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Show The Paper That Dares To Take A Stand November 18, 1976 The Utah Independent Page Continued from page 3 how the output will be shared. This system will be effective only if the orders or commands are ruthlessly enforced. Either a free-mark- et, capitalist economy or a command economy can work. Both have been operating for the past fifty years. Neither type of economy will ever work perfectly. Anyone who is not ideologically blind, however, must have observed that common economies restrict individual freedom and suppress civil liberties much more than do capitalist economies; and in addition, command economies 'are less productive. The certain way to concentrate power and threaten freedom is to merge the power of the state with economic control. A small elite in command will suppress civil liberties to maintain their control over society. I know of no country that has where economic power a is centered in the state. free-foes- s The socialist dream of in an cooperation economy based on social ownership is a farce. The attempt to make everybody do everything for love ends up in a society in which everybody does everything for fear. unselfish Looking at the actual development of socialist societies in Eastern Europe, Russia, and China, Kenneth Boulding recently said, Socialism has not liberated the human spirit and has produced dull, oppressive, tyrannical, stuffy, and conservative societies in which creativity is stifled by an bureaucracy, or as in China, by a dominant ideology which suppresses brutally all cultural variety and ends up in a spiritual tyranny that is even worse than a political one. It is not the capitalist, but the state socialist societies who have the mine fields, the electrified fences, and the Berlin Walls. Only those societies have armed guards along their borders with orders to shoot anyone trying to flee the workers paradise they are developing. The world history of the past fifty . years shows clearly that private ownership of productive capital, as in our Capitalist economic system, is a necessary element in the preservation of Private personal freedom. ownership is the only way that economic power can be broken up. ent strength of American capitalism is that it A second offers the greatest opportunity for individuals to plan their own lives, set their own objectives, and achieve them. More than 10 million Americans are in business for themselves. This includes professional people, farmers, and small businessmen and women. More than 9 million sole proprietorships and partnerships now operate in America. All of them are in some way different and reflect the ingenuity, the independence, the hard work, and the creativity of those who own and operate them. Not everyone wants to assume responsibility, take risks, make decisions, and give the extra effort to be a successful administrator, executive, or owner of a private business; but for those who do, more opportunity for success exists in America than anywhere else. My third defense of American capitalism rests on the fact that not only is it the most productive standard of living for the average economic system yet developed, Russian is less than one half of that but it is the consuming public who of the average American. determines the matrix of output No country can consume and who reaps the benefit of its in- more than it produces. The the had American has creasing productivity. economy This economy responds easily highest productivity of any and quickly to the way consumers economy in the world for over 100 spend their incomes. It is the con- years. Our standard of living has sumer who is been and is the highest in the world. sovereign. and These are the facts. wholesalers, Producers, retailers respond quickly to the The propaganda image of commands given in the market- American capitalism portrayed in place by the way we as consumers the controlled press of Socialist spend our income. For example, if countries is of a few greedy, consumers decide they want to eat wealthy capitalists riding the back more whole-whe- at bread and less of the exploited working class. white, this change in consumer Nothing could be further from the The whole notion of a preference is quickly signaled to truth. the grocer by the fact that his working class in America is bread is nonsense. We all work, and we all inventory of whole-whefalling, and his white bread is not share in the growing productivity selling as fast. He will quickly of the economy. America is not a land of the change his ordering from the bakery, buying less white and more rich and the poor, but a land of the whole wheat. This becomes the affluent middle class. Federal insignal to the bakery to bake more come tax returns show that less whole wheat and less white. than 1 percent of American All this is done without any families make more than $100,000 central planning, without anyone a year, and their total income directly giving orders, and with no represents less than 4 percent of all these family income. Less than 2 percent enforcing bureaucracy of American families make more orders. The grocer and the baker than $50,000 a year, and their inmerely respond to the wishes of the come is less than 8 percent of the consumer by observing the change total. If all their income were conin consumer spending. Why do fiscated and spread around, it would mean only $ 1 ,000 per family they respond to the consumer? Because it is in their personal nationwide. Two-thirof all of the ininterest to do so. The more consumer spending they can attract, come earned in America goes to the greater will be their sales and those families making between 8 their own income. and 30 thousand dollars a year, The social trading relation- which would be affluence indeed to ships that arise in this competitive most of mankind. Most of us in economy are also more positive America belong to this middle inthan those in a socialist economy. come group. In this economy, people will not It is true that the range of intrade with you unless you treat come varies widely from very poor them in a friendly, decent manner. to very rich, and this apparently In this economy, the saying that greatly disturbs many intellectuals. the customer comes first or the Many believe that central customer is always right has real government power should be used of to transfer income from higher to meaning. It is in the Greater the merchant to do his best to lower income groups. please you so you will continue to equality of income has become a trade with him. major social objective. st There is a great difference In socialism, this does not exist. If you attract more between equality of rights and customers, you merely work equality of opportunity and forced' harder for the same income, so why equality of income and conmake the effort. As a result, both sumption. Equality of rights and of opquality of product and service in socialist economies are stikingly portunity is a necessary element in inferior to that provided by the preservation of liberty. American capitalism. Equality of income means forcing st is the powerful through central government power motivating force that has produced the more productive people to share their output with our high standard of living. will in conbusiness Anyone productive. Pressed to far, forced tinually strive to find ways to lower equality also implies conformity costs because, if he can, he will im- and uniformity that is deadening to the human spirit and destroys the prove his own personal income. He also