Recession Not a Repudiation of Capitalism

I am just a little tired of all the pundits (and my rif raf friends) telling me how the tanking of the economy is a repudiation of free markets, libertarian economics and capitalism.

I will even stipulate that the recession was caused by evil hedge fund managers, greedy bankers and unscrupulous mortgage originators and dealers—who were totally unregulated and in cahoots with the Republican Party.

Without minimizing the true, and often severe, pain many folks are now suffering, I do not feel bad in telling the liberal and leftist nannies who are wringing their hands over this, to just shut up—and please don't make things worse.

Do you actually believe if Fidel Castro had been at the helm of the Republic, for the past forty years, the life of Americans would be so much more bountiful---and of course, equitable?

According to the Census Bureau, income per capita adjusted for inflation has doubled in the four decades since 1968, from $13,374 to $26,804. Non-wage compensation, in the form of employee benefits, has also increased greatly during that time.

Thanks to this new prosperity, and the growth of places like Wal-Mart, items that were considered luxuries just a few years ago, are now common throughout the economic and social strata.

Richard Alm, the senior vice president and chief economist and the senior economics writer at the Federal Reserve Bank of Dallas, reported that in 2005 a full 85 percent of households that are classified as poor by the Census Bureau have air conditioning (compared to only 36 percent in 1971); 97 percent have a color television (compared to 40 percent in 1971); 40 percent have an automatic dishwasher (as opposed to 20 percent in 1971); and almost 100 percent own a refrigerator (a 25 percent increase over 1970).

I am the first to argue, and do so frequently, that the primary problem with the economy is that we have become addicted to debt, greed and gluttonous consumption---along with an aversion to productive work--from the top of the social and political ladder to the bottom. And this is largely the cause of our current economic woes—which are serious.

But, it is not a failure of capitalism, or free markets—it was precisely these systems which gave us the prosperity we obtained (and still largely enjoy) and the ability to get into this particular mess—a problem which the economic planners in the Soviet Union, China and Cuba never had to worry about.

Both Karl Marx and Milton Friedman agree that a capitalist system will go through these cycles. But the alternative----a government that is so wise it can plan and regulate the economy down to the last detail, is an economy that lacks these dips—but is also consistently miserable.

Of course, no one likes these natural recessions---and so politicians always try to come up with something that will prevent it or bring us quickly out of a downswing. This usually involves debasing the currency with low interest rates, the printing of money, and heavy government expenditures---and of course a few people go to jail and the government comes up with more regulation.

This did not work in the New Deal,and it will not work now. Though it may be delayed, the problem and pain is intensified.

It's alright to whine about the economy.

But, just don't point your finger at the very things that created the prosperity, which makes the economic downturn even noticeable to you.