Category: Capitalism

Capitalism and Pope Francis

George Noga
Capitalism is not moral because it works; it works because it is moral.
Capitalism and Pope Francis
By: George Noga – September 9, 2018

       As someone born Catholic, who attended parochial school and was observant much of his life, I take no pleasure in this posting. But Pope Francis is astoundingly callow and ignorant of even elementary economic concepts. Because 1.25 billion Roman Catholics (1 of every 6 souls on the planet) look to the Pope for enlightenment, it is important to set the record straight. Go to our website www.mllg.us to see our related March 13, 2016 posting entitled “Pope Francis Enters the Twilight Zone”.

      Recently, the Pope (directly and via Vatican pronouncements) has criticized capitalism for, inter alia, consumerism, fossil fuels, environmental harm, materialism, lack of charity, speculation, seeking profit, promoting individualism, harming the poor, credit rationing, injustice, legal tax avoidance and credit default swaps. He advocates more government intervention, regulation, politics, taxes and central planning.

        If you missed it, read the September 2nd post on our website. It reports capitalism cutting extreme poverty in the world by 75% and lifting 1.2 billion humans out of the grip of poverty in the past 25 years. Every day, capitalism raises 135,000 more living, breathing people out of extreme poverty. Again thanks to capitalism, every metric of human well being is improving. Capitalism has produced a cornucopia of wealth and is the greatest human success story of all time for the common man. Yet strangely, there is never any mention of this economic miracle by Pope Francis – only vitriol.

         Capitalism is effective and also moral. A market economy is based on voluntary transactions in which both parties benefit; that’s why, upon concluding a transaction, both buyer and seller say “thank you”. Capitalism is peaceful and non-coercive; it channels human nature and self interest toward the common good. Capitalism is a positive sum game since both parties win in all transactions; there are no losers. The most powerful force on earth is a consumer armed with a free choice and even the biggest and most powerful corporation cannot make someone buy its product.

         There is space to address only a few of the Pope’s naif criticisms. Nations must be wealthy (capitalist) to be good environmental stewards; the worst degradations of all time took place under the commies and now are  being cleaned up by capitalists. The Vatican labels credit default swaps “economic cannibalism that profits from the misfortune of others“. Such swaps are merely insurance against defaults and make it easier for poor countries to borrow. The Pope condemned derivatives and speculation, both of which make markets more orderly and especially help third world agriculture.

          Pope Francis doesn’t grasp that squandering trillions for uncertain, infinitesimal climate benefits means the money cannot be spent now to alleviate suffering from unsafe water, malnutrition and lack of electricity and medicine. The last thing a poor child in an African slum needs is a solar panel. The Pope has called money “the dung of the devil” – no riposte needed. Capitalism doesn’t cause consumerism; it responds to it. If consumers demanded more bibles, the market would instantly supply them.

        The Pope is concerned for the poor but attacks the greatest anti-poverty engine in human history. Poor countries suffer due to insufficient capital; wealth must be created before it can be shared and private charity is much more effective than government redistribution. Pope Francis said building a wall is “unchristian”. Is the US unchristian for creating great wealth amidst liberty and becoming a magnet for emigrants?  Or, are socialist nations unchristian for creating great poverty, stifling liberty, fomenting civil unrest and making life so miserable that their people desperately flee their homes?

        Capitalism is not moral because it works; it works because it is moral. Capitalism has achieved, and continues to achieve, miracles that in earlier ages could only have been ascribed to the gods. However well-meaning Pope Francis may be, he fails to understand the morality of free markets and the immorality of statism and collectivism.

Our next post on September 16th addresses reality and denial in America.

Celebrate Capital Day 2018

George Noga
“The achievement of capitalism is not to provide more silk stockings for princesses but to bring them within reach of the shop girl.” (Schumpeter)
Celebrate Capital Day 2018
By: George Noga – September 2, 2018

       This Monday, let’s celebrate capital along with labor. Labor is a noble activity but capital puts labor on steroids by making it more productive. The natural condition of mankind is, and always has been, poverty. Therefore, we should not be asking what causes poverty, but what causes wealth. The answer to that question is capitalism.

