Decline of American Capitalism

The front page of the Wall Street Journal yesterday addressed the trend of Hispanics losing their homes in this country. The demography of the home-losers makes no difference; the phenomenon has hit numerous populations, black and white, rich and poor (more poor than rich, and more rich than you’d imagine). And the development of the phenomenon is the same in each demographic: people borrowed money to buy houses which they could not afford.

WEALTH WITHOUT PRODUCTION

The fault lies with both sides of the matter. The borrowers—rich and poor—could not afford to pay for their houses but the lenders were willing to extend them the money. Loans were given out, in many cases despite lack of credit, collateral, and income, which means that the recipients of loans were at a high risk of defaulting—never paying them back.

In some minds there develops a way of thinking in which need, not work and ability, is what makes a man deserve property. Concomitant to this way of thought is a gross misunderstanding of production; it is in the minds of non-producers that this thinking develops. These thinkers do not produce, yet they see wealth in all the first world around them, so it naturally appears that production is not necessary; wealth exists per se, not perforce. In reality, however, immeasurable strain of study, thought, and labor has gone into the creation of everything from moveable type to plastic tableware to the electrical power plant. We flip on the lights almost effortlessly because Thomas Edison worked doggedly to develop a commercially practical light bulb. His alleged statement issued in the midst of its development is well known (however variably quoted): “I have successfully discovered 1,000 ways to not make a light bulb.”

When a man comes to believe in wealth without production, there is no limit to the loans he can justify, and there is no remorse for the misappropriation of others’ belongings, which he must invariably usurp in order to remain afloat in the aftermath of his bad loans. This is what banks across the country have done. It isn’t because they knew something we didn’t. Their actions resulted from fallacious thinking.

JOBS WITHOUT PRODUCTION

Environmental restrictions are tightening up in California. We won’t discuss whether that’s healthy or not, but one prevalent view on the matter is destructive: The factories say that the environmental policies will compel them to leave the state in order to remain competitive. The government responds that it’s no worry because the increased restrictions will create jobs.

“Creating jobs” has been a line thrown around since my childhood and before. Give me a minute, and I can create a job for every human on the planet. I can’t find business for the employees, and I certainly cannot pay them, however. Who are the environmental departments going to regulate when the factories are gone? And where will the government get the money to pay them after the state loses billions of dollars of industry?

The fact is that such environmental-protection jobs are an example of jobs which do not produce anything. These jobs have to be supported by productive jobs. Those are the bottom line. If we focus on regulatory jobs at the expense of the bottom line, we end up with nothing.

ANTI-CAPITALISM

Entertainment media tend to deprecate capitalism, equating it with opportunism, dishonesty, and avarice. In the latest Indiana Jones movie, ‘Mac’ George Michael ironically explains his betrayal of the U.S. and U.K. (both capitalist) and his alignment with Russia (communist) with a shrug and the words, “Sorry, Indy. I’m a capitalist.”

The American attitude toward socialism grows welcoming and has long been doing so. Former Secretary of Agriculture Ezra Taft Benson, appointed in 1959 to host Soviet First Secretary Nikita Khrushchev for half a day, reported his experience:

According to President Eisenhower, Khrushchev had expressed a desire to learn something of American agriculture—and after seeing Russian agriculture I can understand why. As we talked face to face, he indicated that my grandchildren would live under communism. After assuring him that I expected to do all in my power to assure that his and all other grandchildren will live under freedom, he arrogantly declared in substance: ‘You Americans are so gullible. No, you won’t accept communism outright, but we’ll keep feeding you small doses of socialism until you’ll finally wake up and find you already have communism. We won’t have to fight you. We’ll so weaken your economy until you’ll fall like overripe fruit into our hands.’

Khrushchev’s prophesy of half a century ago is being vindicated; there’s no denying that socialism is integrated into our American society and culture. American education is socialist. Government welfare programs, an institution which has been swelling all my lifetime, is socialist. American healthcare is a hybrid of socialism and capitalism and is likely to be nationalized under the new administration—fyi: “nationalized” is another word for “socialized.”

Welfare programs operate on the belief that it is moral to take from those who produce and give to those who do not. He who produces most is obliged to give most, he who produces least is entitled to receive most. We call this philosophy “bleeding-heart,” as though it is the product of love, but guess what, it’s only heartfelt and charitable if you give your own money, not money wrested from the hands of others.

Nevertheless, the practice is useful and the motives largely unquestioned in the hands of a politician who promises to take from the most wealthy and distribute tax breaks among the other 51% of the voters, his purchased voters. Once the potentate has bought the voting base, he will give and give until they depend upon the government for subsistence. And then no one can afford to depose the regime.

The voice grows louder which says, “It is immoral to let people produce in America without taking a portion of their product.”

American Socialism - Healthcare

Today’s Wall Street Journal shared the humorous story of Nebraska’s experience with its new “safe haven” law. A safe haven law states that parents can give their child to a hospital if they believe that they will not be able to care for the child. Many states have had such laws for many years, stipulating that within so many days of the child’s birth, the parents may return it to the hospital. Nebraska’s safe haven law failed to stipulate any sort of age ceiling, and of a consequence, the law was invoked for a number of children, mostly teenagers, but not a single infant. The Nebraska government was obliged to retool their legislation.

Yes, it is a sad story because it reflects the sorry state of the family in our society, the extreme difficulties presented by some children, and the incapacity of parents. But it is also a funny story because the intent of a new law was entirely without effect. And it is also a horrific story because it shows what the government is permitted to do, despite its own ineptitude: to wit, the government regulated that certain private businesses must provide new services to the public, outside of their expertise, beyond their ability, and at their own expense.

This is just a glimpse of socialism at work in the US. It isn’t strictly socialism because the government has not been actually holding the reins in the healthcare industry, but it has been building the fences that keep the industry corralled for years. In the coming months, we face the possibility of having the country’s entire healthcare industry nationalized, and we had better give some thought to what that would mean.

First of all, it would not mean a complete change of management. The government already exercises great control on the industry, as the previous paragraph describes. The government is moreover considering requiring all employers to provide employees with healthcare plans. Nationalization in this case would mean dissolving the partnership between government and private business holders, only to the exclusion of the latter.

Second, it would mean the elimination of competition, not all competition, of course, since US citizens should still have the opportunity of going to other countries for medical care. Already Americans sometimes visit foreign nations for cosmetic surgeries. Nevertheless, looking at how the last big government-run businesses, Fannie Mae and Freddie Mac, faced the task of staying economically sound, this writer avers that competition is our life preserver.

Third, it would mean a healthcare plan for everyone who cannot afford their own. “Great!” says a segment of the population. “Socialized healthcare means free healthcare, and healthcare costs are too high as it is.” Costs certainly are high, and the US healthcare industry is approaching a crisis, but how myopic not to suppose that the great leap into socialism could be the endpoint crisis. In addition to considering the last two paragraphs, reflect that a promise of free healthcare is only going to be fulfilled in the provision of a free healthcare plan. Anyone who has had to go through a PCP to see a specialist has an idea of the difference between the two; a friend of mine had to go through three physicians, paying each for a visit, before getting treatment for a problem that he accurately self-diagnosed.

The healthcare industry knows that it’s in trouble. One of the healthcare giants out here responded by getting a grant from the taxpayers for itself placed on the last ballot; voters (not synonymous with taxpayers) approved the bill. The other healthcare giant here is researching cost-effective healthcare provision in foreign countries in order to implement their better business models. The first example shows a provider being floated by the government (see also: socialism/communism). The second shows a corporation working to become economically viable (see also: competition). Under a nationalized healthcare system, we don’t get to pick which one we patronize.