Now hear this!I heard something I really liked when listening to my podcast of Jim Quinn‘s radio show last night as I was walking home. This morning, as I was listening to the next day’s podcast, I heard Quinn repeat his comment from the day before. Quinn read something written by Walter Williams back in 1997 that is well worth rebroadcasting here:

Capitalism is relatively new in human history. Prior to capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man.

Apparently this recently appeared on Rush Limbaugh’s show, too. And Rush does a great job of showing the difference between capitalism and socialism. Quinn, after quoting Williams above, further explained on his show the difference of capitalism and socialism this way:

The problem is that pleasing your fellow man requires creativity and hard work. Looting and enslaving can be done by any thug with political connections. So what’s the purpose of Socialism then? Well, Socialism allows these same elites and losers to return us to the days of looting and enslaving, but while presenting it as a moral imperative sanctioned by the government. So I guess we can say that Socialism is a system of economics that allows men to loot and enslave other men while claiming the moral high-ground.

But not everyone likes and agrees with this quote by Williams. Case in point, Williams has an entry in the Daily Kos wiki that engages is some typical libtard bashing. It quotes Williams and then finishes off with “What Williams cannot say is that the African slave trade operated as a global capitalist market for centuries.”

Attention Daily Kos mind-numbed robots: the African slave trade was not capitalism. Capitalism is the free exchange of goods and services from one to another. The African slave trade was part of the “looting, plundering and enslaving their fellow man” that was and is so common in mankind’s existence. And it is what Socialism will bring us back to if we allow it.

Williams finishes up his article with this very true statement:

Despite the miracles of capitalism, it doesn’t do well in popularity polls. One of the reasons is that capitalism is always evaluated against the non-existent utopias of socialism or communism. Any earthly system pales in comparison to utopias. But for the ordinary person, capitalism, with all of its warts, is superior to any system yet devised to deal with our everyday needs and desires.

When it comes to economics, I’ll take reality over fantasy every day.

There are two aspects of our economy, and of any capitalist economy, that affect the price of an item: supply and demand. If few items are available and the demand is high, as with Cabbage Patch dolls in the early ’80s, then the price of the item will be high. But if items are plentiful and the demand is low, as with Cabbage Patch dolls now, then the price will be low.

But what about prices in the aftermath of a disaster? Simple logic would tell us that goods and services would be scarce and the demand for them high, resulting in the rise of prices. This is simply economic realities at work, but whenever it happens, certain people start to shout about price gouging. Walter Williams, economics professor at George Mason University, has written a great deal about scarcity and price gouging. The following is from his article published after Hurricane Katrina:

The fallout from Hurricane Katrina has featured a lot of ignorance and demagoguery about prices. Let’s look at some of it. One undeniable fact is that the hurricane disaster changed scarcity conditions. There are fewer stores, fewer units of housing, less gasoline and a shortage of many other goods and services used daily. Rising prices not only manifest these changed scarcity conditions, they help us cope, adjust and get us on the road to recovery.

Here’s a which-is-better question for you. Suppose a hotel room rented for $79 a night prior to Hurricane Katrina’s devastation. Based on that price, an evacuating family of four might rent two adjoining rooms. When they arrive at the hotel, they find the rooms rent for $200; they decide to make do with one room. In my book, that’s wonderful. The family voluntarily opted to make a room available for another family who had to evacuate or whose home was destroyed. Demagogues will call this price-gouging, but I ask you, which is preferable: a room available at $200 or a room unavailable at $79? Rising prices get people to voluntarily economize on goods and services rendered scarcer by the disaster.

It’s easy to cast aspersions upon people who charge gobs of money for some good or service in the wake of a disaster, but think of it this way: if the power goes out in a city, who will be in greatest need of a generator? Will it be the father who wants to supply the power for his kid to play his Xbox game, or the grocery store owner who wants to preserve his refrigerated and frozen foods until the power comes back on? Actually, this is a trick question because there is no way to measure their needs. However, I can measure the cost of their needs based on the price they are willing to pay to satisfy their needs. At $50 a night, the father might be willing to rent that generator just to keep the whiney brat from complaining. But at $500 a night, he’ll probably tell the kid to shut up and go read a book if he’s bored. The grocery store owner, on the other hand, may be willing to pay the $500 price to keep his food intact. The result is unspoiled food for the people in the town. If the cost of some good, such as a generator, is kept artificially low in a time of scarcity or high demand, the good will quickly run out as people avail themselves of it. But if the cost is high, they will either limit their own use or do without it entirely. In either case, their decision to limit their own use makes it possible for others to have access to the generator–or the hotel room, as in Williams’ example above.