knows that his competitor motivation for hard work. Forced is doing the same. equality would mean that a society in results This automatically produced less, not more. Forced inventing and developing new equality would mean everyone technologies that will increase sharing less. America is the only country in productivity of output for each The result of the world that publishes data on hour worked. successfully lowering costs is to in- poverty. Twelve percent of our have poverty increase productivity, which in turn families raises our standard of living. Thus, comes defined as a family of four people in business, both employers living on less than $5,500 a year. and employees, working in their This overstates the problem, st because have doubled the however, own Medicade, standard of living in America since Medicare, foodstamps, and subWorld War II. Our standard of sidized housing are not counted as living is four times as high as it was part of the income of the poor. in 1900, and ten times as high as it Also, students and old people was in 1776, and this is in inflation living by themselves aTe counted as free dollars. part of this 1 When productive capital is We recognize the problem of motivation of poverty, and we transfer through socially owned, the is absent. The real taxes more income to help the sick, world facts are clear. After half a the aged, and the poor than does century of socialist control, the any other society. at ds self-inter- est self-intere- Self-intere- the-les- self-intere- . self-inter-est 2. s We cant blame other coun- tries for not publishing poverty date, because compared to America, they would look very bad. For example, using the definition of poverty of American $5,500 a year for a family of four, we would find the following: At lea st a quarter of the people in Germany would be in the percent poverty group. Thirty-fiv- e Rusone-half in over in England, sia, and in China, using our standards, over99 percent of the people live in poverty. Another myth that is circulated by the critics of American capitalism is that profits are huge and go to a privileged few. This again is just nonsense. Profits make up less than 10 percent of our total American income before taxes, which take almost half. About half of the remaining profit is reinvested to provide jobs, and the rest becomes divident income to the owners and is taxed again. Dividends make up less than 3 percent of the total income of this country and remember, that penof all sion funds now own one-thir- d corporate stock and so get one-third of these dividends. Most of the total income in this country is paid in the form of wages. During the last several decades, the share of total income represented by wages has increased. Now wage income makes of all income up three-fourtearned. Who reaps the benefits of the growth of American capitalism? Not only do consumers determine what will be produced, but they get the great bulk of the income as American capitalism is well. peoples capitalism, operating for and directed by all of us. hs If anyone objectively role preciating their This of purveyors of truth. resentment leads them to center on the weaknesses of the economic system rather than its strengths. A attitude has general developed over the years. When was the last time you read a novel or saw a movie or a TV show in which an honest businessman was a hero? Academia is filled with men and women who have never had extensive work experience in the outside world. They are jealous of the higher incomes and prestige they see outside their sheltered environment. They tend to feel unappreciated. They also fear they could not succeed in the competitive economic world they resent. So, emotions prevail which influence their teaching and condition the young with similar attitudes. As a result, many young people fear entering the business world pictured in TV, movies, novels, and classrooms as greedy, vaillanious, and dishonest. They fear accommodating themselves to this environment. Fortunately, later real world experience dissipates these myths. It does appear, however, that in recent years the level of economic literacy is rising in the professional writing group. The failures of socialism and government coercive programs have been apparent long enough so that utopian dreams of a superior world based on government intervention and control of an economy are eroding. There is self-assum- THREE CHEERS FOR AMERICAN CAPITOLISM com- pares American capitalism to any other economy, past or present, its superiority is obvious. Why is it then, that so many intellectuals do not do this, but instead center on the problems and weaknesses of this economy and then compare the present imperfect reality to some utopian dream of perfection that has never, and will never, exist. Even worse, they convince themselves they know how to make a better society, and impatient with the results they can obtain through persuasion and reason, opt for central government coercion to achieve their vision of the future. Always they rationalize this in their belief that they really know what is best for others. Without realizing what they are doing, they become authoritarians who advocate central government power policies which not only weaken American capitalism but freedom as well. Why is it that so many Americans really dont understand how their economy works, and why so many negative myths about the economy are widely circulated? The intellectuals who have turned against our system also write our textbooks and novels, make our TV shows and movies, edit our magazines and write for newspapers. As Irving Kristol says, these people conceive of themselves as constituting a sort of secular theocracy the source of truth and wisdom. Frequently they know almost nothing about the actual functioning of this complex economy. They resent the secular business community not really ap 11 ed anti-busine- ss more of a willingness to face reality and to notice the comparative advantages and strengths of the American economic system as it exists in a world of universal imperfection. The attitudes of the young are also changing today. All over the country, young people are streaming into colleges of business to obtain the training that will help them become successful administrators and businessmen and women. The College of Business in this university is the largest public Lack of college in the state. resources is presently forcing the college to turn hundreds of students away. By the way, the faculty of the College of Business does understand, believe in, and defend our econimic system. We have analyzed American capitalism as a system for breaking up power necessary to preserve liberty; as a system that provides a great variety of economic opportunity; and as a system that is wondrously productive, not for the benefit of few, but for all of us. We should be aware of the weaknesses of our economic system and strive to keep, it competitive and as free as possible from regulation, government control. and ownership, But let us also recognize and defend its strengths. We should challenge the untruths and negative myths so widely held. Actually, our society, of which capitalism is an integral part, stands as a beacon to humanity struggling to achieve liberty and the elimination of poverty. Let's take pride in what we are doing well, and that means pride in our productive capitalist economy that is superior to any other. For two hundred years American prosperity has led the world. I, for one, would like to give three cheers for American Capitalism. |