Where Did My Capitalism Go?

This blog has been silent for too long a time (over six months!), but over the next few weeks I’d like to change that. 

Given the recent events in Massachusetts regarding Scott Brown’s win of that state’s Senate seat, the Republicans now have the ability to filibuster legislative action in the Senate.  Even with this greater balance of power, however, the citizens of this country and our representatives must remain diligent in their efforts to combat the anti-capitalistic tendencies that have emerged from the Democrat’s Congressional majority over the past year.  Now that the Democrats can be stymied by a Republican filibuster, we must be wary of the political wheelings and dealings that can occur on both sides of the aisle.  As the balance of power approaches equilibrium in Congress, the propensity for compromise grows, and the temptation to make a deal in order to push legislation forward can become great.  I urge all members of Congress to resist this temptation. 

This nation was built by those who would not compromise their beliefs, who stood for what they believed in and could not be swayed by gestures of appeasment.  Spirited debate led us to independence and gave shape to our government, but a deal that compromises the morals, values or beliefs of the dealer has no place in the realm of a republic.  Speak for your people, for those you represent, and for yourself.  When you deal in politics as a trader, you speak only for politicking itself. 

Our Congress should be pressed by their public to serve the American and capitalisitc ideals that have made this country the nation that it is today.  Those ideas of spirited competition, freedom from government restriction and unbounded opportunity for all citizens which were so celebrated in early America have been gradually limited  by our government over time.  I can imagine that these ideals might have remained as centerpieces of American business and thought had our politicians been less compromising in their agendas.  It would be an interesting study to find out how we got to where we are in our current state of government, but that’s a conversation for another post.  As far as this topic goes, I believe it is the representatives duty to hold the peoples will at heart whenever decisions are made, and when this will is compromised, the representation of the public is forfeited.

So far this blog has talked a lot about what is wrong with the most recent steps taken that are dismantling the free market capitalism we have enjoyed. In this entry I’d like to diverge from the negative, and focus on what we can do to let the key players know that their moves away from pure capitalism are highly inappropriate and unhealthy. Let’s focus on two basic ideas for now:

1) Boycott companies that have received federal “bailout” money. Make it known that you are not buying products from those companies, or banking in those institutions, for that specific reason. One of the most powerful ways to make your voice heard within a capitalist system is to use your money. A purchase from one company over the other says that you chose that seller consciously over their competitor. If you publicly express why you entrusted your money to a competitor (or just didn’t buy from a bailed out company) your “money-used-as-a-statement” becomes even more effective. Whether you tell your friends by word of mouth, write an editorial in your local paper or publish your opinions in a blog …anyway you’re able; let the world know your opinion regarding who deserves your dollar the most. A good list (mostly of banks and auto companies) that received federal money can be here.

2) Express your sentiment to your local, state and federal representatives. Talk to the government officials that supported the doling out of taxpayer dollars to failing companies, and let them know that they did a disservice to your community. Let them know that what they did was not in the best interest of their constituents, and that their actions do not represent the values and principles of the US Constitution which they are charged to uphold. Tell them also that come election time, they will not have your vote and that you intend to rally others to vote against them. Then, back your words up with actions.

Tell your representatives that did not support these federal aid packages that you agree with their decision, and admire their willingness to stand up to political pressures in order to preserve the values that we hold dear. Assure them that come election time, they will have your vote as long as they continue their stance upholding the free, capitalistic nature of our society. Then, take action and spread the word that this representative did what was right and voted down the bailout legislation.

This page has a comprehensive list of the US congress votes on the initial bailout package, though I would encourage all to seek out more information regarding any additional legislation recently passed that is of the same ilk.

I’ll be posting more about what an individual can do to get their opinions on the state of capitalism heard in the future, but consider this a good start. If anyone has more ideas feel free to start a discussion on the blog by commenting or email andrew@wheredidmycapitalismgo.com with ideas.

Maybe someone does, but not I.  Who knows…there might be some venture capitalists out there willing to shell out the money to fund GM through its failure, but at this point we won’t get the chance to find out.  Under the lead of President Obama, the US and Canadian governments will assume a “70% equity stake” in the company during and after it emerges from the bankruptcy it declared on Monday.

