Saturday, May 25, 2024

What went wrong with capitalism

Just one problem: the era of small government never happened. Government has been expanding for nearly a century in virtually all measurable respects, as a spender, borrower and regulator; the one brief retreat, under Bill Clinton, proves the trend. In the US, government spending has risen eight-fold since 1930 from under 4 per cent to 24 per cent of GDP — and 36 per cent including state and local spending. What changed under Reagan was that as spending rose, tax collections remained steady, so government started paying for its own expansion by borrowing. Deficits went from rare to routine and as a result public debt has quadrupled in the US to more than 120 per cent of GDP today.  

America is displacing Europe as the society least tolerant of financial distress for anyone, up to and including the super-rich

Rather than reversing the course of government, Reagan changed the conversation, which did often focus on a neoliberal agenda of cuts to taxes or deficits or regulation. But even when governments attempted to deregulate, the result was more complex and costly rules, which the rich and powerful were best equipped to navigate. By the 1980s, fearful that mounting debts could end in another 1930s-style depression, central banks started working alongside governments to prop up big corporations, banks, even foreign countries, every time the financial markets wobbled.  

With good reason, progressives deride this new version of capitalism as "socialism for the very rich", but governments were doling out relief for the poor and middle class too. More than socialism for the rich, this is "socialised risk", a campaign to inoculate an entire society against economic downturns. Although still widely criticised as the land of "raw" Reaganite capitalism, America is displacing Europe as the society least tolerant of financial distress for anyone, up to and including the super-rich.  

Something has been changing in the culture. Just as the American "revolution in pain management", which insisted on treating even moderate injuries with powerful opiates, was hooking the nation on OxyContin, its approach to economic pain management was addicting the system to a drip feed of government support. During the past two decades, the US fell from fourth to 25th in the Heritage Foundation rankings for economic freedom as both regulation and debt increased.  

If the era of small government was a myth, then the majority who want government to "do more" would be wise to think twice. An even bigger government is more likely to magnify than ease their frustration with the dysfunctions of modern capitalism.

Saturday, April 6, 2024

How to Make a Million Dollars

Ben Shapiro is an exceptionally talented person.  I would be happy with just a job I like.

Thursday, February 29, 2024

Ayn Rand: The Real Motive for the Socialist Mindset

The term "Capitalism" gets thrown around and has become a pejorative on the political left.  So maybe we should define what we mean by "Capitalism".

A free market is one in which you get to make free choices.  The opposite of this is tyranny, but no society is either completely free or completely tyrannical.  Being free to make choices includes the freedom to make voluntary exchanges,  to own property, and to do business for your own benefit.

The definition of Socialism is that the means of production is socially or collectively owned.  By definition, the means of production can't be privately owned, which requires an authoritarian state to take away people's right to engage in commerce.   This makes Socialism not only evil, but impractical because it prevents people from acting in their own benefit, and it prevents the innovation that would come from large numbers of people doing business.  It also takes away incentive structures of success and failure that result in a more efficient free market.

One thing that the political right believes that maybe the political left doesn't is that people respond to incentives.  Give people an incentive to not work and they won't work.  Give people an incentive to be productive and innovative and they will be productive and innovative.

These claims are easily demonstrated by looking at how various economic systems have faired.  Far-left economic systems have faired very poorly and have been a disaster for the people living under them.  All you need for a prosperous society is to embrace a free market to at least some degree.

Wednesday, February 21, 2024

Why Democracies Always Fail

Two centuries ago, a somewhat obscure Scotsman named Tytler made this profound observation: "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury.