Tag: capitalism

Poor Nations Are Poor Because of the Lack of Capitalism, Not Because of Capitalism


twenty20_7de84ae1-915a-420b-944d-8cd37f9db403_poor_homes-e1450461883995Why are the wealthiest nations so much richer than the poorest nations? Harvard’s Ricardo Hausmann explains what’s behind global inequality and poverty:

So there are these enormous differences in productivity that make the productive places rich and the unproductive places poor. The poor people are not being exploited. They’re being excluded from the higher productivity activities. It’s not that the capitalists are taking a very large share of what they produce. It’s just that they produce very little in the first place. …

Poor places are characterized by the absence of capitalist firms and by self-employment, employment: these are small peasants and farmers or owners of small shop. In these settings, there are no wages, there’s no employment relationship. There are no pensions. There is no unemployment insurance. The trappings of a capitalist labor market do not exist.

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The intern is an insane title, typical of our times. This movie should have been called The Magical Boomer. Then it would have been as sane as fantasy can be. Sometimes, I catch myself thinking at the movies, baby boomers sure want a legacy! This is not news, however. Do you remember that year of […]

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What distinguishes product discounts that undercut the developer/publisher from discounts which improve developer revenue or at least benefit the retailer without cutting into developer profits?  When Amazon puts a product on sale, whose cut is that discount taken from? Not all sales are the same, of course. But how often does a retailer reduce or […]

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Today in False Choices: People Versus Profits


Screen Shot 2015-10-27 at 3.42.32 PMConsulting with corporations about the importance of putting “people before profits” is mutually beneficial to both corporation and speaker: the former is afforded cheap virtue and the latter an expensive lifestyle. In the world of speaking and corporate consulting, espousing the People-Before-Profits narrative — as with the virtues authenticity and diversity — is simply good business practice.

This value-for-value model is lost on the very same speakers who take it for granted that profits are suspect. These self-styled experts fail to see that, unlike President Obama’s facile description of the tension between liberty and security, the choice between people and profits is a false one. Yet companies throughout the United States are happy to self-flagellate before speaker after speaker, pretending to temporarily forget what reality will forever remind them: that profits are a darn good measure of the extent to which you have served others.

At the heart of the People-Before-Profits movement is an ambivalence about the dignity and morality of business. In popular culture, this idea is most evident in movies and on television, where businessmen are almost invariably portrayed as either moral bankrupts (Wall Street) or courageous heroes who unveil the moral bankruptcy of business (Michael Clayton).

Democratic Party: Not for Grown-ups


Illustration by Kate Greenaway for Robert Browning’s “The Pied Piper of Hamelin” (public domain)

Think of today’s Democratic Party as the little village of Hamelin. A piper called Bernie Sanders toots his socialist tune, and all the little Democrats skip along behind him to … where exactly? According to the medieval legend, the Pied Piper of Hamelin led the children away and drowned them.

Do Democrats Really Believe Americans Are Worse Off Today Than in the 1970s?


In last night’s Democratic debate from Las Vegas, Bernie Sanders highlighted a key bit of modern Democratic economic theory: “The middle class of this country for the last 40 years has been disappearing.” Things have been going to hell since Nixon! (It always goes back to Nixon, doesn’t it, progressives?)

But things have not been going to hell for decades. Sure, the middle class – defined as households earning between $35,000 and $100,000 — probably has been shrinking. But through 2000, a New York Times analysis reveals, “the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets.”

Could We Please Stop Calling it “Capitalism?”


shutterstock_237930475The moment we call “capitalism” capitalism, I’ve come to believe, we’ve already conceded far too much ground to the other side, which of course portrays capitalism as a coherent system, imposed on economic life, just as socialism represents a system imposed on producers and consumers from the outside. If we’re simply choosing between two systems, the socialists contend, why choose the one imposed on the rest of us by rich cronies, interested only in their own wealth and power, instead of the system imposed by the government on behalf of ordinary people?

In truth, of course, capitalism represents the absence of any imposed economic system. Instead, it is simply what arises in conditions of freedom — the organic order that establishes itself as people come together in markets, pool their capital, respond to price signals, and so forth. Our choice isn’t between two systems, imposed on the rest of us, one by the rich, the other by the government. Not at all. Our choice is between freedom and coercion. The term “capitalism” obscures that absolutely basic point.

