The Greatest Threat to an Oppressive Dictatorship is Free Market Capitalism

Posted by PITHOCRATES - September 22nd, 2013

Week in Review

When people enter economic exchanges voluntarily everybody wins.  For example, let’s say one person has a hundred dollars of spare cash.  And another person owns a mountain bicycle that sells for $350 new.  The one with the money wants to buy a mountain bicycle.  The one with the mountain bicycle needs cash and wants to sell the bike. These two people meet.  And exchange the $100 for the bicycle.  And both walk away with something they valued more.  The person originally with the $100 valued the bicycle more than the $100.  And the person originally with the bicycle valued the $100 more than the bicycle.  Each person wins in this voluntary economic exchange.

Now contrast that to a managed economy.  Where a few decide for everyone else.  Such as in socialism.  Or communism.  Say, in the former Soviet Union.  Where the economic planners decide to make more tractor parts and less toilet paper and laundry detergent.  Resulting in shelves full of tractor parts no one wanted to buy.  And empty shelves where there was once toilet paper and laundry detergent.  As you can see, when you have forced economic exchanges no one wins.

Countries with economic systems based on free market capitalism where people enter economic exchanges voluntarily have historically had the highest standards of living.  Whereas countries with managed economic systems have had the lowest standards of living.  Liberty and prosperity are synonymous with the United Kingdom, the United States, Canada, Australia and Hong Kong.  Which were once all part of the British Empire.  Which ruled the world and kept the peace for a hundred years or so.  The Pax Britannica.  She was able to do this because of her wealth.  Generated from free market capitalism.  The rule of law.  Representative government.  Sound money.  And free trade.  Things that today give these nations immigration problems.  Because everyone wants to go to these nations for a better life.

In capitalist nations people live better because there is a profit incentive.  Whereas the countries these immigrants left typically put people before profits.  Where instead of letting market forces set prices and allocate limited resources that have alternative uses the government decides.  Like they did in the former Soviet Union.  And the more government interferes with these market forces the more these economic decisions become political.  Where friends of the ruling power get those limited resources first and at favorable prices.  Allowing them and the ruling powers to profit handsomely from this political favoritism.  At the expense of the people who have to do with less.

The profit incentive puts people first.  Because in free market capitalism market forces are the people.  Hundreds of millions of people coming together to make voluntary economic exchanges.  Where each individual person looks out for his or her best interests.  But when a ‘caring’ government manages the economy to put the people first that government interferes with those market forces.  And goes against the will of the people.  Making the people worse off.  Which is why immigration is always from a country where there is less free market capitalism to a country where there is more free market capitalism.  Because the quality of life increases with increasing amounts of capitalism.  So we should be careful what we ask for when we ask to put people first.  Even when the Pope joins the ‘put the people first’ choir (see Pope condemns idolatry of cash in capitalism by Lizzy Davies posted 9/22/2013 on theguardian).

Pope Francis has called for a global economic system that puts people and not “an idol called money” at its heart, drawing on the hardship of his immigrant family as he sympathised with unemployed workers in a part of Italy that has suffered greatly from the recession…

“Where there is no work, there is no dignity,” he said, in ad-libbed remarks after listening to three locals, including an unemployed worker who spoke of how joblessness “weakens the spirit”. But the problem went far beyond the Italian island, said Francis, who has called for wholesale reform of the financial system…

Sardinia, one of Italy’s autonomous regions with a population of 1.6 million, has suffered particularly badly during the economic crisis, with an unemployment rate of 20%, eight points higher than the national average, and youth unemployment of 51%.

Last summer the island’s hardship became national news when Stefano Meletti, a 49-year-old miner, slashed his wrists on television during a protest aimed at keeping the Carbosulcis coal mine open.

There was one other thing these nations born of the British Empire shared.  Judeo-Christian values.  They lived by the Ten Commandments.  And the Golden Rule.  The good Christians of the British Empire followed the teachings of Christ.  “Do unto others as you would have them do unto you.”  These Judeo-Christian values went hand-in-hand with free market capitalism.  It’s what made us choose to live by the rule of law.  To honor the contracts we made with one another.  To voluntarily enter economic exchanges instead of just stealing and pillaging our neighbors.

Money doesn’t have value.  It’s a temporary storage of value.  It is our human capital that has value.  Our ability to create things that have value.  Things that other people will voluntarily enter into economic exchanges to trade for with things of value they created.  Whether it be a physical good.  Or money from a paycheck they earned creating value for an employer who uses it to produce a service or good.

Capitalists don’t worship money.  For money only makes those economic exchanges more efficient.  By eliminating the search costs of the barter system.  It’s human capital that capitalists are interested in.  This is what they worship.  People.  Unlocking the latent talent in all of us.  To bring incredible things into existence.  Sanitation.  Waste water treatment plants.  New farming advancements.  Coal-fired power plants.  Things that allowed greater groups of people to live together in growing cities.  Where we have food, clean water and shelter.  Things we take for granted in capitalists nations.  Things that are luxuries in North Korea.  An anti-capitalist country that puts people before profits.  Where people worship the ruling dictator (primarily to avoid imprisonment, torture and death).  And the only people that do well are those close to the ruling power.

We don’t need a new financial system.  We just need to return to what it was before governments intervened into the free market economy to put people first.  Before we completely forget the Ten Commandments.  And the Golden Rule.  For once we use the power of government to nullify contracts to help their crony friends we no longer have a nation of laws.  But one of political favors.  Where the friends of power do well.  While those with no power live at the mercy of those in power.

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