De-Capitalizing America

Have you gotten the latest memo?

Capitalism is at the root of all our problems.

Or at least that's what the young, earnest, and oh-so-woke tell us, via their custom-cased iPhones while sipping their Venti Caramel Ribbon Crunch Frappuccinos. Their alternative, whatever vague (but decidedly authoritarian) structure they refer to when they say "socialism" or "democratic socialism," will certainly make things better.

How?

By taking away people's freedom to do as they wish with the fruits of their labor, by putting more and more decision power in the hands of the government rather than individuals, by confiscating (forcibly, if need be), more and more of what the successful create and earn and own, and by draining dry anyone they dub a capitalist.

The latest jaw-dropping evidence of this aim?

Biden's tax plan.

It would tax private investment so heavily that no rational person would bother taking on the risk that such investments always carry. It would be a sledgehammer to the system that has produced the large majority of the world's wealth and living standards.

Its unstated purpose?

To advance the reimagining of the economy as the Democratic Socialists of America dream. An economy where corporations no longer exist, where workers own the companies they work at, and where capital investment comes from the government.

It is that last bit that the suckers less-informed advocates for socialism don't quite comprehend.

At the heart of every economic endeavor is a simple but not-really concept: risk. Risk is what informs our actions. Risk is at the heart of investments. Risk is as certain as the sun rising, and risk-takers are the people who create progress, advance our living standards, and grow the economy.

Every new business venture is a risk. Every mom-and-pop store, brick-and-mortar or virtual; every business expansion; every new hire; every layoff; every job taken. Safe investments offer lower returns, risky investments offer higher returns. Why? The increased chance for capital loss.

Now, fold in the reality of human nature. Risk is always personalized. Someone investing his own money is more apt to be cautious than someone investing Other People’s Money (OPM). Even among those who invest OPM we find the prudent and the reckless. The prudent are usually fiduciaries in the private sector, driven to prudence by their own personalized risk: Do poorly, lose clients, lose income, lose job. Break rules, lose job, go to jail.

Who's most apt to be reckless? The people who suffer no significant personal repercussion for bad choices or poor risk assessment.

One category of such people are "stakeholders." Stakeholder capitalism, something of an oxymoron, posits that anyone affected in any way by a company's operations should have a say in how that company runs. It's intended to put social "awareness" (read: woke and Green) into corporate decisions, but in reality its purpose is to take control of OPM without incurring any of the risks of investing one's own capital. Stakeholders argue that a company’s decisions affect them, but in truth they suffer no measurable harm from that company’s poor performance or failure.

Another is government. Government is utterly reckless with OPM, because the people who make decisions regarding OPM either face no risk at all from poor judgment or are complicit in cronyism (trading OPM expenditures for campaign donations or other pelf).

Capitalism is self-regulating. Poor choices produce failures. Failures yield information and quantify risk. Good choices produce success. Success produces more investment capital, and the lessons of previous success play and pay forward.

Spending OPM, on the other hand, is not... until you run out of it. Failures are ignored or, worse, funded further. Incentives are perverted. Moral hazard abounds. Wealth is destroyed.

Even if our leaders and all the bureaucrats they appoint had the wisdom of Solomon and the earnest selflessness of... a unicorn, they'd still not perform as well as individuals interacting freely, each in self-interest. Society would not be as prosperous, living standards would not advance as quickly, and less wealth would be generated. Perhaps (probably not) there'd be less wealth inequality, but it's obvious to anyone who looks that unequally prosperous societies have done far better for their poor and working classes than those that try to coerce economic equality. Europeans, on average, live poorer lives than Americans, all that taxation and wealth redistribution notwithstanding (#sarcasm).

Capital is fundamental to capitalism. The Left's (and yes, Biden is, by deeds and words, part of the Left, and no moderate) lust for that capital, masked by its constant denigration (and wild misrepresentation) of capitalism is a classic case of killing the golden goose. No one is going to make more productive use of capital than the people who earned it, and it's as certain as the sunset that sucking that capital out of the private economy will cut the legs out from under the economy.

Not that Biden or his minions care. Their actions, from the green agenda to over-regulation to taxation to endless scheming about how to take people's wealth, depict a greed far, FAR worse than that which they accuse those who made their own money of having.

Since no one says things better than Milton Friedman, I offer one of his more memorable quotes in closing.

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.

Taxing the productive, taking their wealth, and punishing their success sends a clear message: "Don't bother taking investment risks. The government will take your success, but leave you your failures." Socializing capital is about as stupid an idea as there can be. Heck, it'd be better to burn it than hand it to the government. A burned pile of money invites no added fuel. A government money pit will suck OPM forever.