Unhampered Capitalism Will Stop the Insanity

by | Aug 13, 2011

People tend to blame bad business decisions on capitalism. For example, some business owners treat their employees poorly and would advance their own interests better by treating their employees well. Happy employees tend to lead to happy customers, which means more profit for all. People have a bad boss, and they blame the free market. […]

People tend to blame bad business decisions on capitalism. For example, some business owners treat their employees poorly and would advance their own interests better by treating their employees well. Happy employees tend to lead to happy customers, which means more profit for all. People have a bad boss, and they blame the free market. “Government ought to step in where the free market fails,” they say.

This is like blaming oxygen for the actions of criminals. “If we didn’t have so much oxygen, criminals wouldn’t be able to breathe, and there would be less crime.”

It’s just as ridiculous to blame capitalism for the actions of business owners. The “oxygen” of business is unhampered, unrestricted capitalism.

Capitalism refers to freedom, specifically in a business context.

Freedom implies responsibility. In a free market, business owners have moral hazard. In other words, they are responsible for their mistakes.

If they continue to make the same mistakes, competitors who refuse to make those mistakes are free to step in and take business away from them. Sooner or later, this will happen because of the constant incentive for profit and gain present in the free market.

Government only has an incentive to “do good.” Government employees don’t usually make a lot of money, but they will make that money regardless of outcome. If anything, government regulators and “do gooders” have an incentive to make it look like problems exist, even where there are none. This justifies the continued existence and/or expansion of their government offices. Why do you think Washington D.C.

is an always-exploding monster that can never be cut back? We have created this monster by giving these agencies unlimited, infinite regulatory authority in the first place. It’s no longer about “doing good.” It’s about the growth of power and control for its own sake. In order to stop the insanity, we will have to kill the existence of most of these agencies in the first place. Otherwise, today’s incredible exploding debt will grow only bigger and bigger.

People don’t need government do-gooders to get businesses to act the way they want. They can vote with their pocketbooks. If they dislike the way a business is operating, they can cut back or even stop doing business with the particular company. A free market will always provide the competition.

Government gets in the way of the free market by charging too much in taxes, or by regulating so much that it’s not worth it for a competitor to take the chance to open. Remember that big corporations are the strongest supporters of regulators. Once a company becomes gigantic, it can afford the regulations. It doesn’t like being told by government what to do, but it knows it can survive it, while a fledgling competitor could not. That’s the essence of what politicians fondly call “public-private partnerships.” It’s more like a blockade than a partnership. Big, established businesses lean on the power of Big Government to keep competitors out of the marketplace, by making their field so complicated and expensive that nobody will threaten them. So much for “doing good.”

Much is made of the supposed evil of regulatory and tax “loopholes.” But these loopholes are nothing more than ways of getting around laws, taxes and regulations that are often vaguely worded. Loopholes have kept the American economy from collapsing into a frozen state of mediocrity and non-growth. That is, until the last several years. An unusually bad recession (caused by Federal Reserve policies, just like the Great Depression and most other recessions) combined with a virulently anti-capitalist administration in Washington have pushed our floundering economy over the edge. Like 9/11, people act shocked, surprised and angry that this could happen. But government has been hampering and chipping away at the private economy for decades. Obama ran as an explicit anti-capitalist and got the great majority of votes in 2008. A majority of voters, while not necessarily socialist like the current administration is, have not been in favor of capitalism. What business do they have being surprised that we stop getting the benefits of capitalism when capitalism no longer gets any air to breathe?

The air which capitalism must breathe is freedom, plain and simple. This means no government regulations, aside from the obvious need to prosecute fraud or contract violations when evidence of those occur. Tax cuts? You bet; massive ones, in fact, are needed, and immediately. As for the deficit, we’ll have to cut the spending twice what we cut taxes.

And we must cut spending for THIS year, not ten or twenty years down the road.

Other than the obvious need to punish fraud and force, government, by “doing good”, is not letting the market do its self-interested job of pleasing customers at all costs. Voters turn to the government to fix things they don’t like. But no business can possibly please everyone.

People who don’t like what a particular company offers them in goods/services should hold onto their money, or seek out a company who does things differently. This is a far more efficient and affordable way of handling things than turning over responsibility to the government.

People are naive. They think government has the same interests that they do, as consumers. In spite of polls that show almost nobody believes Congress or politicians in general, these very same people expect and count on government to deliver for them what only a free market could ever deliver.

How’s that working out for them?

 

Dr. Michael Hurd is a psychotherapist, columnist and author of "Bad Therapy, Good Therapy (And How to Tell the Difference)" and "Grow Up America!" Visit his website at: www.DrHurd.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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