Corporatism is not Capitalism
This past weekend, it was reported that the United States Federal government issued a $529 million dollar loan to a small car company in Finland to build expensive luxury hybrid cars within the Europe marketplace. Not surprisingly, the firm was backed by politically connected former Vice President Al Gore who is also a board member of the firm.
So lets be honest… Our government is not only confiscating the property of it’s citizens through progressive taxation and redistributing this wealth to other citizens and non-citizens, but it’s also giving away tax-payer money to overseas firms due to the politically connected backers of these recipients? (Sadly, this as been happening for years upon years)
Keep in mind, there is no guarantee this loan will ever be repaid, as it is dependent on the success of the company. Even if it was repaid, it is morally suspect to take from one individual (or groups of individuals) and use the money to give loans to your friends in government. (It’s quite despicable actually.)
As I was reading through the comments on the article, I found many individuals on both sides of the political spectrum disgusted by this news. Not surprisingly, many were blaming capitalism for this mess and pointed to this situation as a reason to further pin our countries woes on the capitalistic free-market system. Frankly, nothing could be further from the truth.
Unfortunately this happens over and over throughout our history. The US government interferes in the free-market capitalistic system, and then when everything falls to crap – as it has done recently – they blame the free market system as if they had nothing to do with it. Thereby calling for more government intervention and starting the cycle all over again. This my friends is not capitalism at all, but is in fact socialist corporatism.
Capitalism is a system of economics where private property is protected and independent businesses compete with each other freely, without government assistance or bailouts, thereby causing the business that provides the highest customer satisfaction to succeed while the others fade or fail. The result is higher customer satisfaction, lower costs to consumers, endless jobs, free competition, and maximum opportunity for the individual.
Corporatism is a nasty enemy of capitalism because if involves government intervention within the market by an elite few. Thus causing excessive corruption, favoritism, and distribution of taxpayer funds to the politically connected… It is essentially a form of socialism, but masquerades as laissez-faire capitalism.
Steve Malanga from Real Clear Markets explains…
Corporatism is especially attractive to politicians, public intellectuals who serve as policy makers, and Nobel Laureates because it is ultimately a world managed by the few, the elect, through the state. If we are told enough times that nothing, even technological innovation, is possible anymore without significant contributions and directions from the state, maybe we’ll eventually come to believe it, although the inventors of the printing press, the steam engine, the light bulb, the telephone, and internal combustion engine and other game-changing technologies might wonder how they accomplished what they did without government. – Steve Malanga
As we all know, the politicians love to interfere in the market. During this process they end up ‘bailing out’ their friends, lining their pockets, and then blame capitalism when the house of cards crumbles. If these distractions and outright lies about free market capitalism are not identified, they will use this ignorance to further increase their power and control over the citizen, their private property, and the free market. (“Never let a serious crises go to waste.” – Rahm Emanuel)
Question: Are we not seeing this even today?
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The last word….
“Most of our country’s serious problems can be laid at the feet of Congress and the White House and not at capitalism. Take the financial crisis. One-third of the $15 trillion of mortgages in existence in 2008 are owned, or securitized by Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing and the Veterans Administration. Banks didn’t mind making risky loans and Wall Street buyers didn’t mind buying these repackaged loans because they assumed that they would be guaranteed by the federal government: read bailout by taxpayers. Under a capitalist system, financial institutions would not have been intimidated or encouraged into making risky loans and neither would they have been bailed out if they did so. Social Security, Medicare and its coverage of prescription drugs have an unfunded liability that exceeds $100 trillion. When those roosters come home to roost, they will make the financial meltdown we’ve been though look like child’s play. Not withstanding all of the demagoguery, it is capitalism not socialism that made us a great country and it’s socialism that will be our undoing.” –economist Walter Williams
Interesting piece. Generating prosperity is a complex task, and requires the confluence of many factors.
Here’s a thumbnail of what it takes, in my view, for a society to be prosperous:
1) An inventive / innovative class; people have to want to invent things and processes;
2) Cross-culturalization, where multiple inventors get together and compare their inventions, and newer \ better inventions are created;
3) Seaports or trade route intersections;
4) Business flowing from invention / innovation;
5) Decent Jobs flowing from business, so people can take care of their families with pride;
6) A reasonably decent life flowing from more people having jobs; and
7) Education encouraging the repeat of the process.
Either some force in society sets this in motion, governs the process, and maintains it, or it does not. If you leave it to chance, you might be on top for a while but you will not be on top indefinitely. But that is a cost of freedom, when you do not direct people what to do with their lives.
My suspicion is that China will be the next world power because they tell more people what to do, and they are more controlling. More free? Of course not. But more planning, organization, consistency, and coordination take place under their model. We in the U.S. use the “herding cats” model, and there are benefits and costs associated with it. One cost is its mercurial and uneven results, but it is the one that we have chosen.
We’ve needed more inventors for years, and few in our country have paid attention to that issue. Simply look at the dramatic decrease in U.S. students studying engineering in this country, and the significant decline in basic research.