Capitalism

After a six month hiatus from posting on this blog, the first entry on our return centers around a timely interview with Richard Epstein on income inequality.

The Occupy Wall Street movement and the Obama administration try to avert attention from runaway government spending and expensive regulations as the causes of our prolonged economic malaise by attacking capitalism. They focus on statistics about the growth of income over nearly thirty years that conveniently ends in 2007, right before a downturn that resulted in greater percentage drops in income among the top income earners. They want to tax higher income earners even more when they already carry the bulk of the tax burden and about half of Americans pay no income tax at all.

Richard Epstein, a law professor at New York University, explains why unequal outcomes are essential for motivating people in a free economy. American voters need to understand his argument if we want to change the direction America is headed in the election less than a year from now.

We hope that the eventual Republican presidential nominee will be able to make the case for economic freedom as well as Richard Epstein.

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Go See Atlas Shrugged!

April 18, 2011

In Theaters, April 15, 2011
In Our Hands, November 6, 2012
– FreedomWorks Video on Atlas Shrugged

Atlas Shrugged, Part 1 based on Ayn Rand’s famous novel about freedom and the people who make the world work was released in a limited number of theaters on April 15. Most mainstream media reviews about the movie were negative. No surprise there. One can hardly expect a critic with a leftist outlook to embrace the ideas in this movie.

For a more informative article about the movie read Mark Skousen in Human Events:

The message of the film (and the novel) is clear: If the government intervenes too much in the economy, things can only get worse. As Ludwig von Mises stated, “Middle of the road policy leads to socialism.” In the movie, the action takes place in 2016, when the Dow has fallen below 4,000, gas prices exceed $37 a gallon, and the infrastructure is collapsing. Naturally, government officials and statist economists (Paul Krugman types) blame the troubles on greedy selfish capitalists.

Parallels to America under Obama’s reign are unmistakable. FreedomWorks created a mash-up of the movie and the Obama & Co. speeches that shows the connection between the movie and our predicament today:

I saw the movie last weekend and I found it a worthy effort. Whether the second and third parts of the movie will be made will depend largely on the success of the first part. So go to the movie’s website and find a theater near you to go see Atlas Shrugged!

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If we want to continue the movement towards limited government and increased freedom that has been re-energized by the Tea Party resisting Obama’s socialism, we need to continue educating Americans on how our economic system works.

Liberty Pen regularly posts great videos featuring leading voices on freedom like Milton Friedman, Friedrich Hayek, Thomas Sowell and others.

Here is a classic example, featuring Milton Friedman explaining how no individual could have created a seemingly simple product like a pencil. It took thousands of people across the world who don’t know of each other to create a pencil. With this simple example, Friedman demonstrates the folly of socialism and central government planning. No government has the knowledge to coordinate people to create something as simple as a pencil. Instead the mechanisms of free market capitalism create cooperation between people resulting in achievements that a central planner could never achieve.

To reverse President Obama’s attempt to interject the government in every facet of the economy, picking winners and losers, more Americans need to understand Milton Friedman’s message:

Friedman’s talk about a pencil is based on Leonard Read’s classic essay “I, Pencil” first published in 1958 by The Freeman. Here is an excerpt:

I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human master-minding! Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree.

The above is what I meant when writing, “If you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing.” For, if one is aware that these know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand—that is, in the absence of governmental or any other coercive master-minding—then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith.

Once government has had a monopoly of a creative activity such, for instance, as the delivery of the mails, most individuals will believe that the mails could not be efficiently delivered by men acting freely. And here is the reason: Each one acknowledges that he himself doesn’t know how to do all the things incident to mail delivery. He also recognizes that no other individual could do it. These assumptions are correct. No individual possesses enough know-how to perform a nation’s mail delivery any more than any individual possesses enough know-how to make a pencil. Now, in the absence of faith in free people—in the unawareness that millions of tiny know-hows would naturally and miraculously form and cooperate to satisfy this necessity—the individual cannot help but reach the erroneous conclusion that mail can be delivered only by governmental “master-minding.”

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Over the next two years, we will have to continue to educate more Americans on why freedom, capitalism and limited government work and government expanding into every sphere of our lives and spending more and more of our money will result in loss of freedom and wealth.

For some of these lessons we can reach back decades. Here is Milton Friedman, one of the greatest economists of all times, explaining how the wealth accumulated by successful people benefits everyone through investments that create jobs and produce more consumer goods:

You can find more short videos of Milton Friedman answering questions like this on Common Sense Capitalism’s Youtube channel and blog.

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