Sometimes I revive old commentaries or concepts from my days writing for the Vail Daily to see if my ideas or notions are still applicable. And today I’m going to focus on a no-brainer that was quite a bit of fun to write. It’s about an economic system that has brought more abundance, more wealth, and more opportunity to more people than any other economic system in history. And I’ll begin by relating a story.
A woman walking out of a Walmart noticed man getting out of his Mercedes S class sedan and commented with an air of moral superiority, “I wonder how many people could have been fed for the money that SUV cost.” The owner replied, “I can’t say for certain, but I suspect It fed more than a few families of the workers in Tuscaloosa, Alabama where Mercedes has a plant, as well as some people in Akron Ohio where the tires were made. I also suspect it fed the people who made its electrical components including those who worked in the mines where the copper for the wires used in the vehicle were found. And come to think of it, I’ll bet it also fed people at Caterpillar who made the trucks that hauled that copper ore as well as the trucker who hauled the finished vehicle from the plant to the dealer in Colorado, not to mention the people working at the dealership and their families. But I must admit, I really don’t know how many people could have been fed, do you?”
And therein illustrates the difference between the capitalistic and the welfare mentality. Economics isn’t about the financial fate of individuals, it’s about the well-being of society as a whole. The cause-and-effect relationships of prices, work, pay, balances of trade, etc., vis-à-vis the allocation of scarce resources are what raise or lower the standard of living of an entire society.
Even more importantly, the left also fails to understand that when people work for something, they receive a double benefit—money and the dignity of their work. But when the government gives someone something for nothing, the individual is being robbed of both dignity and self-worth. It’s like a narcotic—a short-lived high!
~ What Exactly is Capitalism? ~
Capitalism is freely giving your money in exchange for something of value. Whereas the welfare mentality is having the government take your money via taxation and give it to someone else for doing nothing.
The best single argument for capitalism I’ve ever come across is that no one invented it; capitalism is what a free people do naturally. They exchange goods & services for their own benefit before government interventions, regulations & stipulations. Capitalism is a matter of humans acting, associating, cooperating, building, creating, and improving people’s lives, within the bounds of law. Meanwhile, the other “isms,” i.e., socialism, communism, fascism, are arbitrary constructs and an insidious canard with one purpose—control over the lives of others.
The concept the left continually misses is that capitalism is a system that begins not with taking but with giving to others. The motivation of the entrepreneur is to satisfy his or her customers for one simple reason, it’s the only way he or she is going to stay in business, earn a living and make money!
For nearly two and half centuries American entrepreneurs have been putting profits to work expanding businesses which in turn created better products, jobs, and wealth for the citizenry. The left fails to grasp that profits are prosperity’s first cousin. And to judge profits achieved in a free economy without understanding what they mean to society at large is a failure to understand economics.
In the simplest of terms, economics is the allocation of scarce resources that have alternative uses. Even the Garden of Eden wasn’t an economy because everything was available in unlimited abundance; and without scarcity, there is no need to economize.
So, what is scarcity in an economy? Scarcity means that what everybody wants adds up to more than what is; consequently, the concept of ‘alternative uses’ lies at the heart of economics. If each resource had only one use, economics would be simple. But water for example can be used to make a thousand different compounds, while petroleum is used in hundreds of products necessary for life in 21st century America from gasoline to lipstick. What economics boils down to, and the question every economic system must answer is, ‘how do we allocate our scarce resources?’
Allow me to illustrate. On the battlefield economic choices are made even when no money changes hands. If ten soldiers are wounded and there are limited resources (medics, medicine, bandages, etc.) choices of allocation of scarce resources must be made. If one soldier is near death but five others have a higher probability of living if they are administered to first, a choice as to the allocation of scarce resources (time and medicine) must be made—and that in a nutshell is economics.
Bringing this concept even closer to home, look no further than the price of gasoline and our spiraling inflation to see what happens when the government exercises control over scarce resources.
What capitalism does and what every other economic system ever attempted has failed to do, is to place the decisions regarding ‘alternative uses’ in the hands of the individual and not the government.
Quote of the day: “You won’t be happy, whatever you do, unless you’re comfortable with your own conscience.”—Lucille Ball