So now I would rather buy a wonderful business at a fair price, than a fair business at a wonderful price.
Well, clearly a good chunk of the younger generation, as well as many of my generation stopped saving money. And saving matters because it allows you to build capital to invest in assets. And one thing I learned a long time ago is one good investment is worth more than a life's worth of toil. That means if you can accumulate enough capital and buy assets that produce income, and over time build that, uh you don't have to get up every day and work hard to generate your own income. You have assets working for you. Um, you can't just do that overnight. But it takes building savings, being smart, being frugal and prudent with your resources.
This notion though, that you can just sort of send checks out to everybody and things will be fine is not true, obviously. Some have this absurd view that the economy is like some magic horn of plenty… that just makes stuff. There’s a magic horn of plenty, and the goods and services, they just come from this magic horn of plenty. And then if somebody has more stuff than somebody else, it’s because they took more from this magic horn of plenty. Now let me just break it to the fools out there: If you don’t make stuff, there’s no stuff. If you don’t make the food, if you don’t process the food, if you don’t transport the food, medical treatment, getting your teeth fixed, there’s no stuff. We’ve become detached from reality. You can’t just legislate money and solve these things. If you don’t make stuff, there is no stuff.
These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel.
Too many of us look upon Americans as dollar chasers. This is a cruel libel, even if it is reiterated thoughtlessly by the Americans themselves.
America’s abundance was created not by public sacrifices to "the common good," but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes. They did not starve the people to pay for America’s industrialization. They gave the people better jobs, higher wages and cheaper goods with every new machine they invented, with every scientific discovery or technological advance—and thus the whole country was moving forward and profiting, not suffering, every step of the way.
"If all that putting the pencil together requires is basic use of your prefrontal cortex," Shapiro interjects, "then, yes, your labor is alienable at lower rates than if you were a doctor. That's not the fault of the person who owns the machinery."
"No, those are people who are investing the risk," he says of shareholders. "So if they carry the risk, then they get the benefit. The owner of the factory carries the risk; therefore, he gets the benefit."
"Who do you think put more in?" Shapiro asks. "The guy who spent millions of dollars buying all the machinery, leasing the place, making sure there was a management structure, doing the LLC formation, making sure all the tax code was in compliance — or you because you can stick a piece of graphite into a piece of wood?"
Today, adults are told fairy stories, fables, legends, and myths, and a large number of them apparently believe them. Many men apparently believe that government is a kind of Santa Claus who can bestow goods for which there is no charge, that in a democracy people may legitimately play Robin Hood by taking from the rich to give to the poor, that we have solved the problems of production and that the good fairies will continue to produce goods when the incentives to production have been removed, and that there is a pot of gold at the end of the rainbow which the politician describes if only we will follow his policies.
Environmentalism, of course, does not and cannot advocate capitalism, because if people are free to act on their judgment, they will strive to produce and prosper; they will transform the raw materials of nature into the requirements of human life; they will exploit the Earth and live.
The basic principle of environmentalism is that nature (i.e., “the environment”) has intrinsic value—value in and of itself, value apart from and irrespective of the requirements of human life—and that this value must be protected from its only adversary: man. Rivers must be left free to flow unimpeded by human dams, which divert natural flows, alter natural landscapes, and disrupt wildlife habitats. Glaciers must be left free to grow or shrink according to natural causes, but any human activity that might affect their size must be prohibited.
In short, according to environmentalism, if nature affects nature, the effect is good; if man affects nature, the effect is evil.
In practice, socialism didn’t work. But socialism could never have worked because it is based on false premises about human psychology and society, and gross ignorance of human economy. In the vast library of socialist theory (and in all of Marx’s compendious works), there is hardly a chapter devoted to the creation of wealth to what will cause human beings to work and to innovate, or to what will make their efforts efficient. Socialism is a plan of morally sanctioned theft. It is about dividing up what others have created. Consequently, socialist economies don’t work; they create poverty instead of wealth. This is unarguable historical fact now, but that has not prompted the left to have second thoughts.
Bernie is a taker, not a maker
Our embrace of either crony capitalism or welfare statism is going to end very badly. Ideological positions have hardened to the point that compromise seems impossible.
Beginning with Greenspan, we have now had 30+ years of ever-looser monetary policy accompanied by lower rates. This created a series of asset bubbles whose demises wreaked economic havoc. Artificially low rates created the housing bubble, exacerbated by regulatory failure and reinforced by a morally bankrupt financial system. And with the system completely aflame, we asked the arsonist to put out the fire, with very few observers acknowledging the irony. Yes, we did indeed need the Federal Reserve to provide liquidity during the initial crisis. But after that, the Fed kept rates too low for too long, reinforcing the wealth and income disparities and creating new bubbles we will have to deal with in the not-too-distant future. This wasn’t a “beautiful deleveraging” as you call it. It was the ugly creation of bubbles and misallocation of capital. The Fed shouldn’t have blown these bubbles in the first place.
The simple conceit that 12 men and women sitting around the table can decide the most important price in the world (short-term interest rates) better than the market itself is beginning to wear thin. Keeping rates too low for too long in the current cycle brought massive capital misallocation. It resulted in the financialization of a significant part of the business world, in the US and elsewhere. The rules now reward management, not for generating revenue, but to drive up the price of the share price, thus making their options and stock grants more valuable.
Sometime in the middle to late 2020s we will see a Great Reset that profoundly changes everything you know about money and investing.
Both parties in Congress are committed to more spending.
Feminism owes its existence to capitalism. Capitalism made our work much more efficient and our lives much safer, so being a mother was no longer a full-time job. It meant that the average woman had much fewer children; 200 years ago you would expect to have six, in the hope that some would survive, but now the average woman in most industrialized countries has fewer than 2. Capitalism meant that childbirth and early childhood became incredibly safe compared with the past.