In my last article, I mentioned the quote in Adam Smith’s The Wealth of Nations that explains it is self-interest and not altruism that inspires people to labor in their professions for others. Williams confirmed this as he wrote about the aftermath of another hurricane:

In Isabel’s wake, private contractors from nearby states brought their heavy equipment to Virginia to clear fallen trees from people’s houses. Producers and shippers of generators, plywood and other vital supplies worked overtime to increase the flow of these goods to Virginians. What was it that got these people and millions of others to help their fellow man in time of need? Was it admonitions from George Bush? Was it conscience or love for one’s fellow man?

I’ll tell you what it was. It was rising prices and the opportunity for people to cash in on windfall profits. Windfall profits are one of the vital signals of the marketplace. It’s a signal saying that there are unmet human wants, leading people to strive to meet those wants. It stimulates the supply response to a disaster.

I started off saying that supply and demand are the two aspects of our economy which dictate prices. But there is another heavy-handed price changer which almost always drives prices up: our government. The introduction of government rules, restrictions, and regulations almost always distorts the cost of a good to higher levels. Don’t believe me? Compare the cost of medical attention now that Medicaid, Medicare, and the bazillions of other government programs have meddled with the health care industry with the costs 20 and 30 years ago. Now compare the relatively unmeddled Lasik eye surgery costs of today with those a mere decade ago. Williams has written about the heavy hand of government interference as well:

Economic ignorance, misconceptions and superstition drive us toward totalitarianism because they make us more willing to hand over greater control of our lives to politicians. That results in a diminution of our liberties. Think back to the gasoline price controls during the 1970s.

The price controls caused shortages. To deal with the shortages, restrictions were imposed on purchases. Then national highway speed limits were enacted. Then there were more calls for smaller and less crashworthy cars. With the recent gasoline supply shocks, we didn’t experience the shortages, long lines and closed gas stations seen during the 1970s. Why?

Prices were allowed to perform their allocative function — get people to use less gas and get suppliers to supply more. Economic ignorance is to politicians what idle hands are to the devil. Both provide the workshop for the creation of evil.

It may be painful to have to pay $6 a gallon for gas as you flee an approaching disaster, but if you really need that gas, you will be willing to pay for it. If you don’t really need it, your willingness to drive another 100 miles down the road before filling up makes those pricey gallons of gas available for people who are riding on fumes and who are willing to pay the price for a few gallons.

If you don’t like what the gas station did in a time of need, nothing says you need to buy anything from them ever again after the emergency has passed. That’s the free choice of capitalism, too.

We live in a capitalist society. That means we allow the free market to determine prices and distribute goods to us. The other option is to allow government to do the same task, but a bureaucracy is never as efficient as the free market. I remember walking through the shopping areas of East Berlin during the 1980s when the Soviet Union was still strong and communism was the wave of the future. I saw for myself that the items for sale in communist East Berlin were inferior in number, quality, and desirability to anything I could purchase in free West Berlin. We did pick up some items from East Berlin, mainly because they were Russian-made knick-knacks like matryoshka dolls, not because they were good quality. We had a wonderful dinner for six in one of the Communist Party’s elite back rooms of a classy restaurant for about $20, including the best borscht soup I’ve ever eaten. But as good as the food was, the reason why we could afford to eat there was because of the purchasing power of Western currency in the hard-currency-starved East. Decades of bureaucratic control via communism had failed to compete in any meaningful way with the free and capitalist nations of the West.

But not everyone likes capitalism. I’ve held onto the picture below long enough that I can no longer remember where I found it. I’m guessing I got it from Zombie’s protest page, but I didn’t find it in a quick look through her archives.

useful idiots

To badly paraphrase Winston Churchill, it has been said that capitalism is the worst form of economics, save all the others that have been tried. Capitalism is far from perfect, but it is the best system we have–at least in part because it takes human nature into account. Communism has been tried and found wanting, but there are still plenty of people who believe that it only needs the right people to get it to work. But the good thing about capitalism is that it doesn’t require optimal conditions, and you don’t have to wait for the best people to show up. It doesn’t rely on people willing to work for the greater good of the communist borg collective, but out of self-interest.

Adam Smith wrote about this self-interest in The Wealth of Nations. “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love.”

The next time you buy a pizza, notice that the variety, quality, and availability are all direct results of capitalism at work. So thank the pizza guy for his willingness to make some money for himself by providing a great pizza for you. Then give him a good tip.

Karl Marx is a dead, white European male. You’d think this would be sufficient to make liberals dislike him, but the opposite is true. Did Marx know in 1848 when he wrote the Communist Manifesto, or in 1867 when he wrote Das Kapital, that these writings would have a profound effect on the world for the next 150 years? Could he have foreseen that Marxism would be the root cause of over 100 million deaths in the 20th Century? My wife wonders if the knowledge of these deaths would have mattered to him. I find it ironic that a man who could not manage his own finances and who blew through two inheritances could be given any credence in matters financial, but many people still believe in the fundamental principles of Marxism.