Which is why I found myself struck by one phrase in an email from a friend. He was writing about the pope’s visit, but the pontiff isn’t the issue here. Words — that is the issue here:

Perhaps the Most Powerful Defense of Market Capitalism You Will Ever Read


092115marketEconomist Deirdre McCloskey recently spoke in London, and this brief summary nicely captures her talk and her work on the power of economic freedom. Next year will see the arrival of her latest book, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World,” the completion of a trilogy on the wonder-working power of modern capitalism.

Now, McCloskey does not like the word “capitalism.” She would prefer our economic system be called “technological and institutional betterment at a frenetic pace, tested by unforced exchange among all the parties involved.”

Or perhaps “fantastically successful liberalism, in the old European sense, applied to trade and politics, as it was applied also to science and music and painting and literature.”

What Still Works?


338745main_13-lgApollo 13, Ron Howard’s glorious 1995 epic, tells the heroic true story of America’s doomed third manned mission to the moon. On April 14, 1970, some 56 hours into the flight, a crippling explosion rocked the spacecraft’s service module, forcing NASA to abort the moon landing and concentrate on bringing the crew safely back to earth. The movie grippingly captures the first tense moments after the jolt of the explosion, as the astronauts and mission control engineers in Houston grapple with a cacophony of alarms and flashing warning lights, and try to make sense of torrents of contradictory incoming data amidst the din of crosstalk and reports of mounting system failures.

After several interminable minutes, Gene Krantz (Ed Harris), NASA’s legendary flight director, steps in to impose order on the barely controlled chaos inside Mission Control. He tells his engineers to quiet down, lights a cigarette, takes a long, deep draw, and says:

“Can we review our status here… Let’s look at these things from a… from a standpoint of status. What have we got on that spacecraft that’s good?

Laudato Si’: Now What Does a Catholic Do?


shutterstock_195361532For Catholics who advocate for free markets, Pope Francis has just made life extremely complicated. The Holy Father’s encyclical, Laudato Si’ — which I have only begun to read — contains statements that clearly indicate that the Pope has fallen in with the progressives. Although the encyclical still prohibits birth control, abortion, and euthanasia, Francis seems tone deaf to the constant demands of the left, particularly the environmental left, that the Church abandon her teachings and encourage the use of these prohibited techniques. The Pope also seems to have largely adopted the platform of the American Democratic Party. As a Republican, my stomach is queasy.

So what to do? As a Catholic, I must submit my personal convictions to the authority of the Magisterium– which means to the Pope insofar as he speaks within Church tradition on theological matters. That gives me some weasel room on Francis’s economic views. But not much room. A Catholic’s first duty is obedience, or as my daughter wrote in her new article for Catholic Exchange:

…our lives are not our own. They belong to God and that means a total emptying of self. It is within this framework that we will examine our call to love and submit in obedience to the hierarchical Church. In learning this obedience, we will mature and grow in our faith. Since Christ left us the Church, it is He who calls us to loving submission to the Church.

Is the US Economy Immoral?


shutterstock_259200614When Democrat Jerry Brown ran a long shot presidential campaign back in 1992, he snarkily referred to Bill and Hillary Clinton as “Bonnie and Clyde,” the Depression-era bank robbers. Brown, now the governor of California, thought he had a legitimate chance to win the nomination. He wasn’t going to let some delicate notion of political etiquette stand in his way.

Don’t expect that kind of tough talk from Bernie Sanders, another longshot Democratic presidential candidate challenging a Clinton. During his announcement Tuesday, all the socialist Vermont senator had to say about Hillary Clinton was that his campaign “is not about Hillary Clinton.”

That’s not exactly surprising. The socialist Sanders almost certainly doesn’t believe he will defeat the Clinton machine and be the Democratic Party’s next presidential nominee — much less America’s next president. So there’s no reason to play attack dog. More likely, what Sanders really wants is a big stage to highlight what he sees as the terrible unfairness and inequality of the modern U.S. economy, one where Americans have “a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.” In other words, the economy is just dandy at generating wealth, but that prosperity only benefits a few.

