Return to Capitalism Read online

  I also reference John Tamny’s Who Needs the Fed?: What Taylor Swift, Uber, and Roberts Tell Us About Money, Credit, and Why We Should Abolish America’s Central Bank.

  It was during my college years at Westminster, a private 500 male liberal arts college in Fulton, Missouri, where I discovered a principle that has stayed with me throughout my life. That period was in the early ‘60s. The prevailing wisdom of the day was that bigness was necessary to get things done; big corporations, big labor unions, and of course, big government. This little college, once Presbyterian, had hosted Winston Churchill’s visit in 1946 where he delivered what became known as the “Iron Curtain Speech.” Churchill, horrified at watching Russia swallow up Eastern Europe, country after country following World War II, felt it necessary to warn Americans about the danger Russia imposed upon the world. Churchill called President Truman to ask where he should give the speech, and Truman responded with “Missouri,” which was his home state. Truman then turned to his personal physician, an alumnus of Westminster, and asked where in Missouri would be a good location, and Dr. Wallace said, “Why not Westminster College in Fulton, Missouri?” Westminster it was. Americans loved Churchill and what he had done to save the Western world from the horrors of Hitler and the Nazi juggernaut, so this speech attracted great attention. So, it was during my college years that our school’s president, Dr. Davidson, conceived of the idea of commemorating the Churchill speech by acquiring a Christopher Wren Church from London that had been severely damaged during Hitler’s bombing campaign. Somehow, Henry R. Luce, founder of Time/Life Magazines and a powerful and wealthy New York media mogul, got involved and began promoting the idea. Soon, contributions started flowing in from all parts of the country, not just from midwesterners. Catholics and Jews were also attracted to the idea of giving money to what had been a Presbyterian school, all because of their love for Churchill. They disassembled the church in London block by block, shipped it to New Orleans, brought it up on the Mississippi to St. Louis, and then transported it by rail to Fulton. I went back a few years after graduation and was astonished by the beauty of the restored building, originally designed by the King’s physician, Christopher Wren, to the like-new condition of what it had been following the Great Fire of London in 1666. Christopher Wren today is one of the most highly acclaimed English architects in history. The principle I learned from this remarkable project, and the one that has stayed with me ever since, is that it is not bigness that gets things done. It’s a small group of dedicated people that get things done, such as starting movements, that move a lot of people which then gets things done. It is with that spirit that I have been moved to embark on this book.

  My book is divided into three main sections. Part One, Background, explains what capitalism is, then its opposite, socialism. I add a chapter on identity politics which was on full display during the 2016 presidential campaign. I then add in my take on what entrepreneurs are, and end with my biased opinion on who I consider to be the five foremost economists relevant to us today. I also include a chapter on select economic definitions. Part Two gets into the elements of economic growth and prosperity. Part Three covers issues necessary to understand in today’s United States: debt, inflation, infrastructure, entitlements, education, and military things.

  Economics always ranks high on the scale of what most concerns voters in each election. Because of my interest in economics, I believe that what I’ve discovered and studied may help to elucidate principles for those who lack the time and interest to delve into these principles themselves, but never the less, still get battered by the consequences of bad policies. And as a bonus, with my medical training and background as a radiologist, I bring a unique perspective to the subject of healthcare.

  My book, Return to Capitalism, is a counter-argument to the socialist direction that President Obama subjected us to during his administration, and is offered as something for others to consider going forward.

  PART ONE – THE BACKGROUND

  1 - CAPITALISM

  While I originally chose the title Return to Capitalism for my book, I missed the opportunity to fully explain what capitalism is and how it differs from its opposite, socialism. Americans have only a vague idea of what capitalism is, and that includes heads-of-state as well as CEOs of America’s largest corporations. If the leaders of state and of corporations are confused over what capitalism is all about, is it any wonder that the general public has difficulty understanding what capitalism is and is not? My purpose in writing this book is to add insight and wisdom to this most base economic thought. When we vote for our leaders, it’s important we have crystal-clear thinking about what policies and ideas they advocate. We need to know what we wish to achieve, free of misconceptions that trap us into thinking some goals seem reasonable, but in fact really represent creeping socialism, thereby sabotaging our effort to get us to where we want to go. To wit, I give you two common examples. First, to balance the federal budget, let’s agree on what are necessary expenses, and then start whittling down unnecessary items. Second, cutting taxes is certainly a good idea, but just make sure it is revenue neutral, otherwise we’ll just be increasing the federal debt. These, as well as other popular arguments are flawed thinking, and fail to support or enhance a capitalistic system. In this chapter, I’ll try to explain why.

  Classically, a textbook or dictionary definition of capitalism will say that it describes private ownership of the means of production. This, as opposed to socialism, where the means of production is owned by the state. While technically correct, it is pretty abstract, and without further explanation, fails to inform the curious about what is really important. It just doesn’t adequately explain the difference between capitalism and socialism, and it leaves out a lot of nuance, such as where shop owners, doctors, lawyers, and various service workers and contractors fit in.

