It isn't surprising that David Shuster's monthly column is a criticism of free market capitalism. It isn't surprising because Shuster doesn't truly understand capitalism. Here's a sampling of Shuster's liberalism:
Many economic conservatives believe free markets are self-policing.As an example, if consumers are disgusted by bad service or a faulty product, a company’s reputation suffers and sales drop.Accordingly, self-interest, more disparagingly known as greed, provides an incentive for ethical business behavior. The state’s role is to establish and enforce general laws, while avoiding excessive regulation of commerce.The events that led to the subprime mortgage catastrophe and near collapse of our banking system demonstrate this model has flaws.Despite the above, the chastity of free markets is still vigorously promoted and regulatory efforts demonized, while the importance of personal ethics is, in a relative sense, ignored.
It isn't that the free market caused the subprime mortgage crisis by itself. It didn't help that Congress passed laws that gave banks the incentive to write mortgages to people who didn't have a chance of paying off mortgages.
There's no mention of that in Shuster's column because, being the progressive that he is, he thinks that government is virtuous, that it only acts with the people's best interests at heart.
It's telling that Shuster's vision of government is fiction.
Enter Milton Friedman with a dose of reality. Here's the transcript of Friedman's interview with Phil Donahue:
Donahue: When you see around the globe the maldistribution of wealth, the desperate plight of millions of people in underdeveloped countries, when you see so few haves and so many have nots, when you see the greed and the concentration of power with it, didn't you ever have a moment of doubt about capitalism and whether greed is a good idea to run on?
Friedman: Well, first of all, tell me, is there some society that doesn't run on greed. You think Russia doesn't run on greed? You think China doesn't run on greed? What is greed? Of course, none of us are greedy. It's only the other guy that's greedy.
The world runs on individuals pursuing their seperate interests. The greatest accomplishments have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way.
In the only cases in which the masses have escaped from the grinding poverty you're talking about, the only cases in recorded history is where they've had capitalism and largely free trade.
If you want to know where the masses are worse off, it's exactly in the societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered that will improve the lot of ordinary people that can hold a candle to the productive activities that are unleashed by the free enterprise system.
DONAHUE: But it seems to me that it rewards not virtue but the ability to manipulate the system.
FRIEDMAN: And what does reward virtue? Do you think that communist commissary rewards virtue? Do you think that a Hitler rewards virtue? Do you think, pardon me, if you'll excuse the expression, do you think that American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people or on the basis of their political clout?
Is it really true that political self-interest is nobler somehow than economic self-interest?
You know, I think you're taking alot of things for granted. Just where in the world do you find these angels who are going to organize society for us? I don't even trust you to do that.
Let's be clear about something. It's foolish to think that all capitalists are virtuous people. They aren't. Shuster's column is premised on the notions that regulations are virtuous, capitalists are automatically corrupt and that capitalists ignore corruption.
Such is the thinking of out-of-touch progressives.
First, regulations shouldn't tell what innovators what they should do or how they should do it. Straightforward laws should be written that establishes a clear framework for what's permitted and what isn't. Those straightfoward laws should be strictly enforced based on the laws, not whether the criminal or civil offender is a friend or crony of the regulator or law enforcement official.
Next, Shuster and other progressives should note the difference between regulation and law enforcement. They're often lumped together but they aren't. They're entirely different creatures.
The solution: Make laws straightforward. Enforce them vigorously if they're violated. Apart from that, let open markets and capitalism work.
Comments