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Greed is good. So say our own EThompson and Gordon Gekko. But is this a compelling defense of capitalism? More importantly, is it accurate? Does it tell us something true about why a free society succeeds? Bernard Mandeville thought so. Mandeville thought vanity or pride unleashed would lead to a vibrant and wealthy society: private […]

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The Material and Moral Poverty of Equality


imageCapitalism has long been reviled because of the material inequality it is said to foster. In his essay, Discourse on Inequality, Jean-Jacques Rousseau railed against the evils of market-coordinated cooperation:

[So long as men] undertook only what a single person could accomplish, and confined themselves to such arts as did not require the joint labour of several hands, they lived free, healthy, honest and happy lives, so long as their nature allowed, and as they continued to enjoy the pleasures of mutual and independent intercourse. But from the moment one man began to stand in need of the help of another; from the moment it appeared advantageous to any one man to have enough provisions for two, equality disappeared, property was introduced, work became indispensable, and vast forests became smiling fields, which man had to water with the sweat of his brow, and where slavery and misery were soon seen to germinate and grow up with the crops.

In reality, this meant that — while individuals lived just on what they themselves could produce — they remained equally poor and in equally miserable squalor, since even the most industrious and talented can create little in isolation. But Rousseau didn’t stop there, arguing that when people began cooperating and expanding their efforts’ yields through the division of labor, slavery and misery became inevitable because unequal talents necessarily led to unequal results:

One Small Step for Business


moon-openUnder the 1967 Outer Space Treaty — to which the United States is a signatory — neither nations nor private citizens can make territorial claims on the Moon or other celestial bodies. However, this doesn’t mean that people can’t use resources they find there. If you want to mine for Helium-3 or water, go right ahead; just know that you can’t legally claim the mine as your own or keep anyone else out, any more than a fisherman can keep other people away from a school of tuna (admittedly, it’s a little unclear whether you can sell those materials back on Earth as your property).

From a property rights perspective, this is a shame in that it discourages exploration and development. Besides being cool, this means that there are resources sitting there that potentially aren’t being used simply because we haven’t adopted a legal framework that allows people to profit from their work. Still, it could be worse: neither the United States nor any other space-capable country signed the Moon Treaty, which explicitly banned commercial operations on the Moon. As if that isn’t bad enough, the language it uses is the sort that most Model UN participants would find too utopian, collectivist, and bureaucratic (“The Moon and its natural resources are the common heritage of mankind… Neither the surface nor the subsurface of the Moon, nor any part thereof or natural resources in place, shall become property of any State, international intergovernmental or non-governmental organization, national organization or non-governmental entity or of any natural person.”).

Fortunately, there’s been a smidgeon of good news on the subject. It’s been revealed that, late last year, the FAA wrote a letter to an American aerospace company confirming that it would use its licensing authority to keep other (American) companies out of its way if it proceeded with its planned moon base:

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My parents I spent three nights collectively building the Lego pirate ship back when I was a little scamp, because they were good parents. But, during the day, they had jobs. And friends. And lives. I certainly respect the skill and dedication, but only an upper-middle/upper class white mom with means and excesses in both money […]

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In it For the Money, But With Questions, Too


shutterstock_133534910I would like to use this opportunity to explain why, precisely, I write: for the money. And indeed, as Dr. Johnson said, “No man but a blockhead ever wrote except for money.”

Admittedly, the money’s not great, but that is indeed why I do it. (Were it to do over, I might have thought of applying the same talents to corporate law. I fantasize about that fork in the road, sometimes. But I didn’t. No point in regret.) Now, when I say “I do it for the money,” oddly, people think I’m kidding. Or worse: they’re shocked. Even people who should not be. This suggests to me a taboo that really ought not exist. In fact, it’s one I’d like to stamp on, hard, forever.

It should surprise no one that I do what I do all day for the money. In fact, it is what you really hope I’m doing. Earning money. The other options are “stealing it” or “asking you for a handout.” As for the latter, that probably means you–personally. In one way or another. So, unless you feel like being the next person I touch up for a loan, you should hope I’m working as hard as I know how to earn money. Otherwise, you’re telling me you want higher taxes. (You really don’t want me applying for a government grant although; let me tell you, that is one fast and easy way for someone like me to get money.)