Capitalism is becoming a dirty word in the United States. Companies and the individuals who run them are constantly being tried in the court of public opinion over achieving record profits and the paths taken to earn them. Politicians have been advised to stay away from the word because of the connotations it has amongst today’s society. Capitalism is becoming the scapegoat for problem within the lower and middle classes, and it is 100 percent, completely and utterly misplaced.
The frustration of millions of Americans is completely understandable. Large companies are raking in record profits, while the little guy is left to struggle, working paycheck to paycheck. Movements like Occupy Wall Street and the fervor over the Bernie Sanders campaign are taking center stage and gaining support. “The government needs to step in and fix the economy!”, is the battle cry on the campaign trail. The only problem is, that government interference within the market is exactly the problem and is exactly where this growing outrage needs to be directed.
Take, for example, the recent media coverage of the price of the Epi-Pen, which we already discussed in an earlier post. It’s easy to simply read the story and become disgusted at the corporate greed of Mylan. What is difficult, and what most people do not take the time to do, the media included, is to investigate. They don’t take into account the government imposed barriers to entry that kept competitors out of the market like the 17 month long approval process or the billions of dollars it costs to bring the product to market. The government is allowing these companies to achieve record profits by legislating a scarcity which hurts the consumer in the long run.
It’s all done with the best of intentions. Nobel Prize winning economist Milton Friedman spoke a great deal about this subject saying, “We’ve surrendered power to government; nobody has taken it from us. It’s our doing. The results — monumental government spending, much of it wasted, little of it going to the people whom we would like to see helped.” Those words, spoken over 30 years ago ring true now more than ever. The only thing is, people are not learning from the mistakes of the past.
To see this, look no further than to the desperation to have some type of nationalized healthcare system and the wake of unintended consequences under Obamacare. Ask a small business owner what effect the legislation has had on the level of pay for their employees, or how many hours they can afford to have employees work. Ask a middle class worker who already had coverage what happened to the cost of their premiums once the law went into effect. Yet, the health care providers and insurance companies are the ones being vilified for increasing premiums.
We have become so used to looking to the government to legislate our problems away that the difference between the free market and the reach of the government is nearly if not completely indistinguishable. Politicians have done a fantastic job at pointing their fingers at CEO’s and corporate greed, but those very politicians have been the ones to propagate the problem by continuously passing corporate sponsored, protectionist legislation. Passing blame may be the only function in which politicians are truly efficient.
Capitalism, unobstructed, creates opportunity, prosperity, and efficiency. That is not the economy that we live in anymore. A recent study by Harvard University showed that just 42 percent of millennials supported capitalism. The word carried with it a connotation of greed and lead people to think of “crony capitalism”. Other subsequent studies have corroborated the Harvard report that the millennial generation is not in favor of capitalism However, they also took it step further by discovering that only 26 percent of millennials think government spending is the best action to increase economic growth.
While capitalism may be getting a bad rap nowadays, there may be hope that the upcoming generation is waking up from the government subsidized wool being pulled over their eyes.