Government Lesson No. 5: What About Capitalism's Faults?

"The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery."
........Winston Churchill



I'm a bit of a renegade. Unlike most opinion writers, I'm able to find praise for the good intentions of many socialists, while faulting socialism itself. At the same time, even though I support more freedom for capitalism with all of my heart and mind, I am equally capable of finding fault with many capitalists.

I will be the first to admit that, just as there are capitalists who can be warm, generous and fair, they are some who are greedy, egotistical, devious, etc. Furthermore, I realize that there are excesses and distortions of distribution in a capitalist world. (See my discussion of how open, protected competition is the secret built-in magical (imperfect) restraint on these weaknesses, in Economics Lesson No. 2, in the March archives.)

However, the degree of idealism of one's particular brand of philosophy does not change one's underlying human nature. A socialist has the same foibles as a capitalist; one is no more or less human than the other. Trouble will definitely arise when either of them is allowed to acquire too much power.

Now, here's where they differ. In a capitalist system, government's purpose is to protect the citizens as best it can from external attack and from each other's weaker moments, through the legislature and judicial system; and government's size is purposely limited to keep elected representatives modest and away from the temptations of power's machinations. In a socialist system, government is allowed to infiltrate every aspect of our life, as though our chosen politicians are assumed to be somehow superior to other mere mortals and able to put their self-interest aside, resist the urge to accumulate power, and keep their constituents' well-being at the center of their focus.

This is hogwash. On the average, a socialist is no more nor less weak than the greediest of capitalists. The only difference is that the capitalist recognizes this true equality of all humankind, whilst the socialist prefers to promote a naive faith in the superiority of himself as a member of an elite governing class impervious to corruption.

Surely by now we have learned that power corrupts. This is such an age-old adage, I don't understand how people can forget it. Some savvy capitalists, because they are good at making money, do tend to acquire the power that comes with it - and this is definitely a corrupting influence; but the politicians in today's America have access to much more money - trillions, in fact, of yours and mine - and thus to the power and influence this access generates; and their own resistance to ego and cupidity is no stronger than anyone else's.

Just as may happen with corporations, any government favoritism, corruption and eventually extortion and bribery will rot the institution from the inside. The difference is that corporations die once this happens. Not governments. They simply ignore the rot - or throw more of your money at it. We all know about the waste, the overspending, the campaigning, the pork distribution, the party politics, the overlooking of the budget deficit, the insidious inflation; but we don't take our politicians to task, as corporate shareholders would do. We're too busy cheering the MS media, like Romans at the Coliseum, watching the scapegoat corporate CEOs get raked over the coals for relatively less consequent offenses, while the politicians grandstand on the sidelines and call our attention to their perverted and counterproductive "regulatory remedies."

We also forget two things: (1) that it is the politicians, through their availability, suggestibility, regulatory favoritism and uneven-handed oversight, who may have helped many of the most offending corporations become the nasty, multi-billion-dollar lobbying forces that they are; and (2) that these same political shenanigans actually help to create the very nouveau-filthy-riche class that socialists so despise. (More later.)

Where do we go wrong? The crux of the problem is two-fold. As the voting public we are oblivious to the dangers of government, too busy looking for ways to milk the system ourselves (e.g. nationalized health care), and rationalizing with the help of our favorite rhetorician's idealism. At the same time, a politician's gotta do what a politician's gotta do, i.e. attract votes. In order to accumulate these votes, he must seduce, placate and entice the wealthy (the "capitalists"), pay off the organized special interests (groups of voters like the poor, the unemployed, the Moral Majority, the immigrants, the AARP, the unions, etc.), and snow the more naive with idealistic speeches and trinkets.

Of course, eventually it all falls apart when these distributors of goodies start giving away more money than the government budget has in its accounts. (Also, see Economics Lesson No. 3 in the March archive for a description of the monetary charade they play with our dollar.) At that point, and by the very nature of the game, these addicted power-gamblers become erratic. Scatterbrained. Incapable of controlling their own government spending. America is at this point as I write. Congress has disintegrated into a gang of apoplectics.

I say bah humbug to socialist idealists. I say to them, if you think "capitalist" (read special-favor-bloated) Enron was bad, wait until you've experienced a truly European-style socialist government, where a chimeric mix of hubris and multi-trillion-dollar government budgets brings out the worst in everyone. And I mean EVERYONE, including Robin Hood.