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Comments on Capitalism and Free Enterprise

 

Only fear the Lord, and serve him faithfully with all your heart; for consider what great things he has done for you. 1 Samuel 12:24

“Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon.” Winston Churchill

At least up until now, we live in an English speaking country and operate in a Free Enterprise Economy. I don’t know if currently true, but when I graduated from high school four years of English were required to graduate, but not a single class of Economics was offered, much less required. I don’t know how many years of English are currently required for high school graduation, but I’m satisfied, an Economics class is still not offered or required. Ask your local school board if they offer classes in Economics. If they say, “yes, …Economics is taught.” Ask to see the text book and speak to the Economics teacher. The best I have found is a small section in some social studies class devoted to economics.

If students don’t understand economics, how do we expect them to appreciate and understand where jobs come from and what sacrifices are required to hire employees, meet a payroll and pay taxes. How can we expect them to know and appreciate how wealth is created and money is generated? It certainly isn’t the government, as I fear a majority now believes. We are raising a generation of children that have no understanding of that concept at all. Currently, I feel, capitalism is viewed with distain and having wealth is, if not deemed criminal, believed to have been acquired through less than honest endeavors. These students, uneducated in economics, are rife for being encouraged to vote for more and more government largess. They have no way of knowing or understanding the idea of “killing the goose that laid the golden egg” as they have no knowledge of how the goose was raised and trained to lay golden eggs.

We also have a cadre of politicians who apparently don’t understand free enterprise nor how new wealth is created. Any wealth above a certain amount (they’ll determine what that amount is, at any given time) is too much (or more than deserved) and should be taken from them, in the form of excessive taxation.   This concept is currently touted as “the right thing to do” as if those pushing the concept are bigger hearted and broader-minded than those who made or earned it. In fact, to resist it is publicized as stingy and insensitive to the poor and less fortunate. And our current society is buying it.

The politicians who want to tax the “Ultra-rich” give no consideration to how their wealth was obtained. How long it took to achieve, what sacrifices made and taxes paid in the process; how many jobs were created, and how much down-stream wealth was created as they became “Ultra-rich”. They just start with the notion, you have lots of money, way more than you deserve and therefore should be taxed more than others.

In addition this bias toward wealth and the “Ultra-rich” is amazingly pervasive, especially in a country that’s economic system and financial supports comes from free/private enterprise. Why is wealth, even modest wealth viewed negatively?

One reason, I believe is politicians, pandering to the poor for votes, suggest it by holding the wealthy up as evil. The media supports the concept, depicting their lavish lifestyles and reporting their scandals, encouraging the belief that one can’t become wealthy by fair and honest means. This being the case therefore, they deserve to have it taken away, at a disproportionate rate and redistributed to the more deserving. While that is the propaganda line, much or most of it goes to perpetuate various wasteful government bureaucracies

“Many persons have an idea that one cannot be in business and lead an upright life, whereas the truth is that no one succeeds in business to any great extent, who misleads or misrepresents.” John Wanamaker, John Vansant Wanamaker (July 11, 1838 – December 12, 1922) was a United States merchant, religious leader, civic and political figure, considered by some to be a proponent of advertising and a “pioneer in marketing.”[1] He served as U.S. Postmaster General. Wanamaker was born in Philadelphia, Pennsylvania.

The principle of taxing the “ultra-rich” at a rate higher than the average annual income, seems at first blush to have some merit, after all, they have so much more than everyone else, why shouldn’t they contribute more? This argument falls apart on several fronts.

  1. What is “Ultra-rich” and who defines it? Is it forever set at an annual income or net worth amount? Or is it a moving target at the whim of legislators that want a larger and larger piece?
  2. They already pay more in actual dollars (35% of x is always a lot less than 35% of x to the 10th power). In simpler terms 35% of $1,000,000 is much more in actual spendable dollars, than 35% of $100,000.
  3. Do they make more demands on the infrastructure (roads, bridges, schools, libraries and military) than the other tax payers?
  4. Since they became “Ultra-rich” by free-enterprise economic means, how long will they tolerate paying a dis-proportionate share? How long will it be before they move their business, wealth, income to a state or country with a more favorable tax structure? (See California vs Texas)
  5. Wealthy people do not cause/create poor people.
  6. Redistribution of wealth does not create more wealth.
  7. If you really want a fair and equitable tax system, tax everyone’s income on a flat percentage rate with no deductions…………..FOR ANYTHING!! (if you make nothing, you pay nothing., if you make a billion dollars you pay the established percentage tax as everyone else, no exceptions!)
  8. The indiscriminate denunciation of the rich is mischievous. It perverts the mind, poisons the heart and furnishes an excuse to crime. No poor man was ever made richer or happier by it. Not what a man has, but what he is, settles his class. Benjamin Harrison, 23rd US President, Republican

