Monday, October 26, 2009

Capitalism is my Friend

Capitalism is an economic system that has been globally debated time and time again. Those against capitalism say it is a system based on greed, but looking deeper into the system, one sees how capitalism is beneficial.
Many say that in capitalism one man gains at the expense of another. However, man does not profit off the loss of his fellow men, rather he gains from helping and serving his fellow men. For example, a doctor would not make money if he consistently made mistakes at his practice, he would lose business and money. So, if someone is driven by greed, they will help those in need to get the disposable income they desire.
Disposable income can only exist in a progressive economy, such as capitalism. Ludwig Von Mises
As Ludwig Von Mises states "If one were to prevent doctors from occasionally earning high fees, one would not increase but rather decrease the number of those choosing the medical profession". What Von Mises is saying is that people are driven to pursue certain careers because of the good salary they know that they will earn. If doctors made the same amount of money as librarians, then many people wouldn't go through the extra years of schooling to become a doctor. Many will admit, such as Hank Reardon in Atlas Shrugged by Ayn Rand, "I work for nothing but my own profit...". Capitalism allows what humans naturally long for, excess profit and material posessions. It allows for this because in capitalism, there is much competition. As competition increases, better and better products are made, which is why capitalism creates economic progress. In a system where government controls everything, there is no excess profit, and no competition, therefore motivation becomes scarce. It is important to have a free market economy so that Entrepreneurship isn't stifled. In a capitalist economy, one sees new ideas being proposed everyday, and more products being made. A government-heavy system doesn't allow for entrepreneurship, because the government decides who makes what, not the citizens.
During the Era of the free market, as Howard Baetjer Jr. says, "All some poor immigrant... had to do to get into it was beg or borrow a car, and pencil T-A-X-I on a scrap of cardboard in the window. Guess what it costs today just to go into the business? Around 60,000!". At the time, anyone could start their own business, the American Dream was alive. Now, Americans are not free to start their own businesses without complicated processes of acquiring permits and paying fees. It is more convenient to work at a minimum wage job than strive for something more profitable.
With the free market system, prices steadily decrease. In the United States, the Consumer Price Index in 1801 was around 50. The higher the CPI, the higher consumer prices are. By 1905, the CPI had steadily decreased to 25, with the exception of wartime inflation. The CPI would have continued to decrease, but the government began placing controls on the market, and the CPI was back up to 50 by 1919, and it rose another 50 over the next 24 years. It is clear that Laissez Faire, literally "let it be", is a good economic system because the market literally fixes itself.
Capitalism is an economic system where one sees low prices and motivation in businesses. Stifling capitalism is denying that humans want material things by nature. The founding fathers who wrote the constitution set up government only to make sure human rights are not being violated, and nothing more. A system full of government controls denies humans their most basic right, freedom.

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