag of salad. If a Wal-Mart opens and reduces the price of salad to $1 a bag and the price of chips to 75 cents a bag, the “salad price” of chips has risen (from 1TK2 bag to 3TK4 bag) and the “chip price” of salad has fallen from 2 bags to 4TK3 bags. In short, salad has become cheaper relative to chips.

This argument is based on basic price comparison. If the salad cost 2 times what chips cost before Walmart,  Jack and Jill are more likely to buy the salad now because it only costs 1.3 times more than the chips now.

Then there is the income effect:

If Wal-Mart sells food at lower prices–even if our incomes don’t change–every dollar can buy more. Therefore, we’re richer.

The crux of their findings is that people, when given a choice and a suitable price range, will purchase healthier foods.

Our data suggest that we buy healthier food when our purchasing power increases. There is a small increase in consumption of fruit and vegetables in places where Wal-Mart does a lot of business and a decrease–or smaller increase–in fatty food consumption relative to places where Wal-Mart doesn’t do business. That is, people might consume more fatty foods, but consumption of those unhealthy goods increases more slowly than it does for the rest of the population.

There are other facts, findings, and arguments in the article. I urge you to read the whole thing: Wal-Mart’s Weight Effect.

The point is, don’t be too quick to denigrate or disparage the current state of our free martket system.

It’s not always pretty, and it’s easy to find fault.

However, compared with any other system out there, capitalism and the free market are the best at providing escalating levels of service and product to the most people most equitably and with the least amount of downside.

It’s been proven time and again, yet we in America now are dangerously close to forgetting completely, if we haven’t already.

The free market and capitalism isn’t about the blind, mindless pursuit of money at all costs, that’s anarchy.

Free markets and capitalism are about working in tandem with those around us to maximize our return by providing the best service or product to others. It’s a mutually beneficial system.

And we’re in danger of throwing it away.