       Paleolithic fishermen worked incessantly spearing enough fish to survive until one nascent capitalist thought of a net. Since he had no capital, he worked longer hours for months to accumulate enough extra fish (his capital) to give him time to construct a net. He then generated a surplus of fish to trade for other goods. His capital investment made him wealthier than others but it also made everyone else better off. The same is true of the capitalists who founded Wal-Mart, Amazon, Apple and Microsoft.

        Per the World Bank, capitalism has cut extreme poverty by 75% in just the past 25 years, equal to 1.2 billion human beings with an additional 50 million being lifted out of poverty each year. Each day there are 135,000 fewer people in poverty. Today less than 10% of the world’s population lives in extreme poverty and it could end within our lifetime. This is by far the greatest economic success story of all time. For the average human being, the world has never been a better place – thanks to capitalism.

        Americans are ignorant of the dramatic progress against extreme poverty. Surveys have asked if, over the last two decades, extreme poverty has doubled, remained the same or halved (the correct answer). A staggering nineteen out of twenty (95%) Americans get it wrong. The only plausible explanation is media ignorance and bias. Despite capitalism stamping out poverty and vastly improving the human condition, it is widely condemned – even by the Pope. Why all the criticism?

  •      Capitalism is perceived as flawed because it hasn’t solved every human problem. In fact, capitalism is purely an economic system and most of the things for which it is criticized (wealth distribution) are political rather than economic issues.

 

  •       An ubiquitous critique is that capitalism is based on self interest or greed, if you insist. Like it or not, greed is an inseparable part of the human condition. The genius of capitalism is that it channels greed into incentives to serve your fellow man. Greed is just as endemic under socialism but it is channeled toward destructive ends.

 

  •       The practice of capitalism always is compared to the theory of socialism; this is a wholly dishonest comparison. If actual results of both systems are compared, capitalism triumphs handily. If the theories of both systems are compared, capitalism again wins because socialism is contrary to human nature and it never can succeed.

 

  •       Leftists, academia and the media are infatuated with socialism even though in 10,000 years socialism (and its cousins) never has succeeded in any group bigger than a family, clan or tribe (about 25 people) in which familial bonds supersede economic interests. How many more Venezuelas must there be before they learn?

      Capitalism has created a cornucopia of wealth unprecedented in human history. Extreme poverty is being eliminated; every metric of human well being is improving. Even inequality is shrinking as the poor are getting richer at a much faster pace than the affluent. Average folks live better than monarchs a few decades ago. Luxuries a short time ago are selling for ridiculously cheap prices at Wal-Mart and Costco.

        Not one of these miracles was created by government or socialism. Who has done more to benefit the common man – Henry Ford, Steve Jobs, Sam Walton or any king, president or commissar? America is the bastion of capitalism; tomorrow, let’s celebrate capitalism and the capitalists who had a dream and the will to accomplish it!

September 9th we blog (reluctantly) about capitalism and Pope Francis.

Destroying the Link between Capitalism and Wealth

George Noga
If  capitalism and liberty lose the culture war, it will be because Americans have lost the link that brought us our unprecedented cornucopia of  wealth.
Destroying the Link between Capitalism and Wealth
By: George Noga – March 11, 2018

      This is the second and final post seeking to answer the question: Does capitalism sow the seeds of its own destruction? The first part is on our website: www.mllg.us. This question first was posed 100 years ago by economist Joseph Schumpeter. We will conclude by comparing Schumpeter’s predictions with where America stands today.

       We are engaged in a great culture war for the preservation of capitalism along with wealth and liberty, which are symbiotically linked to capitalism. If we have capitalism, we ipso facto have liberty and wealth. Without capitalism we become poorer and less free, while under socialism we are impoverished and tyrannized; think Venezuela.

