The Reality of Capitalism

Alan Greenspan, in his book The Age of Turbulence, frequently refers to a theory put forward by Harvard economist Joseph Schumpeter. This theory is call creative destruction and is explained thusly: "A market economy will incessantly revitalize itself from within by scrapping old and failing businesses and then reallocating resources to newer, more productive ones" (Greenspan, p. 48).



Throughout the first 150 years or so of our country the federal government allowed market forces (Adam Smith's "Invisible Hand" and Schumpeter's "Creative Destruction") to work through cycle after cycle. But starting in the late 1800s in reaction to the industrialization of the Western world, socialist theories like Marxism began to gain momentum in the political discourse.



One the one hand you have the Enlightenment view of the world wherein political society is created by the consent of the people for the protection of property rights. As time moved on and society advanced, distinctions between wealthy and poor grew greater or at least more clear. By the time of the Industrial Revolution, the class conflict became an issue for socialists such as Marx- the other hand. Market forces, property rights, man selling his labor to capitalist vs. exploitation of labor that must be rectified, redistribution of wealth, government intervention at the expense of property rights of a free society.



By the time of the Great Depression Marxism and Keynesianism (government intervention in economic cycles, especially troughs) became embedded in Democratic Party policy and to a lesser extend Republican policy (see Eisenhower, Nixon and Bush 43). President Franklin Roosevelt took unusual, extra-ordinary and some would argue, unconstitutional authority to create interventionist programs. These programs took taxpayer money (from the newly passed Income Tax Amendment) to re-distribute wealth, a goal of Marxism and Communism. Since the 1930s we have seen periods of regulation and de-regulation as political power and economic conditions have changed.



Our Founding Fathers, however, wrote our Constitution based on the Enlightenment ideas of Locke and Rousseau, where property rights (i.e., "pursuit of happiness" in the Declaration of Independence) are to be protected by a government bound by checks and balances. The Constitution was written such that the federal government's powers were specifically enumerated and virtually all other powers belonged to the states and the people.



President Obama and the Democratic Congress are steamrolling over the Constitutional restrictions and directly manipulating the market, preventing "Creative Destruction's" regenerative powers from bringing about a stronger recovery. As Greenspan argues in his book, the primary role of our government is the protection of property rights. The moment that the government re-distributes wealth, it takes away the fruits of our labor and hands it to someone else. The moment the government enters into private industry, it crowds our private investment and the property rights of others (GM/Chrysler vs Ford; private insurance vs. public insurance).



The reality of capitalism is twofold. First, it is dependent on a government that protects property rights and avoids regulation. Government is inefficient and incapable of running an economy (see USSR, East Germany, Cuba). Second, capitalism ain't always pretty. Markets will boom and markets will crash. Government intervention destroys property rights and individual liberties by taking from those who have risked their private property (capital investors) and redistributing those gains.



Today, Congressman Barney Frank is about to lead his financial sector compensation wage limitation bill to victory in the House. Today, Congress is about to add $2 billion more to the Cash for Clunkers program- taking your tax dollars and handing it out to others, for what gain? This week, the US government became a 34% owner of Citigroup and continues to own parts of GM and Chrysler. These government interventionist, redistributive policies are squashing liberty and property rights. Furthermore, it is retarding the creative destruction necessary for capitalism to work most effectively. Finally, it is wasting your tax dollars. That is to say, wasting your income which is the property you have gained through the sale of your labor in the free (albeit, now heavily regulated) market.



Consider what government interventionist policies mean to the functioning of our economy. Margaret Thatcher said, "The problem with socialism is that you eventually run out of other people's money."



Just look to California to see what the future will be like for the United States.

Introduction

Welcome! After punishing my friends on Facebook with countless political posts I decided to finally start a web log to channel my musings.

I chose "The Raleigh Tavern" for two reasons. First, "Raleigh Tavern" is already a blog so I had to use "The" in front of the proper name. Second, the real Raleigh Tavern is located in Williamsburg and was used as a meeting place for the Virginia House Of Burgesses after Royal Governor Botetourt dissolved the assembly for protesting recent British transgressions such as the Stamp Act and Revenue Act. The tavern was a spot for Thomas Jefferson, George Mason, Patrick Henry, Dabney Carr and other patriots to organize against their oppressive government that disrespected their liberty and freedom.

The blog will be a spot for me to express my thoughts and react to current events. At times I will be quite passionate and earnest. But other times I will attempt to push your buttons and hopefully challenge your beliefs and assumptions. Above all, I hope some of these words will inspire us all to be more active in our public life. Our form of government depends on an educated, engaged citizenry. Do your part or your government will part you from your money, your property and your liberty.