It’s ironic that the question would be raised about a system that has brought economic freedom and prosperity to so many. But the public image of capitalism always suffers during economic downturns. This time, populist conservatives have teamed with traditional enemies to slap around capitalism pretty badly.
The most publicized attack was “friendly fire” from candidate Newt Gingrich, a long-time eloquent defender of free markets and entrepreneurship. Yet in the heat of the GOP primary battle, he unleashed a broadside against then-frontrunner Mitt Romney, accusing him of being a “vulture capitalist.” He claimed Romney downsized companies and eliminated jobs, all while making good money for himself.
The charges stuck, causing a turnaround in the polls. But it was despicable because Newt knows better. He knows that competition is the essence of capitalism, as is the unbridled flow of capital to its most profitable use. He knows that risk-taking is essential and that by definition not all risks turn out well.
The successes of capitalism are because weak performers are continuously being weeded out. They either improve or are replaced by stronger players able to bring better, cheaper goods and services to the marketplace. Over time we all see a rise in our standard of living.
Bain Capital, Romney’s company, was in the business of rescuing floundering companies and making them profitable, if possible. This often involved management changes, reducing the number of unproductive employees and other efficiencies. Sometimes it didn’t work and the companies failed anyway. The net result of the process was substantial job creation and wealth generation. But the benefits were hard to see while job losses, even if temporary, were wrenching.
Gingrich knows that many Americans are ambivalent about capitalism. They
Iike its fruits but the process can seem perilous. They have a faulty understanding of the link between the two. Rather than educate and lead, Newt chose to exploit their lack of understanding. Shame on him.
But Americans increasingly have a sense that the system really isn’t fair, that the game isn’t played on a level playing field. They have a point.
It recently came to light that members of Congress were fabulously successful investors, able to achieve rates of return far higher than the average 401(k) owner. Sheer intellectual superiority seemed an unlikely explanation. It turned out that insider information available only to them was the key. Whoops! Reforms are on the way.
Even more troubling, we sense a pervasive culture has developed in which who you know and how well you play the political game matters more than ability or productivity. All the bailouts, subsidies, Obamacare exemptions and other goodies aren’t spread around evenly. They go to the favored few, people with connections and political clout.
Take Goldman Sachs, for example, sitting at the pinnacle of the world of crony capitalism. Goldman regularly makes substantial political contributions, primarily to Democrats in recent years, simply because Democrats control the action now. They also have 30 ex-government officials retained to lobby on their behalf.
Not coincidentally, Goldman pocketed $10 billion in TARP funds and an additional $12.9 billion as an aggrieved counter-party to AIG. Your corporate welfare dollars at work!
Goldman alum Jon Corzine, a $3 million Democratic contributor and major Obama bundler, was able to fend off the proposal of the Commodity Futures Trading Commission, headed by a former Goldman colleague, to prevent companies like his MF Global from investing in foreign sovereign debt. While the friendly watchdog slept, Corzine’s reckless gambling lost $2 billion for his clients.
Capitalism often takes the hit for these outrages but it’s not capitalism; it’s corporate socialism. We need more capitalism, entrepreneurship and innovation, not less, if we are ever to achieve economic recovery.
East Valley resident Tom Patterson (pattersontomc@cox.net) is a retired physician and former state senator.
Accuracy posted at 10:50 am on Sat, Feb 25, 2012.
Government's deficits have come from higher spending. Massive spending by Obama and his administration, auto bailout (a $787 billion stimulus), and ponzi schemes, have Americans questioning bad economics. And U.S. capitalism continues to get the blame for causing economic troubles.
Capitalism is investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.
Tom Patterson’s title question; “Is capitalism dying?” . . . Free-market capitalism?
In Steve Forbes and Elizabeth Ames book, “How Capitalism Will Save Us”, they say don't blame capitalism. Instead of catering to the people, government regulations cater to political interests. They say that without free-market capitalism, Americans face a new normal, which is defined as a life without prosperity, fairness, or choice.
Some legislation and policies may be well-intended and based on sound moral principles, but they don’t work because they are based on bad economics.
chatmandu002 posted at 11:15 am on Sat, Feb 25, 2012.
After decades of compromise our nations leaders have succumb to the temptation of socialism. With 50% not paying federal income taxes to support our government there will be no way to return to the goals of our capitalist system. I'm afraid it will be a continual slide to bankruptcy and socialistic sloth.
Dale Whiting posted at 2:12 pm on Sat, Feb 25, 2012.
Tom,
Of course captializm is not dead. Free and open markets determine the types and quantities of goods and services to be produced and the prices to be paid. Just look at the Washington D.C. market. That's proof that most any sort of commodity can be bought! Who needs Wallstreet when we've got K Street! [thumbdown]
Slabside posted at 6:10 pm on Sat, Feb 25, 2012.
Obamanure is doing his best to drive a stake into the heart of capitalism.
http://www.washingtontimes.com/news/2012/jan/26/obamas-crony-capitalism-667847839/
Mike McClellan posted at 7:59 pm on Sat, Feb 25, 2012.
I don't know about the rest of Patterson's column, but at the end, he tries to rewrite history.
He writes, "Goldman regularly makes substantial political contributions, primarily to Democrats in recent years, simply because Democrats control the action now. They also have 30 ex-government officials retained to lobby on their behalf.
Not coincidentally, Goldman pocketed $10 billion in TARP funds and an additional $12.9 billion as an aggrieved counter-party to AIG. Your corporate welfare dollars at work!
One problem -- TARP was done in 2008, by President Bush. Who, the last time I checked, was a Republican.