     How bad is the anti-capitalist mentality? One poll showed 4 out of 10 US adults preferred socialism to capitalism. A YouGov poll asked if respondents had a favorable view of capitalism or socialism. With Democrats, it was tied at 42%; millennials chose socialism 43% to 32%. In a Gallup poll, 47% of respondents reported they would vote for a qualified socialist for president; 69% of those ages 18-29 said they would. Of  millennials, 58% would rather live under socialism than capitalism. In a Politico poll, Democrat voters in every age group, gender and race said they liked socialism.

     Unsurprisingly, few people, especially millennials, understand what capitalism, socialism or communism really is. Large majorities conflate European social welfare states with socialism. They particularly believe Sweden is the model of a successful socialist country. Read our October 15, 2017 post “Socialism and Sweden” on our website; it shows Sweden as a free-market capitalist country. Liberals and millennials it seems are not only brainwashed but ignorant. Perhaps they can spend their next vacation in Venezuela, Cuba or North Korea to see real socialism at work.

Let’s revisit Schumpeter’s prediction, which contained five sequential points.

  1.  Capitalism will create great wealth. This has come true to an extent few dreamed.
  2.  More people will be educated. Again true, in America education is universal.
  3.  Professors and teachers will promote anti-capitalist ideas. BINGO!
  4.  People will vote for social welfare states. Already true  as shown by polling.
  5.  Capitalism’s success brings about its own destruction. This hangs in the balance.
     Schumpeter feared the demise of capitalism, along with wealth and liberty, would usher in a new dark age and we may have to wait centuries for the reemergence of capitalism and liberty. If Schumpeter’s final prediction comes true, we will drag the entire planet into a lengthy and unspeakable Orwellian torpor where men lead lives of quiet desperation, where war is peace, bad is good, immoral is moral and big brother always is watching. Nowhere is it written that liberty will survive.
My March 18th post is mega special; hint: it is my 75th birthday!

Why Intellectuals Hate Capitalism

George Noga
Does capitalism really sow the seeds of its own destruction? 
Why Intellectuals Hate Capitalism
By: George Noga – March 4, 2018

       This is the first of two posts seeking to answer the above question about capitalism and self destruction. This question has a nexus to our three February posts (available at www.mllg.us) about the debt crisis. Both stem from the consequences of the stunning success of capitalism in creating enormous wealth for all. This first post explains why intellectuals and progressives loathe capitalism and love socialism.

       A century ago economist Joseph Schumpeter wrote that capitalism would self destruct: “I do not think capitalism can survive. Its demise will not be due to economic failure; instead, its very success undermines the institutions which protect it and creates conditions in which it can’t survive.” He theorized: (1) capitalism would enable more people to become educated; (2) they would be taught anti-capitalist dogma by professors now free to promote their ideas rather than to work; (3) people thusly (mis)educated would vote for liberal welfare states leading to the end of capitalism.

       Vituperation from socialist professors has infected college students and wafted into the general population. There are six main reasons liberals hate capitalism.

1. Capitalism evolved organically. No intellectual wrote a capitalist manifesto; Adam Smith merely explained what happened naturally. Capitalism just happens; it doesn’t require professors to theorize. No one is capable of controlling capitalism, whereas socialism requires controllers, i.e. intellectuals who know what is best for everyone.

2. Capitalism is egalitarian. An uneducated, uncouth bloke can make a fortune by say recognizing the market for used auto parts and buying and stripping junk cars. He gets rich because he provided a valuable service to consumers. In contrast, the intellectual is unrecognized and unrewarded. Successful capitalists repulse elites.

3. Professors are rewarded by bureaucrats, not markets. They succeed by pleasing their statist employers, not by pleasing students (customers) or by attracting new students. Capitalism does not reward them based on their exalted education and good intentions. They prefer regulation to the chaos of the marketplace. They believe their pet theories should override the free decisions of individuals, if necessary by using the police power of the state. Their peers all are anti-market and they must go along to succeed.

