You hear it all the time. I know you do, because I hear it all the time.
And no, that isn’t meant to be arrogant or self-centered or any other label. It just is.
We’ve all heard it, because it’s all over the media. It’s in books, on television screens and plastered across magazines: the continual war against capitalism.
They damn it as selfish, they spit the word out as if it were venomous.
Capitalism.
And yet, no one seems to truly know what capitalism is.
The dictionary definition goes something like this: an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.
But the true definition would look more like this quote by Kenneth Minogue:
“Capitalism is what people do if you leave them alone.”
As a proud, self-proclaimed individualist and a libertarian, (about as far up as you can get on the Nolan chart, actually, and slightly to the right) it is this definition which sums up my feelings for economics…and just about everything else. When it comes down to it, we need to be individuals before we are anything else; you wouldn’t, for instance, be in your right mind if you had a child without knowing how to care for yourself first.
We are reasonable people here, after all.
Therefore, if you restrained from having a child to take care of until you could properly care for yourself, you wouldn’t go out and try to save the world until you knew what you were doing with your own body.
Would you?
The fact is, you don’t have to look far to find it. In the race of government vs. private operated, well…we all know who wins.
Let’s see…USPS, Social Service, Cash for Clunkers, the Fed…Even if we stray from organizations, private industries always win out.
I mean, let’s face it. Without competition, business everywhere flounders. If there’s no one to compete against (and nothing to compete for) nothing gets done.
Let’s see, if I can think up one nightmare…
Okay. Here goes.
So.
A company (let’s call it Pear) takes over everything. Everything. Cell phones, music players, laptops, desktops, and everything that goes with them.
Pear does not build its products to last.
However, this does not effect the price. The laptops will still cost about 1200 dollars per computer. This means that every few years, if you want a new computer, it will cost 1200 dollars. And this does not include any extras you purchase for that computer. 1200 dollars for the machine itself. So, every…let’s say four…every four years or so, you’re paying 1200 dollars for a computer….and then for the extras. If you bought your first computer at age fourteen, you would have to pay for your next computer by eighteen. About the time you’d be planning to head off to college. So on top of tuition, meal plans, residency bills and book bills, you would have to fork over another 1200 dollars for a computer on which to write your papers, keep track of your grades, and communicate with friends and family far away. Now, this computer has changed minimally over the past four years. Maybe Pear updated its word processing. So writing your paper won’t be quite as time consuming as it was before. But all the other little flaws remain.
So, your (hopefully) four years of college pass smoothly. And, once again, it’s time to buy a new computer…your old one has totally kicked the bucket. Now, not having a computer isn’t an option. Assume you’re entering a work force in which you need a computer. So, you pay yet another 1200 dollars for a computer that still hasn’t changed in any real way.
That’s $3600 by the time you’re 22 just for a new computer every four years. This isn’t counting, as I said, school bills, groceries, Christmas presents for mom and dad, etc.
And this isn’t just for computers. In this imaginary little world, you’re stuck with the same issue on all fronts.
Your phone, your music player, your home computer, your laptop, gaming systems; it’s the same deal. A lot of money for a product which has not changed in years.
Now, a few years later (you’re 30 and have paid 6000 dollars total only for computers) an entrepreneur begins her own business manufacturing and selling computers. She starts out small, but the product is good: solid, basic computers that have fewer flaws than Pear’s, last longer, and cost less. As word spreads, this new business gains in size and popularity.
As would be expected, Pear all but has a heart-attack and finally (finally) they begin to make progress.
The new company matches or betters them, and the process starts again.
Now, consumers have choice. If Pear customers are no longer satisfied with Pear’s service, they can switch to the New Company or vice-versa. And then, inspired by the success of The New Company, other business begin to sprout up, offering even more competition.
Remember, these businesses are competing for you and your money. So as this competition increases, so does quality…but prices decrease. For instance, two laptops. Both are of the same quality, offer the same services, have the same features, last the same amount of time, and look very similar. The difference? One costs 1,000 dollars while another is 600. Which one would you purchase?
So the rundown:
Government run = Bad
Monopoly = Bad
Privately owned = Good
Competition = Good
And this is all very basic. There’s far more to capitalism than this.
I’m also no expert, so feel free to call me on errors.
But, think of it this way; capitalism is the only economic system that encourages competition. And competition is the only way you’ll find companies offering good-quality products at lower prices.
So who wins, here?
You do.
Capitalism is not your enemy; it is your friend.
Up Next: Taxes.
And I promise I won’t make it boring.
I hope.
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