Good try, Mr. Patterson.
Arizona Willie posted at 7:44 am on Sun, Feb 26, 2012.
Republican politicians spend most of their time re-writing history ( or trying to ) in order to cover up what they did and / or blame it on the Democrats.
Although they preach personal responsibility, and smaller government, every Republican administration since Eisenhower has run up big deficits and then turned it over to Democrats to clean up and then blamed the Democrats for the mess the Republicans made.
Cerulean posted at 1:58 pm on Sun, Feb 26, 2012.
‘Is capitalism dying?’ No, but politics are dying.
Tom describes capitalism as if it were so sweet and virtuous that it nearly sticks to the inside of ones throat and chokes. He says “The successes of capitalism are because weak performers are continuously being weeded out. They either improve or are replaced by stronger players able to bring better, cheaper goods and services to the marketplace.”
I have heard, probably from Andy Rooney (RIP), that most products have not changed that much over years; shampoo, toothpaste, clothes, coffee cups, kitchen tables etcetera, are all basically the same. The successful capitalist, Proctor & Gamble, General Electric, Exxon, Goldman Sachs and others ‘weed out’ the competition with purchasing power. Capitalist hegemony is alive and well.
Politics are dying because people like Tom Patterson who, in his capacity as chairman of the Goldwater Institute, has more influence on Arizona policy than do most of our elected representatives. This is not Democracy. And worse, it is not in the best interest of the citizens of Arizona.
Mike McClellan – you hit the nail, so to speak. Yes - and There is a good article about Hank Paulson’s Crony Capitalism at Rolling Stone magazine : http://www.rollingstone.com/politics/blogs/national-affairs/hank-paulsons-crony-capitalism-20111201
Rich posted at 9:28 pm on Mon, Feb 27, 2012.
As you are talking about it, it's been comatose about a century. People like Vanderbilt and Ford were the last to amass a fortune that was anywhere near a percent of the GDP. Capitalism overproduces, as we learned in 1929, and it was sort of buried then. The resultant system is a hybrid. It's part Socialism, part Capitalism, it is supposed to hold a balance between service and production. When it tips too far one way or the other, well, you're living that. Government and other services sit on one side, when there are too much of them the economy tanks because there isn't enough production, value to sustain them. As in today when government and 'health care' are over half the GDP. Naturally, the basics, the necessities are strained, they are relegated to less than half of what is getting done which is out of all proportion.
Right now, yes, we need a little Capitalism, because we need to produce as much as we consume, for things to return to a balance. Too much 'service' and the money dilutes itself, there is nothing behind it. However too much production and it costs more to produce than it can be sold for, the opposite condition. One economic philosophy doesn't cover it, or do it. Obama went the wrong way, deficit finance needs to consume production, so you can keep producing, because we can overproduce rather quickly. Instead he chose to save a dinosaur like GM instead of break it down into smaller, more competitive companies that needed to produce a car cheaper and better to survive. Instead a government financed dinosaur is still stepping on us while not producing as much as it should.
"Capitalism' has been dead a long time, except as a label and a model for a part of what needs to be done.
Blue1 posted at 10:20 am on Tue, Feb 28, 2012.
No, capitalism is not dead yet, however, it is committing suicide. Many years ago a gentleman named Tom Watson built an empire, known as International Business Machines or simply IBM. He focused his company on the long term profits. He considered us, his employees, (aka labor) as one of his most valuable resources. We often called the company International Big Mother. Romney and his Bain Capital would have destroyed IBM in one of IBM's slack periods as an underperformer. Instead Tom Watson put us to work on a project called "Precursive Thought." Our job became to figure out how to make IBM even more profitable when the market improved, and we did. IBM continued to grow throughout our time.
I said that Capitalism is committing suicide. How you might, ask is capitalism committing suicide. Almost all the attention is on this quarter's profits and cutting costs, particular labor, to increase those profits. Little attention is paid to the long term. I call it the slash and burn approach, modeled after the farming method that destroys valuable timber and the land on which the timber grew to grow more short term money making crops until the land in a short time will not produce much of anything. Romney and Bain Capital are part of the problem. Gingrich was correct in his assessment, though Gingrich has his own problems, unless you believe that he has been reborn and given up his nefarious ways for which he was basically kicked out of his office.
Patterson draws attention, only to the errors of the Democrats, (citing Goldman Sachs and TARP as examples) ignoring that the Republicans have committed the same kind of errors to enrich Republican legislators. Until it ceases to be possible to buy politicians support; using lobbyists, campaign contributions, PACs, and super-PACS, those problems will continue in both parties.
Last but not least, having been or being a state senator in AZ is not exactly a positive recommendation; examples include the takers found in Pearce and ABSCAM.
Arizona Willie posted at 11:42 am on Tue, Feb 28, 2012.
And the EVT continues to publish his propaganda without correctly identifying the authors connection to the Goldwater Institute.
Why don't they want people to know he is a right wing political activist?
VofReason posted at 1:04 pm on Tue, Feb 28, 2012.
Shucks Willie, Republicans should act much more like the stalwart Democrats that always take ownership for their mistakes and lack of progress. I mean President Obama's administration is constantly saying, "yes that was on us" and "we really need to focus on this". It is also a good thing that the main stream media always holds everyone's foot to the fire in the exact same way. I mean they are probably just waiting for just the right moment to jump on the gas prices issue and how the administration hasn't done enough. They and everyone on the Democrats side found every reason why it was President Bush's fault during the lower price increase back then. Cannot wait for it this time around