“Capitalism is: To each according to his accomplishments.” 

4. Consumers are sovereign; intellectuals have no special status. The common man holds all the power; his decisions to buy (or not to buy) determine what is produced and makes suppliers rich (or poor). Wealth is achieved only by serving consumers.

5. Capitalism brooks no excuses for shortcomings. Capitalist success is based strictly on one’s ability to provide value to his fellow man. Capitalism is to each according to his accomplishments; those who fail are found wanting by their fellow men.

6. Intellectuals desire control over others. They fail to understand why the unwashed, poor ignorant rubes in flyover land believe they know what is best for them and for their families. Intellectuals see themselves as heroic emancipators, crushing greedy capitalists, saving helpless victims and reaping the just approbation of all mankind.

      America’s immense, broadly shared wealth comes with pernicious consequences.  Any society rich enough to have millions of pet insurance policies with acupuncture, chiropractic and mental health benefits is a society that arguably has lost its critical connection between wealth and capitalism. More on this next week along with our conclusion about Schumpeter’s prediction of capitalism’s self destruction.

Our March 11th post is the second and final part dealing with Schumpeter.

The Politics of Harvey, Irma and Maria

George Noga
“Blow, winds, and crack your cheeks! Rage! blow! You cataracts and hurricanes, spout till you have drenched our steeples, drowned the cocks!”  (King Lear)
The Politics of Harvey, Irma and Maria
By: George Noga – November 26, 2017
      The lines above are from King Lear’s famous diatribe against the storm. The once mighty Lear, now powerless, urges nature to bring on another apocalypse. The storm symbolizes Lear’s state of mind. Shakespeare’s words could easily have been spoken by politicians following Harvey, Irma and Maria, ranting about climate change, price gouging and, in Puerto Rico, blaming others for their lack of preparedness.
     Harvey was the first major (cat 3) hurricane to make US landfall since Wilma in 2005, the longest hurricane-free period ever. Irma was the only major hurricane to hit Florida in 12 years, toppling a 165-year record. What happened next was as predictable as it was pathetic. There were climate change diatribes worthy of King Lear about how 12 hurricane-free years somehow proves hurricanes are more (not less) frequent.
       Meanwhile, a 2017 peer-reviewed study (D’Aleo, Wallace, Idso) found man-made adjustments to temperature readings account for all reported warming in the past 75 years. The study’s authors said when numerous adjustments are made, it is reasonable to expect some to have the effect of increasing warming and some of decreasing warming. Instead, nearly all adjustments increased warming; i.e. the data underpinning global warming are based entirely on human adjustments – not on actual data!
       EPA Administrator Pruitt and Energy Secretary Perry have suggested red-blue team exercises (used by military and intelligence services) to expose vulnerabilities in climate science. Climate alarmists went ballistic, arguing it would be a dangerous attempt to elevate minority opinions and to undercut the legitimacy, objectivity and transparency of existing climate science. Why would legitimate scientists be afraid to debate any issue? They should welcome debate. Newton is spinning in his grave.
       Politicians also mimicked King Lear in castigating price gouging. Florida Senator Nelson and AG Bondi were the best Lear impersonators. Bondi vowed to prosecute and to shame gougers and established a hotline for reporting violations. They are economically illiterate; economists universally agree price gouging is beneficial.
       Americans understand prices for the same product fluctuate in different conditions. Hotel rooms in a college town cost more during a big game. Americans openly flaunt anti-scalping laws. A poor ghetto kid risking scarce capital to broker tickets should be honored, not incarcerated. We readily accept Uber’s surge pricing and viscerally grasp it is beneficial. Government engages in price gouging at, inter alia, airports, toll roads, turnpike rest stops and sporting venues – Nelson and Bondi take note.
      Prices in free markets convey accurate, truthful and useful information about the value of a good or service; government prices are lies; consider the following:
  •    Market prices are determined by voluntary cooperation among people. Government prices are coercive and based on the naked police power of the state. Markets enforce themselves; government prices must be enforced by men with guns.
  •   Market prices alleviate shortages by directing resources to where they are most needed; government prices (rent control) lead to rationing and create shortages.
  •   Market prices are logical, non-political, foster civility and encourage honest behavior. Government prices are illogical, political and strain the social fabric by criminalizing laudable and honest behavior. Government prices create black markets, incentives for illegal behavior and breed disrespect for the law as in Venezuela.
  •   Market prices result in more supplies being available during a crisis, storing extra goods beforehand and conservation. Government prices create shortages, rationing and empty shelves. Market prices are better for victims of natural disasters.
       Why should a hurricane somehow be different than a football game when it comes to the price of a hotel room? Market prices are truthful; government prices are lies. In what kind of society would you prefer to live – one based on voluntary cooperation of people in markets or one based on government lies enforced by men with guns?
Our next post describes the four gifts of Christmas