The reason individuals mortgage their homes, borrow money from their dads, or friends or banks to start a business is with the idea of improving their and their family’s financial position in society. They want, intend, desire, hope, to obtain wealth…….to get wealthy. They are willing to work long hours, sacrifice time with family and even their health over countless years in pursuit of that goal.

Free enterprise affords, encourages and rewards individual effort!

In the process, if they are lucky and successful, and their business grows they can hire additional employees (other than family members). They create jobs! Jobs that didn’t exist before! If they are really successful, they create hundreds of new jobs, employing people and paying taxes into local, state and federal government, supporting social security and Medicare, welfare and other expenditures they have little control over, other than in the voting booth. With all the time, risk and sacrifice, how much of the proceeds from their efforts should the owner be able to keep?

Wealth does trickle down. Instead of being a comedian’s punch line, there is reality in the concept. Often it doesn’t just trickle down, it flows like a river!

In addition to himself, how many multi-millionaires, even billionaires did Bill Gates’ company Microsoft create? I don’t know, but suffice it to say, “lots”! Through stock options alone, there is no telling how many multi-millionaires and billionaires were created. Through this one man’s efforts, untold billions of dollars were newly created. Each one of these new millionaire-billionaires, bought or built lavish homes, paying contractors, framers, brick/stone masons, electricians, plumbers, decorators, furniture store owners and salesmen to fulfill their desires, money “trickling down” to people that would be otherwise looking for other sources. Each one surely bought one or more luxury cars, a Lexus, Cadillac, Mercedes, BMW, Ferrari, etc., creating additional sales for local dealers, and salesmen. Each no doubt, joined expensive country clubs, spending money on golf clubs, in the pro shop and restaurants, tipping waiters and waitress lavishly in a manner they never knew previously, each paying additional, local, state and federal taxes on money and wealth that did not exist previously.

Then the contractor, electrician, plumber, accounting firm, divorce lawyer, waiter/waitress, etc. had more money to spend at Walmart, with their barber and beautician, and at the drug and grocery store. Perhaps they too bought a new car, a new suit of clothes or took a vacation.

The beneficiaries may not all be merchants. I assume and prefer to believe that at least some of the new money made its way to charitable causes, to churches, to fund retirement accounts, to pay off college loans and or to fund other worthwhile endeavors. Hopefully altruism found its way into the picture.

Immeasurable dollars, “trickling down” from Bill Gates. Free Enterprise at its best!

And how was the poor harmed in the process?

And when he realized he had gained more wealth than he could ever spend, he started to give it away through the Bill and Melinda Gates Foundation. He is giving away billions of dollars that never existed before!! How can that be a bad thing??

Instead of “he’s got too much money, lets tax the hell out of him”,……Why shouldn’t our approach be………..”How can we make conditions favorable to create more Bill Gates’?”

I only cite Bill Gates as an example. There are many, many more. The Sam Walton family to name another. How many Bill Gates’ are toiling now, on some project that will revolutionize our society and make that individual “Ultra-Rich”? Quick! Let’s find him and stop him before he makes more money than we think he deserves.

While critics can site all the negatives of capitalism and the free enterprise system, it is far better than any other system, socialism and communism included!! Bernie Sanders’ Democratic socialism….. is still Socialism!

As Margaret Thatcher said, “The problem with socialism is you eventually run out of other people’s money.”

You, I, we…..none of us have a legal right, or a moral entitlement to the other man’s money, no matter how much he may have or how he legally acquired it!!