  To clarify things, I have purposely avoided the terms liberal and conservative, right and left, and progressive, as their meanings change with time, and they only add confusion to the political debate. Although many have difficulty explaining what capitalism means, and apparently many millennials have the wrong idea of what socialism is, I believe the terms “capitalism” and “socialism” best describe the mindsets dividing our country today.

  As our culture came to be out of the evolution of each making what they needed to survive, to some selling their abundance over what they needed for themselves, this over centuries came to be what today we call capitalism. Through growth and expansion there came workers and owners, and then, excesses and conflicts. The natural state gave rise to a competing philosophy: collectivism or communism, and from communism, and its relative in the Western world, socialism. Governments were assigned the duty of bringing order, and we started to examine the characteristics of each system and tried to define what we thought were good and bad characteristics. Today, we see polar opposites of capitalism and socialism, with one representing private ownership, and the other, public or group ownership with central planning. Hence, the classic definition of each by who owns the means of production. But without expanding on these two systems, understanding is lost.

  Let me start with the individual: a human is the original and most important capital, and his learning, education, and training become his most important and most valuable investment. When this person works and sells his goods and services, he receives capital to be saved up and reinvested to produce more capital, a process that we call capitalism. To flourish, it needs to be immersed in a free and democratic atmosphere with rule-of-law and recognition of property rights uncontested, and a market without unfair restrictions. The free market is vital because only here can the little guy use his or her own unique talents to offer a better product or service without being blocked from competing. And, just as important, for workers whose greatest protection is possible only in a dynamic, growing economy where he or she is able to freely move around to find the best job possible. Please note the word compete. This becomes maybe the most impo
rtant and key concept, and is vital to the capitalistic way. Its opposite is the replacement of competition by centralized planning, which becomes the central feature of socialism.

  In the capitalistic system, money earned, to be useful for future investment, must be stable without the scourge of inflation that steals from us all. For savings to accumulate, taxes must be low as they compete for the individual’s savings. Government must therefore be small and efficient, with burdensome regulations eliminated. Public works must be useful and affordable. For a free-enterprise system to develop, open markets and competition become necessary to give consumers goods and services of the most value at the lowest cost. And in this capitalistic system, the engine of creativity and prosperity is the entrepreneur, and he is essential in advancing opportunity for all. What they do is morally correct, and entrepreneurs need to be embraced as they contribute to the community by creating wealth and opportunity for others.

  Later in this chapter, I’ll contrast the capitalistic system with the socialistic system where the goals are to have a large government putting out many public services, numerous regulations, and large government spending. And key to this way is centralized planning. Obviously, these characteristics are well known to us today. It gives rise to political divisions polarizing our society. My hope in writing this book is to help us better understand what it is that we want, and give some directions to get us there. Greater consensus over economic issues can only lead to decreased polarization and result in a national mood that becomes more of a feeling of contentment as we go about the job of living our lives.

  I would submit that the public generally looks at the heads of GE, GM, and other huge corporations as being run by capitalists. So many of these chiefs are generally thought to be immensely over-paid and spoiled by their fleets of private jets that can carry them to the playgrounds of the rich, ski slopes, and famous beaches. It then becomes easy to understand why the public in general becomes skeptical of what good these types bring forth, and some contempt has to filter into their minds. Then, when the topic of what a fair level of taxation should be is considered, those at the top of the income-ladder get no sympathy. When workers are laid off, factories close, only to be re-opened overseas, or when foreign imports increase to the point of choking off our harbors, skepticism changes to anger. But these corporate hired-hands are not the capitalist per se, though some may be. While most of these managers properly care for their respective businesses, they are not the capitalists unless they supplied the business’s capital. Their corporations do not generally lead to job growth or add much to the wealth of the country; most typically they maintain the status quo, and I do not begrudge that. But rather it is the entrepreneurs that advance our employment, our job growth, our wealth, and our culture, and this becomes the story that I wish to tell.

  More technically correct, those with the capital, or money, are the capitalists, when they invest their funds into building factories, machines, and innumerable inventions to satisfy needs of the public, sometimes that which they didn’t even know they wanted or needed. Obviously, this includes Bill Gates and Steve Jobs, but it also includes just about anyone who has built a business and hired employees. It may or may not include corporate chieftains, but it always includes entrepreneurs and all those who have built a business. And where do doctors and lawyers fit in, or the contractor building houses and apartments? If they saved their money and made investments in their various lines of business, then they, too, would be capitalists. All of them, if they provide a needed good or service, and if they manage their line of business efficiently, succeed and make a profit. If not, they lose. To the failures, this system can be cruel. But to the masses over time immemorial, this system has been the giver of the greatest gifts to mankind, having lifted, again and again, the starving, the poor, the afflicted from the gutters of despair and hopelessness to the elevations of joy and happiness.

