Saving American Capitalism

Steven Pearlstein’s long, rather useless article (doesn’t even mention Hayek or Friedman) about saving capitalism contains several questionable comments. For example, he suggests that conservatives reject the notion that it “takes a village to create a successful company.” This is a straw man; everyone knows that we live in a highly interdependent society.

The question is how to organize society in a way that produces the greatest prosperity. Conservatives believe (backed by historical results) that this is achieved through freedom, which means a market-based economy and competition. In contrast, liberals can only imagine and “hope” for a centralized, authoritarian approach, complete with central planning (soon to be seen in the 20% of the economy that we call healthcare).

Pearlstein also suggests that it’s odd to think that anyone in America these days is “seriously” proposing socialism or communism. I’m not sure what Pearlstein means when he refers to socialism or communism, but such societies are clearly authoritarian in nature. If we consider a political spectrum ranging from authoritarian on the one end to freedom on the other, we not only already are leaning to the authoritarian side, but Obama clearly has us moving even further in that direction. This isn’t a fact to be taken lightly.

Saving capitalism is not rocket science. We might start by realizing government’s role should be limited to providing the legal framework in which markets and competition will thrive (btw: authoritarian government is inconsistent with the development of the “social capital” that Pearlstein and others praise so much).

This means rejecting the idea of central planning; choosing instead to enforce the antitrust laws:  breaking up the entities that are too big to fail, stopping the consolidation in health-care, and requiring firms to compete. Yes, this would be a start. And anyone who thinks that a market approach is what caused the real estate and financial meltdown in the first place should think again. Government led the way in the whole sorry mess.

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