Pete's Blog

I am a conservative. As such, I am capitalistic in my thinking, though not a complete libertarian capitalist. Following are some of the truths which make me lean in such a direction. It is a quick list. I might think of others at another point.

1. Capitalism promotes wealth distribution based on merit.
   
2. Labour and natural resources are not the only economic resources in calculations of merit (e.g., a good idea can be very valuable, yet not cost a person a nickel).
   
3. Economics is not a zero-sum game.
   
4. A higher price in one (geographic) place (e.g., in one country) over another (e.g., the higher cost of medical care in the US over Canada, ignoring that the provinces catch the bill in Canada for its citizens) does not imply inefficiencies in the former.
   
5. Money not spent on consumption (e.g., what Bill Gates didn't spend in a year back when he was pulling in an income), and corporate profits are still productive, and can cause economic growth which includes job creation.
   
6. When the economy hurts, most feel it, rich and poor. (Refer to 3.)
   
7. Taxing the rich disproportionately to the rest of the population is a disincentive for working hard. (Refer to 1.)
   
8. The economy has a natural way of setting prices and wages: supply and demand.
   
9. When the government intervenes (e.g., minimum wages, price fixing typically taking the form of ceilings, subsidizing an industry) it creates inequalities which cause the economy to unnaturally shift, distributing wealth where the government deems fit, not where it is merited.
   
10. Government programs (e.g., running a war, universal healthcare, Universities), whether they're good or bad, do not maximize economic productivity. (This one needs a clarification. I haven't looked into this, but many economists have argued that WWII ended the Great Depression. I've never heard someone dissent from this conclusion. Government programs spend money. So they naturally stimulate the economy. The problem is that the government needs to make an assessment of where to spend the money. Individuals are better at making that decision than the government, which is I why I am a proponent of tax cuts across the board to handouts.)
    
11. Capitalism provides an incentive for people to work hard and give their all, while giving natural consequences for laziness and idleness.
    

Some further considerations. As stated above, I'm not a complete capitalist, in fact, I'm a Christian (surprise, surprise) and that has significant implications on the way I think about economics and politics. I know that there are drawbacks to capitalism. I will list some.

1. Since an economy produces maximum human employment when consumption is high, it can tend to promote consumerism, where people store up treasures on earth, blinding them from the greater treasures in heaven found in Christ.
   
2. Capitalism relies on the self-interest of individuals to keep the economy rolling, which can lead to self-absorption and self-obsession, and thus, neglect for other individuals.
   
3. People, though all created in the image of God, are not created equally able to earn wealth, for example, a mentally handicapped person has much less capacity to produce wealth than the average person, yet he should still be provided for, being an image bearer of God. (Actually it's really interesting to think about how God's image is reflected in someone who isn't able to think and communicate above a three-year-old's ability. Maybe it's the way that they are fascinated by everything. Maybe it's the way they are gentler than others. Any other ideas?)
   
4. Capitalism can easily give people an unnatural measure of success and a life well lived. People are on earth to glorify God, not inherently to make money.
   
5. Capitalism has no natural way of punishing immorality (e.g., murder, stealing, racism), so several government programs are necessary, in my mind, such as police departments, prisons and, more abstractly, a government to make law.
   
6. Self-interest could cause a person to live with a scarcity mentality, so his consumption would be lower than it could be, and if every individual behaved in this way, the whole economy would slow down, causing unemployment and poor wealth creation. (This is why WWII was effective at ending the Great Depression. It forced consumption where not enough was happening. I am willing to concede that a government stimulus package can work, but it depends on the situation.)
   
7. If an individual is rightly following his own self-interest, he would realize that having children, and taking care of a child once one is born, is disadvantageous, so capitalism is not able to naturally provide for children. (The question of how much the government should intervene, going against the parents' will, in a child's life is debateable, but I think in certain cases it's necessary. I will blog about this sometime in the near future.)
   

When all has been said and done, there are still two more reasons to go for a more capitalistic system than a more socialistic system for a country's economic policy. First, whether or not you have public healthcare (e.g., in Canada) or private healthcare (e.g., in the U.S.), or high taxes (e.g., France) or low taxes (e.g., the Caymen Islands), as long as people are choosing where to apply for work, where they're going to spend their money, what brand of shoes to buy, the economy is fundamentally capitalistic. There may be more or less socialistic intervention, but the fundamentals are capitalistic. Authoritarian communism failed in the U.S.S.R. and is being marginalized in China (every year I end up reading at least one article saying that China is becoming more and more capitalistic). Like Churchill saying, "democracy is the worst form of Government except all those other forms that have been tried from time to time," capitalism, while it has some dangerous implications, is the only winner so far. (See the YouTube video below.)

Second, an economic system which is more capitalistic, as opposed to less, by implication minimizes the size of the government. In Christianity, we acknowledge that people are sinful, and whenever power is concentrated in certain institutions (e.g., governments) or individuals (e.g., dictators) dangerous outcomes may occur. Have you read 1^st and 2^nd Kings? It's something to consider, at least.

In terms of resources, the only one that immediately jumps to mind that I would recommend is a talk by Wayne Grudem on Why Do Poor Nations Remain Poor? There is also a handout to go along with it. Grudem also wrote a book on the issue called, Business for the Glory of God.

I guess upon second thought I think of a YouTube video that Justin Taylor showed on his blog a few days ago by Milton Friedman. Friedman's a libertarian and he's not a Christian (I'd argue that the two are mutually incompatible). Nevertheless, he and I would have a ton in common to talk about if we were in a room together. His mannerism reminds me of one of my math profs at Carleton, Professor Sam Melkonian. Here's a video of him talking about the benefit of applying capitalistic principles in economic policy: