When Capitalism Fails You, Demand More


It is occasionally suggested that conservatives and Tea Party voters could find some common ground with the Occupy Wall Street demonstrators.  We don’t like crony capitalism any more than they do, right?

It’s interesting to note how differently the two movements have expressed their ostensibly similar grievances.  OWS is everything the media desperately wanted the Tea Party to be: violent, lawless, unsanitary, and plugged into fringe hate groups with increasingly high levels of voltage.  Communists, Nazis, the Iranian mullahs, anti-Semites: they’re all on board with Occupy Wall Street.  Meanwhile, the media was reduced to doctoring video in their effort to paint the Tea Party as a racist riot bomb with a sputtering fuse.

Now, anyone can endorse anyone.  Occupy Wall Street can’t force the Communist Party USA to take back their endorsement, although they could denounce the communists in no uncertain terms.  Why is this movement attracting such an ugly rogue’s gallery of fellow travelers?

A big part of the reason lies in their crucial difference with the Tea Party critique.  The Tea Party looked at crony capitalism and denounced the cronies, while Occupy Wall Street denounces the capitalists.  Every aspect of OWS, from demonstrations outside the homes of carefully selected millionaires to people demanding the “forgiveness” of “unfair” loans they signed onto voluntarily, is useful to the enemies of capitalism.

Those enemies are eager to destroy the wealth and power capitalism brought to the United States.  Domestic enemies want to create a frightening vacuum they can fill with government power.  International adversaries don’t want Uncle Sam to pick himself up off the floor and flex the muscles he packs on through rigorous capitalist exercise.

Capitalism is the economic expression of liberty: the freedom to fully own property, and voluntarily exchange it with others, extended from individuals selling their labor, to huge business organizations risking investment capital in the pursuit of great reward.  Every other method of arranging affairs between men compromises that liberty to some degree.  The further we move away from free-market capitalism, the less completely anyone owns his property or labor.  Discard any foolish romantic notions you might harbor about reaching some exalted level of metaphysical “freedom” by letting the State take charge of crude material concerns.  When nobody owns anything, the result is not freedom, but slavery.

Of course capitalism is not perfect – no system is.  There are moments when even the best system will include a substantial number of people who feel let down and betrayed.  If you’re serious about protesting the obvious failures of our current economic landscape, it’s useful to think carefully about how capitalism can fail, and why.

Maximum economic liberty doesn’t require anarchy.  Quite the contrary – government is necessary to secure liberty on a massive scale.  Without laws enforced by a just and impartial government, practical liberty is available only to the recluse, who stays far away from the lawless rabble that would seize his goods and compel his behavior.  Obviously, that’s not a healthy environment in which to raise a prosperous society.

How can the economic rights of free people be violated?  What is truly “unfair” within the boundaries of a lawful free market?  There are three fundamental capitalist sins: robbery, fraud, and collusion.

Robbery is a simple enough proposition.  It requires the application of force, which no private entity can bring to bear.  However much you might dislike, say, Wal-Mart or Microsoft, they can’t take your money at gunpoint, or break into your house and steal your goods. 

The government can rob you, because it has vast amounts of coercion at its disposal.  Property can be seized under flimsy premises.  Confiscatory taxes can be leveled against unpopular groups who are guilty of no criminal behavior.  You might complain about the slow police response time in some neighborhoods, but that’s nothing compared to waiting four years to lodge a complaint against politicians at the ballot box.

Fraud is a much more common problem in the free market.  Both public and private entities trick people out of their money with false information all the time.  The best defense against fraud lies in diligent enforcement of the laws against it, coupled with a free flow of information to produce informed consumers and investors.  This is hard to achieve when those who enforce the laws are the biggest con artists of all. 

As the government becomes larger, it has an increasing conflict of interest with the free flow of information.  Every Big Government program is sold with a mixture of wild promises and manipulated data.  When these claims are proved false, there is no one to sue.  Politicians face few consequences beyond potential remove from office in a future election for misleading the public, and frankly the re-election rate for incumbents is so high that Big Government con artists really don’t have that much to worry about. 

ObamaCare, for example, is one of the most titanic frauds in American history.  It was sold with promises that its authors knew were false.  One of these con jobs was the CLASS Act, which just vanished in a puff of bureaucratic smoke.  It was supposed to offset $86 billion of ObamaCare’s cost.  It did this by collecting premiums in advance from healthy people, and assuming there wouldn’t be significant outlays for many years.  In the long run, it was so laughably unsustainable that Obama’s own Department of Health and Human Services just announced they wouldn’t even try to defend it any more. 

Everyone involved in this scam knew the CLASS Act was a turkey.  They just needed to keep the scam going long enough to claim $86 billion of “savings” from a program that would generate a surge of government revenue in the early years, then collapse into hopeless insolvency.  The Congressional Budget Office just sent out an email advising Capitol Hill staff that repeal of the CLASS Act would have zero effect on the deficit – an official admission that the $86 billion in “savings” it supposedly represented was a lie.

What would happen to a private business that sold a fantastically expensive product under such fraudulent premises?  What consequences would the Occupy Wall Street crowd demand for such despicable corporate criminals?  Would it satisfy them to know that a few of the executives might lose their jobs, and slide into very comfortable retirements, a couple of years after the fraud was made public?

The last sin against capitalism is collusion, where powerful forces conspire to rig the marketplace, changing the rules to benefit themselves.  In the modern environment, this is almost impossible to do without an alliance between Big Government and Big Business.  Uncle Sam is a partner in every rigged market, a consultant to every monopoly.  Big Labor has become nothing but a squadron of government-supported anti-competitive mega-corporations, operating within “markets” Big Government has shaped to their liking with compulsive force, not least by blocking any attempt by corporations or non-union workers to escape from them.  Other “markets” were created out of thin air, at staggering expense to captive taxpayers, for the benefit of companies like Solyndra and SunPower. 

All of the “too big to fail” horrors denounced by Occupy Wall Street depended on government power: regulations carefully tailored to choose “winners” and “losers,” and a vast Treasury funded by compulsory taxes spending billions to over-ride the voluntary transactions made by free citizens.  The one “partner” who pops up in every corrupt arrangement is the government.  Corruption becomes endemic as Big Government and Big Business fuse into one indistinguishable, unsustainable mass.

The solution to this problem does not lie in chopping Big Business down to size.  Competition will do that nicely, if it is allowed to flourish.  Competition is freedom.  It’s how the millions of individuals in a free society are persuaded to allocate resources.  The true enemy of freedom is always coercion.  Look behind poverty and you will find force.  The hot buzz word today is “frustration,” and that is caused by the absence of competition.  Corporations can be unappealing, and they make plenty of boneheaded mistakes… but only the government has the compulsive power to be “unfair” without breaking the law.

Some of the OWS protesters say that all they want is a fair chance.  Fairness requires honesty, and chance implies risk.  Honesty and risk are the meat and drink of free people.  Don’t waste your time looking for them in a world where the State decides what everyone “deserves,” and the only way to change its mind is to plead with it.