We are in the midst of a Great Recession that could have been a depression. The net worth of all Americans has been negatively affected, as has their optimism and willingness to go on spending binges as they have over the last several decades. Controlling the binge is a good thing; however, it means that we must find another engine for our growth rather than the American consumer. The good news is there is a new engine, and an established one, that will drive us to prosperity again.The new engine is exports. The rest of the world is rushing to catch up to our life style and wealth. They want to consume and someone is going to fill their desire. People throughout the world are looking to increase their consumption of goods and services. If we do not meet this demand there are other nations clawing to fill their needs. These consumers are in
The second engine is capitalism. We invented capitalism (Actually, we stole the concept from Adam Smith who was a Scottish Economist and Moral Philosopher). Even though stolen, we perfected and implemented it better than any nation on earth. Unfortunately, we have lost site of what capitalism is all about and we need to rediscover it if we are going to be the envy of the world.
When Adam Smith conceived capitalism, he envisioned many consumers, not influenced by outside forces, demanding the goods and services that met their rational self-interest. In order for the system to optimize the living standards of individuals he saw the need to have many producers looking out for their rational self-interest by efficiently meeting the consumers wants and needs. In this world, the producer achieved his objective by delivering a product that best met the needs of the consumer at the lowest cost possible.
What Adam Smith did not take fully into account was if one producer could gain an edge on other producers, his rational self-interest would not always be to meet the needs of consumers. If he could control the market, it is in rational self-interest to do so. It was in the rational self-interest for the U.A.W. to gain control of the labor market for the auto industry; even though the rational self-interest of the consumer, lower car prices, would have been better served with more unions to compete with the U.A.W. and more auto companies to compete with the Big Three. Unfortunately, the competition came from foreign companies who were not part of the oligopoly of the Big Three and the U.A.W.
Capitalism works only if markets are free. Many of our existing markets are no longer free because our government has failed to protect us from tyranny from within; oligopolies taking over major markets including, but not limited to, autos, banking, health insurance, computers and energy. The government has failed in being the honest umpire in these markets. Part of the reason is that these oligopolies have bought off the umpire with campaign contributions. The NFL policies its referees to make sure they are not bought off. Under existing law, it is legal for our representatives to accept bribes from oligopolies in the form of campaign contributions. That is why we need to
Fix Congress First
Until this is done, not much will change. Unions and oligopolies cannot vote. Why are they allowed to buy votes?