The Legacy of Fidel Castro

George Noga
A preview of this blog for 2017 and also Fidel Castro’s Legacy for Cuba
The Legacy of Fidel Castro
2017 Preview of the MLLG Blog
By: George Noga – January 8, 2017

    Before we get to Cuba, I must attend to some MLLG business. I hope you enjoyed the new MLLG blog throughout the past year. We are continuing the blog in 2017; hence, I now must ask for contributions from readers to help with our costs which are not inconsequential. I hope that this will be the only time I make such a request.

    All support goes 100% for expenses; any help, even a small amount, is appreciated. Please mail your check to MLLG at: P. O. Box 916381, Longwood, FL 32791-6381. To save time and money, I no longer maintain a separate MLLG legal entity; therefore your check, to be negotiable, must be made payable to “George Noga“. Thanks to all of you for reading, forwarding to others and for all your support since we began in 2007.

    I am excited about upcoming posts. Next week we present a postmortem of the 2016 election; this is followed by a special edition on Inauguration Day (January 20) which is a not-to-be-missed retrospective of the Obama presidency. Other upcoming topics include: Kitty Genovese and the Democrats, nullification, the war on blacks, the ninth amendment, more on climate change and MLLG commencement addresses for both high school and college. With the election now over, 2017 will contain more posts about economic, tax, human interest, environmental and cultural issues.

Fidel Castro’s Legacy

   In 1959 revolutions took place in two countries, both on small, subtropical islands governed by dictators. Both countries were mountainous, less than 25% arable and both relied on sugar exports. Also in both cases, there were giant hostile mainland nations just a few miles away that cut off all diplomatic and economic relations and threatened military invasion. However, one of the nations was much more prosperous than the other one and well ahead in terms of health, education and income.

    One of the two nations was Cuba and in 1959 it was the more prosperous. Today its economy has failed; its per capita GDP is $5,500, but the take home pay of most Cubans is $30 per month. It remains a brutal dictatorship filled with political prisons that practice torture. Its GDP per capita ranks 137 in the world and its freedom index ranks 171. One-third of all pregnancies are aborted and it is a nihilistic society.

    Even Cuba’s vaunted health care system is a failure. Cuban doctors botched Fidel’s treatment in 2006; specialists from Spain flew in to save his life. Infant mortality, once claimed to be ultra low, is based on lies. Cuban data are based on forced abortions for any pregnancy considered risky and they do not count infant deaths from underweight births. Cuba’s infant mortality is worse than elsewhere in Latin America. Most Cuban doctors are sent abroad to earn hard currency to keep the regime from utter failure.

    You may be surprised that the second country referred to is Taiwan. Dirt poor and under military dictatorship in 1959, it became a vibrant democracy and a capitalist economic tiger. Today Taiwan’s economy ranks 21 in the world with per capita GDP of $40,000. It ranks 26 on the index of human freedom. Cuba was ahead of Taiwan in 1959 in nearly every metric of human and economic well being. The juxtaposition of Cuba and Taiwan between 1959 and today reveals the true human and economic disaster that is the eternal legacy of Fidel Castro to the remaining people of Cuba.

