Tuesday, December 10, 2013

Capitalism isn’t a four letter word

What's Capitalism, anyhow

Capitalism has a bad rep these days. Media is partially responsible. So are those who claim they want a smaller government, and who say they want fewer regulations. We don’t explain it well. People have this idea that capitalism means big businesses who stomp on poor people and on regular folks like you and me, who take all the money and leave none for us. Socialism seems attractive. It seems like real equality until you live it, (See: My socialist adventure) as any immigrant from a communist country will tell you

Capitalism isn’t a dirty word or a plot against poor people.  It’s  people free to buy and sell what others want and keep the profits, freedom to invent new solutions, rewards for the hard work of making useful   products and selling them, and keep the money. You get to do this without the government in your face.  The innovation America was known for grew out of this idea.

The waves of immigrants that came to this country with very little are a testament to that,  A man starts with nothing works buys a car, gets paid to drive people, provides good service and builds a limousine service. A woman works long hours,  saves money buys a house, pays it off and becomes successful in real estate, a young kid obsessed with technology builds a computer, or software or.... in his garage and builds a successful. business. People pursue happiness, they don’t always succeed, but they have the right to give it their best shot build something, feeling proud and live good lives. 

If you think ‘but that was then’ or ‘ but not me’ perhaps these examples will work better: Making a living selling on eBay is capitalism, a kid who saves broken bicycles and sells the parts is capitalism. the entire underground economy is capitalism, farmers markets, flea markets....

The less involved government is, the better economies work. In of technology sector, where government is not very involved, there are constant new products, growth, quality and economic prosperity. People expect quality and get it; companies that don’t deliver are replaced.  Healthcare, and banking are highly regulated  and don’t work as well. But no part of the economy works as poorly as government.

How peoples’ actions regulate the private sector

People also hold the mistaken idea that capitalism if not controlled by government is chaos, no rules , anything goes. Not true.

In the private sector we vote with our pocketbooks every day.  For the most part, this works. The food at restaurants is safe to eat not because it has a license, not because of all the regulations ot has to follow but because it wants your business.

Elevators don’t usually kill people, not because of those certificates and inspections you see on their walls,  but because people won’t ride in elevators that kill people.

Disposal companies for the most part, don’t dump garbage in peoples’ backyards --  not because of all the environmental laws and regulations -- but because they want to stay in business.

Accountants don’t steal your money for the most part because they want your business and the business of your friends.

This pocketbook voting of capitalism keeps business honest, and protects people. Of course, the system is far from perfect. People would have to get injured in elevators or even killed before people boycotted them, Crooked accountants might steal money before pocketbook voting kicked in and so on.

But ask yourself this,  Does government improve on that? Make it worse? Improve some things and make other things worse? On balance are the laws, the procedures and rules worth it?

Other protections in the Private Sector-

Insurance is another way that capitalism protects consumers. Most professionals and commercial builders have insurance,; insurance contracts require businesses to meet standards, may require evidence, and will  not payout if those standards aren’t met. Any business that breaks the rules,  won’t get insurance again. Of course, insurance companies can be corrupt; insurance agents can get paid off to “look the other way”. but again only to a certain extent.  Lose money for your boss and you get fired. [ Here’s something to think on-- If a government inspector is paid off, what will stop him from doing it again? Who would be easier to pay off -  an insurance agent or a government inspector]

The same motive limits corruption of insurance companies. They want the words Insured by Geico.. to mean something to keep customers and get new ones.

Consumer feedback groups from Angie’s list to consumer reports serve a similar function in some areas. On-line feedback about businesses do as well. Book reviews, seller statistics, do the same. Consumers are willing to pay for this.

The feedback people give and get in the internet and the speed at which it occurs and is used keeps people honest. Why would a salesman lie about a cars previous accidents, when the consumer can just check the VIN number using his mobile phone and see if he is telling the truth.

Getting rid of government completely is a nice fantasy, I know I am not the only one who wished it really had during the alleged partial shutdown. I am not proposing that.

Consider this as a possibility to think on. We have separation of church and state in this country, How about separation of economy and state?

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