Month: April 2010

  This is really a simple, every day picture.  It’s beautiful.  I’m not referring to the sapphire blue Carolina sky, though that’s beautiful as well.  It’s the FedEx and UPS trucks parked side by side at my client’s place of business.  Just prior to taking this picture, the FedEx delivery van driver was hustling out the door carrying a large box.  She ran into her van and drove off before I snapped the picture.  The tractor trailers from both UPS and FedEx were already parked at loading docks.  Within minutes of the FedEx delivery van leaving, the UPS delivery van pulled up.  You can barely see it in this picture, parked to the left of the FedEx trailer.  Here are two international businesses vigorously competing for my client’s business.  The fierce competition forces each one to drive down prices and innovate.  Akin to an arms race, it’s a “service race.”

In this “service race,” the companies “battle” by trying to out-serve the other. The story on how the UPS representative managed to get some of the business away from FedEx is funny and heartwarming.  And there’s the reality of capitalism, survival in the “struggle” of a competitive marketplace means understanding and serving others — your customers.  Absolutely contrary to what Marxist twits write into too many of the television and movie scripts, corporations don’t succeed by being greedy, self-centered, and evil.  To the contrary, success requires exactly the opposite – delivering the best value possible to the consumer, understanding and anticipating the consumer’s wants and needs, and being trustworthy.  Brands that fail these standards ultimately fail to survive.

Markets function because they satisfy human needs.  To the extent those “needs” can become perverted and twisted, the market can (and does) deliver evil.  Further, markets depend on fallen people for production and consumption.  Accordingly, like any human institution, markets are fallible and make mistakes.  However, companies that fail to correct mistakes in a timely manner fail to survive.  Further, consumers can be fooled, but where information is freely exchanged, the consumer eventually learns and corrects his or her behaviour. 

Democracy operates on similar principles.  Politicians provide what voters want.  Too often, politicians “advertise” one set of policies, but govern according to another once elected.  When that happens and voters realize it, corrective action should occur.  President Obama ran for election on platitudes that sounded centrist.  As it turns out, he is in no way a moderate when it comes to domestic policy.  President Obama is the most statist, big government president since FDR and perhaps in the history of this Country.  At least during the FDR administrations, the country was in a World War and centralised economic planning had not yet been exposed as a complete failure.  Six decades later, no one should be falling for the lie and false promises of centralized planning.  As aptly pointed out by D.O.M., we shouldn’t even fall for the lie of Euro-socialism.  Let’s hope and pray that this November, enough political consumers, ie voters, will learn from their mistakes, take corrective measures, and vote the Euro-socialists out of office.

Our current President has defined his core economic tenets on the assertion of fairness, or to be more accurate, the unfairness of our economic system. Equality of outcome rather than equality of opportunity is the root principle. A forced re-distribution of wealth will act as an equalizer for the past sins of Capitalism.

The administration, the Congressional majority, and an agreeable media are systematically dismantling the free-market mechanisms and installing a centrally regulated, command economy all for the sake of fairness. Evidence over the last fifteen months is overwhelming: Government takeovers of major industries and individual companies, massive ramp-up of government regulations on industry, tax changes to force re-distribution of wealth, and lectures on behavior by our Grand Arbiter of Fairness, the President. The consequences on all 330 million Americans are enormous.

But where is the clear, unemotional evidence of either how bad it was under capitalism or how many more people will benefit under the new system? What is the alternative system? Where is it working today? All we have seen are a string of anecdotes and a parade of victims. Wall street bonuses are bad, out-of-work people are victims, millionaires don’t deserve their wealth, change will make it better.

Facts are rarely useful in debates with ideologues and religious zealots. Yet we cannot allow partisans to make unchallenged, generalized claims about the free-market system with such consequential implications. Using comparative data over the long-term, we can find objective conclusions on the comparison of free-market capitalism to more regulated economies. The last twenty-five years, virtually a generational view on economies, gives us a broad perspective of market performance during a relatively stable period.

Let’s compare countries side-by-side, answer claims of economic unfairness with facts, and decide which economy we would like for our children.

Data source: The Organisation of Economic Co-operation and Development (OECD) is a 30 country member group1 that provides unbiased, consistent economic data comparisons. Please note: For purposes of balance, comparisons are made of the U.S. economy compared to the top five western democratic economies, and the OECD average where data was available. 1987 through 2007 were selected only for completeness of data.

Claim #1:
Our economy has been weak for the last decade. Our problems have only been covered up by deficit spending and cheap credit.

Facts:
The U.S. has out-performed all economies over a 20 year period, out producing goods and services, worker for worker. In terms of annual growth rates, our free-market system has more extreme highs and lows but has climbed out of recessions faster and provided more sustained growth periods.