Part Time Capitalists

Part Time Capitalists

Sociologists are well known for being lefties.  Many sociologists are even still Marxists.  I don’t really think a gigantic planned economy would be less problematic than the market system we do have, although I do understand Marxists’ critiques of market systems.  That said, closer to home than whether capitalism is unfairly exploitative is the basic problem that our citizenry appears to be economically illiterate.  Not only do they not understand why a sociologist might be a Marxist, they don’t even understand the theory of basic free market economics.

We don’t as a people recognize that when we buy on credit, we get less stuff in the long run.  Why?  Because the interest has to be paid.  If we were to buy with discipline, in the end we get to keep all those interest payments and buy more stuff.  If we want to be more disciplined, and do without the extra stuff, all those interest payments could be banked, and the interest could work for us.  It is the difference between living as a sharecropper, and living as economically independent citizens.  It is the foundation of Jeffersonian democracy, of free market capitalism.  By having some small wealth in the system, we are going to make smart decisions regarding our resources.  What you work hard for, and follow personal discipline for, won’t be squandered easily.  But people don’t see that.

The same logic applies in a rising fuel price environment.  Fuel prices are going up.  But the best the citizenry can come up with is that we are being gouged by evil oil companies, or G Bush is making a load of profit for his buddies, or those darn Arabs are throttling us again (nice pun eh?).  However, regardless of which of these scenarios might be true, in a free market the wise thing to do is to cut back on that resource.  Period.  Economics doesn’t care if you bought too big a house, or live too far from work, or drive your kids all over town for activities.  The responsible citizen will husband his resources carefully.  He will not make decisions that risk his family’s wealth and well being, and trap him economically.  And yet, that is how the average citizen approaches fuel.  We are not really ready to absorb higher prices, and so hope Bush will bail us out.

The same is true with immigrants.  Regardless of what one thinks of the political implications of illegal immigration, one has to have respect for these guys.  They are willing to risk their lives, sleep crowded into a house, ride bike miles in all sorts of weather, all for an 8 dollar an hour cash job with no benefits, no security, and the risk of being exported.  Why do they do it?  To send some money home to their family.  To work toward a better life for their kids.  To save a little cash and start a small business here or back at home.  This is the essence of free market incentive.  Work hard, live cheap, save up, and accomplish something.  And these guys manage to do it.  All while many native citizens have trouble making ends meet on 60 or 80 thousand a year.  Now, who has the drive, the spirit, the incentive of Real Americans?  Who is making free market capitalism work for them to the best of their abilities?  

American “red states” tend to be money losers I’m told.  This is not surprising though.  Throughout the 20th c, the extraction and later manufacturing economies that drove the middle of the country concentrated into fewer and fewer jobs.  Many people stick around though because they liked living here, even though employment prospects are limited.  We can keep the economic carrying capacity of the red states artificially higher by subsidizing them.  So large farms scoop up government money, ranchers can rent grasslands below cost, timber lands are rented below cost, local governments desperate for economic development cut taxes for new manufacturing, the list goes on all the way down to bricklayers who take unemployment all winter long, and people who exist on disability who were injured with characteristically dangerous work.  Without arguing the points of these and other government spendings, it does become apparent that the economies in red states are not free market economies.

Urban areas are similar.  We have witnessed a tremendous growth of suburban development over the last century.  Since WW2 this has been the kind of growth that has been promoted by govt spending policies.  Mae/Mac loan guarantees, loans only for new builds, roads funded by federal monies and property taxes rather than use taxes, federal money to destroy urban and poor neighborhoods to build new freeways, and so on.  The cities we have now are sold to us as the results of selling us what the customer wants.  However, a closer look recognizes that while the customer may indeed like them, they are the result of heavily manipulated markets.

Free market capitalism comes with risks and costs.  The system we have now is not one that encourages citizens to accurately gauge the risks and costs associated with different economic activities.  Consequently we have western state citizens trying to keep the government out of everyone’s business.  We have suburban commuters wondering why they are being gouged.  We have people buying homes with irresponsible loans.  We have well meaning people trying to limit immigrants’ attempts to make and save money.  Everywhere we look, we see American citizens NOT behaving in economically responsible ways, hoping someone will bail them out.  We see American citizens LIMITING individual economic freedoms, for someone else’s “own” good.  We see American citizens being willfully ignorant of their governmental support, regulation, and manipulation of their economic freedoms.  

Of course there is a role for regulation.  What’s troublesome however is that people are not recognizing their freedoms and responsibilities when it comes to economics.  They hope to live in a world of plenty without absorbing the risks and costs of it.  They seem not to understand the basic laws of economics and mathematics, which are for better or worse, integral to responsible American citizenry.    Whatever we have here, it is not a free market economy.  But we don’t apparently know this.

We are economically illiterate, even while we are in the middle of a war which, according to the right is to bring the benefits of our economy to the Middle East.  According to the left, it is about petrodollars, transportation, and economics.

Either way, we are part-time capitalists at best.