Bernie Sanders, Kamala Harris, Elizabeth Warren and many politicians as well as academia advocate Socialism; the National Debt doubled…increased by $10 trillion to $20 trillion during President Obama’s 8 years; annual Gross Domestic Product growth under 2% for Obama’s entire reign; …ad infinitum. Currently, President Biden is creating a far worse record with very high inflation and needless deficit spending, $8 trillion to date in only 2 years as President. Is Capitalism to blame for America’s woes under Presidents Obama and Biden or did President Trump prove that Capitalism is the solution to our Nation’s economic problems through the economic miracle he created while President?
Let’s take a closer look, first with very brief definitions of Capitalism and Socialism so we’re clear on what we’re talking about. From the book, ‘isms and ‘ologies by Arthur Goldwag, Capitalism is the “free exchange of goods in a competitive marketplace.” Also, in that book, “Socialism” is defined as the opposite of Capitalism. Further, “In socialist economies, the means of production are either controlled by or directly owned by the state…” European and Nordic countries are not socialist, but simply are capitalist countries with many welfare benefits, free healthcare, and very high taxes.
Capitalism is fueled by a motive to make profits and it does this by providing goods and services that consumers want and at a price that can beat competitors’ prices who also provide similar goods and services. This forces capitalists to constantly improve quality and undercut competitors’ prices. Socialism eliminates the profit motive and therefore satisfies some people’s altruistic side and also attempts to redistribute wealth from the “haves” to the “have-nots,” satisfying some people’s idea of fairness. Because in Socialism there is no continuous need to improve efficiency and effectiveness, there usually is significant waste and inefficiencies. Capitalists would argue that they earn their profits, attending college for many years and then working 70-80-hour workweeks… and it’s their taxed profits that enables government to have the money to help others.
Capitalism creates wealth, which then is taxed and used to help the poor and needy. Socialism makes equality of outcomes most important, consequently leading to everyone being equally poor with no large sums of funds available for government and charities to help those in need. Socialism takes away the incentive for people to work hard and excel to provide for themselves and their families. In 2019, the top 50% of taxpayers paid 96% of all Federal taxes. The bottom 50% of taxpayers paid 3.6% of Federal income taxes.
Government is usually the culprit behind much fraud, unemployment and economic downturn and is responsible for our current economic woes. Loans to people unable to repay them was the precipitating event that caused the 2007-8 economic downturn. Quasi-government Fannie Mae and Freddie Mac forced banks, with threats of lawsuits, to make those bad loans. Therefore, to have the government fully control the economy is insanity. Government does not understand business, does not understand how jobs are created, does not comprehend how many of its regulations, especially “Obamacare,” are destroying the economy.
The Dodd-Frank Bill, proposed by and named after two of the most significant initiators of the 2008 economic downturn (Congressman Barney Frank and Senator Chris Dodd), was truly absurd. For all of its harm to small banks and to the economy, it didn’t even address the cause of the downturn, Fannie Mae and Freddie Mac.
So, let’s answer our two basic questions, “Is Capitalism Ethical”, “Does Socialism Work?” Capitalism is a huge engine for job creation and wealth to the extent that the Pacific Rim countries have embraced it, as well as China (and they are all becoming wealthy fast)…and there’s nothing unethical about making a reasonable profit for providing goods or services. Socialism, on the other hand, can be forced to work, but at the cost of civil liberties, prosperity, unemployment, and political interference in all aspects of our lives.
Finally, how about some people becoming billionaires? Is it ethical for anyone becoming that wealthy? Huge wealth is certainly a possibility and a reality under Capitalism. However, very wealthy people pay most of the taxes and also eventually give away much of their wealth, after providing for their families, to charities, which use it much more wisely than the government ever will. Finally, if you still have a problem with Capitalism, then call it “free enterprise” which means the same thing but is more descriptive and uncontroversial. And if you’re still unconvinced if socialism works or has ever worked, just check out what’s happening in Venezuela, and if you think Socialism is great, then continue to vote for Democrats and be prepared for the continued decline of the United States.