And here’s the kicker:  Obama has said that he has no interest in running GM!  Anyone solidly grounded in capitalistic principle would insist as the majority stakeholder in a company that not only should their views be heard, but as the majority, they should direct the business of the company.  Well Adam Smith help us if the US government gets in the drivers seat of the largest car manufacturer in the country.  And that’s what’s already happening…the administration is appointing personnel to handle the restructuring of GM, and demanding that the company support its subsidiary Chrysler.

I would be fine with private investors rallying together to fund GM through its time of crisis.  They could pool their own money or the money of additional willing investors, and prop up the company in an effort to get it back on its feet.  What’s happening now is far from that.  This decision to fund a bankrupt company isn’t even being routed through Congress (in effect, the US taxpayer isn’t being consulted on the use of their money).  What’s happening now is the execution of a Presidential order directed at funneling taxpayer money towards salvaging a failure.

It was always my belief that the role of the US government was to allow the free market to ebb and flow on its own.  If a business achieved success it wasn’t due to some political influence, but rather the effectiveness of the business and their ability to compete in the marketplace.  If a business fails at its aim, that entity doesn’t deserve a place in the market under its current structure, and it must redirect/reorganize itself if it wants to succeed.  The US government has no place saving a failing company from its ultimate fate because its role is to remain neutral and absent from the free market.  This move sets a dire precedent for future “bailouts”, or as we should call them “takeovers”.

While some will argue that such a takeover of a company needs to happen in order to save jobs, this sentiment, echoed by intrusive politicians everywhere, goes against all that the capitalist system is founded on.  The value of your work is proportional to the value of the product you create.  Once demand for your product reduces in the marketplace, the need for the skill to create that product also reduces, driving down  demand for the worker in that given job.  This may seem cold-hearted, but this same principle also drives the ingenuity of the capitalist, specifically American businessmen and women as the US has historically been the country where the independent thinker has had the opportunity to thrive and prosper economically.  Whether you’re the CEO of a car company or a worker on the factory line, you have a mind that allows and pushes you to see the complexities of the world and determine what the market needs. To not see the failure of one company as a spark that ignites new ideas (and new ventures) is to let the brilliant fire of capitalism extinguish.

I’m not usually one to write out my thoughts and feelings for everyone on the Internet to read, but I’m at the point where I feel compelled to share my thoughts about the current state of the world.  Your line here is, “Why should I read another blog about some random dude’s opinion?”.  My answer:  you should read this blog because I’m going to say what you’re thinking.  If I don’t uphold that promise, you can feel free to comment about it (or just leave), but I’ll make myself clear from the start:  this blog is directed toward people who are witnessing capitalism slip away, and who are willing to do anything they can to save the free-market principles they hold dear.

Now, you might say that we haven’t truly had a free-market for quite some time…and you’d be right.  But what’s happening now is an acceleration toward government intervention into all things business, from the small shop owner to the global corporation.  Honestly, I don’t think that there was much of any acceleration away from free-market principles in last decade, but due to the current global economic situation, our world’s governments have responded by going into takeover mode.  This is a knee-jerk reaction…or just plain reactionary, in the political sense.  The governmental idea is to immediately fix what’s broken instead of allowing a greater, long term shift back to true value by allowing the economy to right itself.  With this solution, we’ll see (we are seeing) a movement away from the free market to a situation where value is agreed upon, and influenced, by politicians and governments rather than a contract between the seller and buyer.  We’re entering a period of time where the government will decide who will be allowed to thrive (or fail) in the market, who will perform what task in what organization, and who will be privileged enough to receive a loan.  We’ve already seen examples of these travesties of economic principle occur in the past few months.  The goal now is to put our heads together, and determine a way forward that decelerates the current movement, and places us back on track toward the capitalism that we’ve misplaced.

I see this site as being a gathering place for people of like mind, and sound capitalist principle.  Here we’ll discuss ideas, criticize and respond to criticism, comment on the topics of the day, and determine a course for the future of capitalism in the world economy.

Andrew