    Castro and Che may continue to adorn tee shirts of clueless youth. Useful idiots, in and out of the media, may offer encomia, but the people of Cuba, when the regime inevitably falls, will render final judgment. Castro statues will be felled, murals defaced and the truth outed – that Fidel was a hypocritical, despotic, murderous megalomaniac who inflicted incalculable poverty and suffering on the people of Cuba.

Our next post January 15th presents a postmortem on the 2016 election.

Let’s Celebrate Capitalism

George Noga
Capital Day – a new American holiday – should be on the Sunday before Labor Day
Let’s Celebrate Capitalism
By: George Noga – August 28, 2016

    Even in the Stone Age, capital made labor more productive. A paleolithic fisherman worked all day to spear enough fish to survive. He intuited that a net could make him much more productive but he had no capital. He slept less, working extra hours each day, until he accumulated enough fish (his capital) to survive the many days required to build the net. Our newbie capitalist then generated a surplus of fish to trade for other goods or to make more nets. His capital investment enhanced the well-being of his entire band. In the 21st century this still holds true – capital enhances labor.

     Poor countries today are underdeveloped due to insufficient capital investment for a variety of reasons. Many are impoverished by obeisance to anti-capitalist ideologies. Others are destitute because they repel capital by not respecting property rights and the rule of law. Some lack educated work forces needed to properly operate capital equipment. Yet others remain poor because of confiscatory taxation and mind-numbing regulation. Many poor nations suffer from many or all of the above conditions. Even Europe and the USA could be far better off by lowering taxes, reducing regulations, eliminating uncertainty, ending creeping socialism and fully embracing capitalism.

    Capitalists, like our paleolithic fisherman, are responsible for the rise of humanity from isolated hunter-gatherer-fishermen up to and including modern man. They enhanced the IQ of the human race by increasing human interaction and cross cultural contacts in early trading centers – where intrepid traders (mostly from the deepest end of the gene pool) left far more behind than their trading goods. There was however one dark side to this. Seeing the wealth created by early entrepreneurs, early politicians created various means to destroy wealth – a pattern that also still holds true today.

    Traders, entrepreneurs, creators, innovators – capitalists all – have spawned enormous wealth, reduced poverty, increased life expectancy and boosted IQ. They are truly the heroes of the world. Who has done more to benefit the common man – Henry Ford, Thomas Edison, Steve Jobs, Sam Walton or any king, president or commissar?

    If you doubt for a moment capitalists are the heroes of the world, look around you. Ponder with amazement the monuments they have bestowed on you. Gape in awe at the medical breakthroughs, consumer electronics, software, technology and the veritable cornucopia of everyday marvels. Average folks today live better than monarchs mere decades ago. World poverty has been halved in the past generation. Luxuries a short time ago are selling today at Wal-Mart or Costco for ridiculously low prices. Not a single one of these miracles was created by government.

    Not uncoincidentally, capitalists are the antithesis of all socialist and utopian schemes. Without entrepreneurs we would be like the former USSR, Cuba, Venezuela and all the other hell holes that elevate the state over people. The greatest metric to measure the progress of a civilization is the rate at which it creates new wealth. The more new millionaires, the better that society is innovating, creating jobs, efficiently allocating its resources and responding to the needs and wants of all its members.

    Labor Day is appropriate to honor work which is a noble activity. However, it must be expanded to honor capitalists who make labor more productive via their risk and investment. America is humanity’s ultimate capitalist bastion; let’s celebrate capitalism and the capitalists who had a dream and the will to see it through. The horn-of-plenty that is America today results from labor and capital – let’s honor them both!

The next post, scheduled for Labor Day, addresses public sector unions.