Currently there is great concern over the growing gap between the Ultra Rich and the rest of us. The income-gap disparity its called. Perhaps there is more to this than I can fathom. I think it would be of greater concern if there was a finite amount of money in the world, never to increase or decrease. In that circumstance, if a few people gained more and more wealth each year, that would leave the rest of us, by necessity, poorer and poorer. But that is not the case. Free enterprise, entrepreneurship and capitalism insure a constantly expanding pool of money……..creating new wealth. The gap, to me is not nearly as important as an expanding volume of cash, available to the hardest working and most creative.

The free enterprise system is responsible for the highest standard of living, across all segments of society, in this country and any other country that has embraced it. Never in the history of mankind, have so many lived so well!

Is the lowest one-third of income-earners living today, better off than the lowest one-third in the 1930’s? My answer is, I concede a very subjective, YES! So what if there is a greater gap in income between the top 10% and the rest of us? If we’re all living better, where’s the harm? How did this better standard of living come to pass? Well it sure didn’t come from the government!!

While the free enterprise system isn’t flawless and results in abuse and criminal conduct in some cases…..OK……….in many cases; I contend it isn’t the system that is at fault, but the fault, weakness, shortcomings and corrupt nature of some of the individuals participating in, corrupting and taking advantage of a system that works better than any other. It’s unfair to fault the system. The fault lies in the sinful nature of man. In some circles it’s easier and more popular to fault the system, than admit and take responsibility for and try to correct the weaknesses in man.

This human weakness is present in every other economic/social system – however, the damages are more far reaching and devastating in all the others.

Obviously, being a Christian, I subscribe to the ideals of a “fully Christian society.” As C.S. Lewis states in his book Mere Christianity:   “All the same, the New Testament, without going into details, gives us a pretty clear hint of what a fully Christian society would be like. Perhaps it gives us more than we can take. It tells us that there are to be no passengers or parasites: if man does not work, he ought not to eat.”

Now before you become too exercised, in other sections in this book, Lewis speaks at length about charity and states that the reason we should work and earn is to be able to provide for the poor, i.e. we are individually responsible for taking care of the poor among us, not the government!

“I do not believe one can settle how much we ought to give. I am afraid the only safe rule is to give more than we can spare. In other words, if our expenditures on comforts, luxuries, amusements, etc., is up to the standard common among those with the same income as our own, we are probably giving away too little. If our charities do not at all pinch or hamper us, I should say they are too small. There ought to be things we should like to do and cannot do because our charities expenditure excludes them.” C.S. Lewis, Mere Christianity

There are two areas of capitalism/free enterprise where Lewis points out we may have missed the boat.

“There is one bit of advice given to us by the ancient heathen Greeks, and by the Jews in the Old Testament, and by the great Christian teachers of the Middle Ages, which the modern economic system has completely disobeyed. All these people told us not to lend money at interest; and lending money at interest – what we call investment – is the basis of our whole system. Now it may not absolutely follow that we are wrong. Some people say that when Moses and Aristotle and the Christians agreed in forbidding interest (or ‘usury’ as they called it), they could not foresee the joint stock company, and were only thinking of the private money-lender, and that therefore, we need not bother about what they say. That is a question I cannot decide on. I am not an economist and I simply do not know whether the investment system is responsible for the state we are in or not.”

The second point where we probably are missing the boat, if we are aspiring to a truly Christian society, Lewis addresses in the same section above, where he states if we don’t work, we don’t eat:

“Everyone is to work with his own hands, and what is more, every one’s work is to produce something good: there will be no manufacture of silly luxuries and then of sillier advertisements to persuade us to buy them.”

I must concede our current economic system is guilty of that in spades!!

Lastly I have used “Capitalism” and “Free Enterprise” interchangeably and perhaps that’s a mistake. To read an opposing view go to:

http://wwwinfowars.com/capatalism-is-not-free-enterprise/

While I don’t necessarily agree with everything stated there, it has some merit.

While I may not be an unabashed capitalist, I am unashamedly a believer in and supporter of free enterprise.

“Private enterprise is ceasing to be free enterprise.” Franklin Delano Roosevelt, 32nd US President, Democrat

For further insight read “Capitalism or Free Enterprise Economy: Features, Merits and Demerits by Smriti Chand at http://www.yourarticlelibrary.com

 

 

 

One Comment

  1. gary clark gary clark

    Free Enterprise is what made our country the greatest in the world! Consider how “old” we are and what we have created in such a short life time compared to other countries! It appears our ‘leaders” would like to control everything in our lives, especially the money!

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