Marx wrote that it is historically inevitable for societies to pass through several stages: feudalism, capitalism, socialism, and finally the workers’ paradise. A feudalist society is one where might makes right and the few “haves” dominate over the “have-nots” like barons over their serfs. In a capitalist society, the individual is important, and contract law makes business possible. The socialist society is concerned with the group over the individual, and the role of government expands to control more and more of the lives and business of the people. The workers’ paradise is the final step in Marx’s vision of society. At this stage the rulers step aside as the workers take control over their lives and their work. A heart-warming, rosy glow surrounds everything as the workers march arm-in-arm off into the sunrise of a new and glorious day.

There is just one problem with Marx’s inevitable march from feudalism to capitalism to socialism and the final joy of the workers’ paradise — it’s a crock of @#$%!

Marxism is a failure because it does not take into account the fundamental reasons how and why people work. If you watch slaves or serfs, you will notice that they work only as fast as the whip of their master compels them, and not one bit faster or further. A slave or serf requires a large amount of control in the form of overseers and bosses. On the other hand, a person who is free and able to benefit from his work will work harder and look for ways to improve his job. A peasant in ancient China had no way of changing his position in life, so inventing a better plow or ox harness would not improve his lot in any way. But in a free society, a baker who creates a new type of bread or a printer who invents a faster way of setting type can expect to do more business and increase profits; a slave or serf does not.

You could say that capitalism is similar to the scientific method. When scientists announce they have proven something new, they will publish their experiment for others to duplicate. If others can reproduce the same results, the new method or theory is accepted. But if someone makes a claim, as in the case of cold fusion, and no one else can duplicate the results, then the theory can be said to be disproved, or at least in a state of not yet being proven. In the years since Marx wrote his ideas, the “inevitable” workers’ paradise has never been successfully achieved. While many countries have moved along the path to socialism, not one has made the final switch to the workers’ paradise. A common response to this complaint is that Marxism has never really been implemented yet. Well, various nations on this planet have only been trying it for the last 150 years, so how much more time and testing is necessary? The scientific community did not take 150 years to disprove Ponds and Fleischman’s claims of cold fusion, so why should it take more than a century to disprove the claims of Marxism? But Marxists will not allow their belief in the system to be destroyed — they cling to it as faithfully as a religion.

Marxism is a philosophy that is applied by its adherents to economics, production, workers and their relationships, government, and much more. In my wife’s English class last term, the professor instructed the students in the Marxist interpretation of literature. As I see it, if the only tool you have is a hammer, before long all your jobs start looking like nails.

But regardless of what Marx said, not everything hinges on money; it hinges on power. Money is merely a unit of power — the power to procure the goods and services that you want and need. My wife has written a wonderful analysis and interpretation of Marx and his ideas that, IMO, is well worth reading.

Marxism is a failure because it fails to depict reality. Marx said that socialism would make way for the workers’ paradise, but in reality dictators never give up their power voluntarily. Can you think of any dictators who have willingly walked away from power? My wife believes that Marx was no dummy. He didn’t talk about how the workers’ paradise would come about. The very concept of the workers’ paradise was sufficient to agitate the common workers into obeying Marx’s pronouncements and achieving his goals. He dangled this carrot so like-minded people could manipulate them as useful idiots. My wife’s idea is that Marx didn’t specify how the workers’ paradise would be created precisely because Marx didn’t intend for it to happen. Instead, Marx wrote up a road map for ruthless people like himself to exploit the working masses in order to gain power. This is why socialism was taken to the communist extreme so easily in many nations. None of these nations have had anywhere near the financial success of smaller capitalist countries. This is a simple indication of the difference between a free and an enslaved population.

Capitalism is very much like Sir Isaac Newton’s law of gravity. Under most normal circumstances, Newton’s law works very well indeed; it only breaks down when things reach extremes: in the realms of the super-small such as atoms and subatomic particles, the very large such as suns or bigger celestial bodies, or the very fast such as speeds approaching light speed. Likewise, capitalism tends to fail at extremes: when there is no authority to guarantee contract compliance, or when there are excessive government regulations and controls. But other than these extreme circumstances, both capitalism and Newton’s law of gravity work very well. Socialism, however, barely functions at its best. The Soviet Union was constantly plagued by food and goods shortages. Cuba is surrounded by ocean, yet it has a chronic shortage of fish. North Koreans are starving. Even Sweden, arguably the most successful socialist country, is showing signs of internal rot. P.J. O’Rourke outlines the situation in Sweden and other countries in his fine book, Eat the Rich.

The bottom line on Marxism is simple: it doesn’t work, it has never worked in the past 150 years, and it is about time for its adherents to acknowledge that Marxism will not work in the future, either. But this isn’t going to happen. Whenever you hear someone say, “Marxism/Socialism has never really been properly tried yet,” you know you are in the presence of someone for whom Marxism is a religion, not open to criticism or logical debate. Thomas Sowell summed this attitude up at the end of Civil Rights: Rhetoric or Reality?: “Someone once said that an idea which fails repeatedly may possibly be wrong…. There are still many true believers to whom all evidence is irrelevant.”