  The contrast to socialism, the opposite of capitalism, then becomes stark. What has socialism delivered to mankind? In the extreme, socialism has delivered death and destruction when usurped by tyrants and dictators. But think beyond this, and where we find ourselves in the U.S. and the Western democracies. More typically, with erosion of capitalistic principles and encroachment by socialist policies, we get economic stagnation or low growth, high unemployment, and high taxes in a futile attempt to control ever-expanding government debt. And unknown to the masses today, the huge risk of government collapse into tyranny.

  What then is the allure of socialism? Why is it so easily sold to the masses? Maybe it’s the simplicity of government offering to care for us without us going through the work of caring for ourselves. That could explain why citizens overwhelmed with ever-increasing medical costs succumb to the idea of letting government figure this out and give us a better solution. The reality is this: the central planning of government can in no way offer the multitude of choices available under a capitalistic system. In our country of 320 million, there is no way that the needs of all can be satisfied by one set of plans put out by Washington. Each individual must be free to find his own best solution to fit his needs, balanced against what he can afford.

  Take healthcare. Government can help the individual by letting him keep more of his earnings accumulating over time in a tax-free account reserved for his healthcare when his time of need comes. The central planning out of Washington cannot plan for the future with creation of new drugs, devices, and the expansion of personnel to deliver the services. Government is always behind the curve and only addresses past experiences. And when something is offered for free, it is always over-used, driving up the costs. Most puzzling to me is the question of who will deliver all government-offered health services? The politicians need to plan for the day when there are inadequate numbers of doctors and all the rest of the paramedical people needed to supply our health needs. These, the most crucial people for the delivery, get completely left out of the debate.

  America today has a mix of capitalism and socialism. There are the social programs of Medicare and Social Security, plus various other safety nets such as food stamps and programs for the disabled. While popular, they must also be affordable, and as structured today, they are headed to insolvency.

  Social Security is in dire need of modernization to compensate for demographic and lifestyle changes since the 1930s. At the beginning of Social Security, there were 75 workers to pay for each beneficiary, while there are only 2 today, and today’s life span is much greater. However, above all these problems is the fact that the tax collected to pay for Social Security was to be kept in a separate fund. Instead, politicians (the government) spent the money. Finally, it was envisioned to be a supplement to what people already had in savings, but today’s perception is that the monthly payment should be adequate to live on. In spite of all these problems, it is a safety net program most Americans like, and it can be fixed.

  Medicare has the problem of addressing who is to supply the healthcare when we run out of doctors, or doctors refuse to accept miserly pay and begin to search out private-paying patients in large numbers. Then there is the problem of technological advancement and obsolescence. Government control and regulation only addresses the past, while entrepreneurs address the future. Only in a market-based system where the consumer is in charge can the consumer be satisfied. Government, insurance companies, and large hospital/medical complexes cannot meet everyone’s needs with one-size-fits-all healthcare when we are so diverse, of various ethnicities and cultures, individuals to large families, of various age groups, some with many chronic diseases, and others completely healthy.

  My book is about the future, and the readers I wish to attract are the younger generations, and especially those people attracted to liberal, progressive, and socialistic ideals. The young tend to reject capitalism because anti-capitalism is all they’ve been taught. Thus, they believe business is in the business of making money, and not helping the poor or the environment. They have established views on the
horrors of greed. Millennials (ages 18-34 and now numbering 80 million) are soon to be the nation’s largest voting block. Focus groups have shown that millennials do not understand what socialism is, usually thinking it means social justice and equality. I’m attempting to explain the tenets of capitalism: small government with low taxes and minimal regulations, primacy of the individual, freedom, private ownership of means of production, and open markets and competition to give consumers goods and services of the most value at the lowest cost.

  I don’t favor the Republican Party, nor do I pan the Democratic Party, and I have no interest in advocating for a third party. But I do hope to influence the independents who sit in the middle, between the two major parties. Historically, about one-third (33%) of the electorate have been registered Democratic, and about one-fourth (25%) have been registered Republicans. That leaves 42% that could go either way, or just not vote. Today, we find our country deeply divided over political philosophy, which we call political polarization. From the beginning of time, with any group, a dialogue develops over every imaginable subject, and the debate proceeds. The spectrum of debate goes from one extreme to the other. It always works this way. Today, with the country facing unsustainable debt, and ever-expanding needs, we need to find common cause that satisfies the most people by allowing each individual the opportunity to maximize his or her lot in life doing and living the best life possible.

  SOCIALISM – Now to the opposite of capitalism, which is socialism. Socialism is having the public own large swaths of the economy, like the factories, steel mills, and railroads. Should citizens compel government to supply auto insurance, that would properly be called socializing car insurance. Social Security and Medicare are social programs. To take over all healthcare in the country would be called socializing healthcare, more commonly referred to as socialized medicine.