Wednesday, June 3, 2009

American Capitalism Gone with a Whimper

There can be little doubt that socialism is replacing capitalism at an alarming rate in the United States. Just look at the facts:
  • De facto government ownership of large segments of the economy;
  • Direct government intervention in private business models and compensation plans;
  • Increased transfer payments from "the rich" to "the poor;"
  • Arbitrarily favoring labor unions over the legal rights of bond holders during bankruptcy proceedings;
  • Imminent regulation of every activity in the country involving CO2 emissions; and
  • Probable government rationing of health care (nothing is "free").
The seduction of socialism has grown so strong that even the Russians (you know, the former Soviet Union?) are chastising us for abandoning our free market system.

This shouldn't be too surprising since the Russians (alongside the still-Communist Chinese) are in large part better capitalists than we are. They adopted a very low flat tax that led to explosive economic growth following its enactment.

Russian Prime Minister Vladimir Putin—a former KGB operative—recently warned the United States that "excessive intervention in economic activity" would be a costly mistake:

In the 20th century, the Soviet Union made the state's [economic] role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.

Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.

And one more point: anti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing.

Unfortunately, the United States seems intent on disregarding the lessons learned from Russia, favoring a command-and-control economy over free markets.

Well, Russian newspaper Pravda recently published a pre-mortem obituary of American capitalism. The author criticized the United States for berating the lack of rule of law in Russia while repeating the mistakes of Russian socialism. The most chilling prediction: "The proud American will go down into his slavery with out a fight, beating his chest and proclaiming to the world, how free he really is."

A Communist takeover of the United States is not imminent, but the fact that we are even progressing toward that side of the spectrum is frightening. Just how far we travel down the path of prioritizing the state ahead of the individual depends upon how soon the American people snap out of their trance and end this insanity.

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