Talk to anyone who has lived under communism (NOT studied it or listened to a collectivist professor) and we can tell you that collectivism doesn't work. I know this young American millennial generation believes "this time they'll get collectivism right" but they won't. Instead, they will receive the predictable outcome of so many other countries before them. Capitalism while not perfect, has PROVEN itself to provide the best outcomes for the "common person" in all of human history. Collectivism has PROVEN the opposite. It is THE reason why for 200 years people have fled TO America, not FROM America.
Good news, friends! We already have Jimmy Stewart. He’s right here among us. Only his name is “market pricing.”
Free enterprise — sometimes called capitalism — is a wonderful thing in normal times because during every non-coercive transaction, the buyer would rather have the thing he’s buying than the money, and the seller would rather have the money. Each freely entered-upon transaction increases global well-being.
But capitalism is especially useful in a crisis, when there is market disruption. When times turn dark, capitalism is, more than ever, your friend. Let’s say stores run out of toilet paper or hand sanitizer or diesel fuel because of panic buying during the age of COVID-19, and no one can find these items in stores. Why people are punching each other over the Charmin while leaving the Robitussin and Tylenol alone is a mystery, but that is of no moment. What matters is that toilet paper is suddenly more valuable simply because demand has surged. That means people are bidding up the price. Or they would be, if the stores allowed this. If Costco quadrupled the price of whatever item is selling out, there wouldn’t be any shortages of anything. Market pricing would restore normal functioning.
Springsteen used to sell tickets to his concerts for very low prices because he wanted ordinary working men and women to be able to afford them. What actually happened: Ticket resellers bought up all the tickets. So a ticket with a face value of $30 went for $100, except $70 of that went to a third party. At some point it occurred to Springsteen that if tickets to his shows were selling for $100, it didn’t make a lot of sense for $70 of that to go to a middleman who not only didn’t write “Born to Run,” he didn’t even write “Workin’ on a Dream.” Years ago, Springsteen dropped his “friend of the working man” pricing policy, which is why the last time I went to one of his concerts the face value of the ticket was $350. Is Springsteen guilty of “price gouging” for denying ticket resellers the opportunity to make gigantic profits from his work and artistry? Were those resellers guilty of “price gouging” for selling those tickets for what people were willing to pay?
When retailers don’t charge market rates, middlemen naturally step in to ensure proper pricing. Would we rather he store the stuff in his basement and not share it with the community, which is what ordinary Costco hoarders are selfishly and mindlessly doing as a group? Why shrug at hoarding but be cross with the anti-hoarder, the reseller? Value is, as always, highly contingent on time and place, as you would know if you’ve ever bought a happy-hour drink, a Tuesday night ticket to the movies, or an off-peak train ticket.
Denying that a thing is worth what another person is willing to pay for it is like denying any other scientific law, like gravity.
What happens if the merchant doesn’t “price gouge” is that his critical items may simply disappear instantly and the person who really needs that snow shovel, needs it so badly that he must have it right now, can’t have it. This is a needless, possibly lethal, cruelty that free movement of prices smoothly corrects
Say that after a blizzard there’s a doctor whose old shovel just broke and who treats lots of elderly patients who might slip and fall and break bones on the sidewalk outside his office. He can’t have a shovel for any price because an ordinary homeowner who already has a serviceable shovel and whose house is not going to be approached by anyone anyway in the next few days happened to get to the store before the doctor and bought a backup he didn’t really need just in case.
Market pricing is how we allocate goods according to greatest need. It’s how we maintain civilization. When we allow market pricing to work its wonders, it forces people to be civic-minded, forces us to be that guy in It’s a Wonderful Life who decides he can get by on $20 for now, instead of taking out the $300 in his bank account. When we interfere with market pricing, it’s like turning away the public-spirited Jimmy Stewart and declaring that it’s every man for himself.
Certainly, we should have national and state parks and open expanses. But to enjoy them, we must make a living. We must farm, mine, travel, and work as we please. We must act on our own initiative and by our own efforts. We need resources to live on and use, readily available to anyone who wants to work. That is the spirit of a free people.
The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau. What an alluring utopia! What a noble cause to fight!
As we’ve learned from countless examples throughout history, including now Venezuela, the main difference between capitalism and socialism is this: capitalism works.
Everybody in America is so money-hungry. It's like a rat race and even when you win you're still a freaking rat.
Well first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade. If you want to know where the masses are worse off, worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free-enterprise system.
There I discovered something about capitalists. They are all alike, whatever the nationality. All they wanted from me was the most work for the least money that kept me alive. So I became a Communist.
Capitalism is being attacked not because it is inefficient or misgoverned but because it is cynical. And indeed a society based on the assertion that private vices become public benefits cannot endure, no matter how impeccable its logic, no matter how great its benefits.
Good point. Capitalism divvied up among many people is still capitalism. In fact, worker-owned companies might even be MORE capitalistic cause, as you noted, everyone incurs risk in that scenario. These folks don't know it, but they aren't against capitalism or for socialism, they are against somebody else having more than them. I think that's called envy.
Go into the London Stock Exchange – a more respectable place than many a court – and you will see representatives from all nations gathered together for the utility of men. Here Jew, Mohammedan and Christian deal with each other as though they were all of the same faith, and only apply the word infidel to people who go bankrupt. Here the Presbyterian trusts the Anabaptist and the Anglican accepts a promise from the Quaker.
The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.
When Jesus comes back, these crazy, greedy, capitalistic men are gonna kill him again.
So now I would rather buy a wonderful business at a fair price, than a fair business at a wonderful price.
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