Kevin
D. Freeman | On February 23,
2016
There are three great
lies circulating. They are:
1.
Capitalism
is EVIL.
2.
Government
owes you something.
3.
America
is rich and always will be.
If you believe these
three, then socialism looks pretty appealing. The problem is that all three are
lies and socialism doesn’t work. Other than that, I like the idea.
Let’s start with
Capitalism is EVIL. In reality, it is
very moral if implemented properly. The problem is government involvement that
creates cronyism (not capitalism). The government interferes with a free market
and hands out favors based on political contributions or some other form of bribery.
The government should make certain the playing field is level, but not try to
pick winners and losers. The proof that government causes cronyism can be seen
in any communist or socialist state. They all have cronyism. It comes from big
government.
While there is a great
deal that can be said on this topic, just consider the Golden Rule. If you are
unfair in your business dealings (and don’t have the force of government behind
you), people will go elsewhere. A successful economy is based on free and fair
exchange.
The second lie is that
the government owes you something. In reality, the government has nothing other than what it takes
from someone else. As a result, the government can’t owe everybody
everything. What this really translates into is that if you get something from
government, someone else loses something. How is that different from cronyism?
Now, in our society, we have generally agreed that it is good and right to help
people in trouble. So we created a social safety net and agreed that
everyone will sacrifice a little. That’s fine as it goes. The problem becomes
when we decide that the goal is to even outcomes. So, we take away from the
rich (some of whom gained their wealth via cronyism) to make sure everyone
gets free college. And then maybe a free car. A free house. Free health care for life. Sounds good! How about free
month-long vacations? And a $200/hour minimum wage guaranteed by the
government?
Sadly, as Margaret Thatcher
shared, at some point you run out of other people’s money. Just ask Greece. And, to pay for all the
goodies, you have to tax the rich at such high rates that they no longer have
the incentive to create or perform. If excelling doesn’t pay, why excel? Whether you succeed or
not, everyone gets the same. Eventually, tax rates have to rise for middle class as well, as the demand for
government goodies always far exceeds the original estimates. The reality
is that the people will end up being owned by the government, and the people
will end up being indebted by the government. The student loan
programs, guaranteed by government, already total in the trillions of dollars. Paying off these loans in a weak economy is a huge burden. Free college would simply
shift the eventual burden from debt owed to the government to taxes owed
to the government.
The third lie is that
America is rich and will be rich forever. The truth is actually quite frightening. America owes almost
$20 trillion. That’s about double
from just eight years ago. If you count unfunded
liabilities, according to top economists, the nation is already bankrupt. Even if you ignore this accounting truth, the non-partisan
Congressional Budget Office states very clearly that we are on an unsustainable
fiscal path. These are simple
facts. The government already has made $200 trillion in promises with existing
programs and takes in a total of about $3 trillion per
year and spends more than
that. Just imagine a family with a $300,000 annual income. That might seem wealthy until you understood
that they had made $20 million in pledges.
One of the best-known
advocates of free-market capitalism was Milton Friedman. I had the honor once
of helping present Dr. Friedman an “Adam Smith Award” given by Hillsdale College. Here is a brief clip of Milton Friedman
discussing capitalism with Phil Donahue. https://www.youtube.com/watch?time_continue=2&v=MQ0-cDKMS5M
The truth is that
private property ownership, combined with limited government (that
supports freedom and a level-playing field, enforces contracts fairly, and
provides for the common defense), and a moral people becomes the engine
for the greatest prosperity known to mankind. This combination will bless all
people. History has shown this to be true.
The problem we are
facing is government intrusion (with excessive taxation and endless rule
making) and cronyism. That’s where the political effort should focus if we want
to help people and ensure prosperity. The resulting growth and
expansion would fund a very robust national defense. The enemies of the United
States greatly fear this and that is why they are working diligently to
undermine our economy.
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