American Capitalism Is Fine, Thank You
The real debate is whether to accept the Liberal Democrat creative destruction at the heart of the free-market system.
Redacted from an article by Governor Bobby Jindal
Wall Street Journal
March 11, 2019
Liberal politicians, abetted by the mainstream media, regularly document the alleged shortcomings of free-market capitalism. Politicians like Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez point to rising inequality and a supposed lack of upward mobility to make the case for socialism.
Today, American Democrats have a more positive view of socialism than capitalism, and less than half of young adults have a positive view of capitalism. But the debate isn’t merely between left-wing socialists and right-wing capitalists. Even President Trump argues that capitalism generates prosperity abroad at the expense of American workers. Years of wage stagnation and diminished economic prospects have soured many Americans on the system that made the U.S. the world’s largest economy.
The problem isn’t market dynamics, but the increased government intervention in the economy that discourages competition. Rather than relying on innovation, many companies often now seek to exploit licensing arbitrage opportunities and engage in other rent-seeking behaviors. They try to beat competitors through regulatory capture and crony capitalism rather than making better products for less.
Almost every large company has calculated the benefits of lobbying government. It is no coincidence that the seemingly recession-proof Washington area dominates the list of the nation’s wealthiest counties. For consumers, this means fewer meaningful choices. For new producers, the goal is often not to displace an incumbent firm but to be purchased by one. Even many tech entrepreneurs hope to sell to Google or Facebook rather than become the next big thing
Democrats, meanwhile, argue for a higher minimum wage, a more progressive income-tax code, stronger unions, and ObamaCare’s Medicaid expansion and exchange subsidies as the best alternative to a single-payer system. Others have pushed for breaking up larger companies—especially tech giants—expanding the earned-income tax credit, raising tariffs, and adopting a universal basic income as possible responses to the displacement caused by globalization and automation.
Small-government conservatives and their libertarian brethren still reject these notions. The biggest threat to American capitalism, they say, comes from liberalism and its incremental—but constant and accumulating—push for a larger, costlier and more powerful government.
They see reform proposals from moderate Republicans as attempts to be partway pregnant. They wonder why the GOP would want to become a weaker, cheaper version of the Democratic Party. Free-market Republicans argue that conservatives should be consistently pulling in the direction of lower taxes, less regulation and smaller government.
For all its faults, capitalism allocates resources more efficiently than other systems. Free markets maximize growth, offering producers the closest approximation of a merit-based system matching talent and effort with tangible rewards.
Any alternative involves bureaucratic, top-down approaches infused with political corruption and rent-seeking. For consumers, markets generate more total goods than centrally controlled systems do. This bottom-up approach responds to consumers’ preferences, rather than subjecting them to the whims of an elite ruling class.
Despite the media hype surrounding Ms. Ocasio-Cortez, the relevant debate isn’t really between socialism and capitalism. The president was right when he declared during the State of the Union: “America will never be a socialist country.” The real debate is whether to accept the creative destruction at the heart of the free-market system—a system responsible for so much prosperity around the world.
Mr. Jindal served as governor of Louisiana, 2008-16, and was a candidate for the 2016 Republican presidential nomination.
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