Prager U: Myths, Lies and Capitalism

Prager University (which isn't really a university) continues to produce some of the best short video "lessons" on the important issues of our time — videos that have garnered over 29 million views to date.

Below is their latest video lesson in economics, Myths, Lies and Capitalism. If you like what you see — as have almost 100,000 subscribers — check out their other videos in economics, political science, history, life studies, and religion/philosophy.

Americans Still Believe in Individualism, Capitalism

Breaking down the results from the latest Pew Research survey of global opinion, James Pethokoukis writes:

Let’s start with the US: 70% of Americans still think most people are better off under a free-market system, even if some people are rich and some are poor. That compares to 63% for the average advanced economy. What’s more, 73%  and 62% think working hard and getting a good education, respectively, are very important to getting ahead in life vs. 40% and 39% for the average advanced economy. (For France, by the way, it’s 25% and 24%.) Finally, just 40% think success is determined by forces outside out control vs. 51% for the average advanced economy.

Stephens: Obama's Envy Problem

"As he came to the end of his awful year Barack Obama gave an awful speech," writes Bret Stephens at the Wall Street Journal. "The president thinks America has inequality issues. What it has—what he has—is an envy problem."

In 1835 Alexis de Tocqueville noticed what might be called the paradox of equality: As social conditions become more equal, the more people resent the inequalities that remain.

"Democratic institutions awaken and foster a passion for equality which they can never entirely satisfy," Tocqueville wrote. "This complete equality eludes the grasp of the people at the very moment they think they have grasped it . . . the people are excited in the pursuit of an advantage, which is more precious because it is not sufficiently remote to be unknown or sufficiently near to be enjoyed."

One result: "Democratic institutions strongly tend to promote the feeling of envy." Another: "A depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom."

That is the background by which the current hand-wringing over inequality must be judged. Inequality is not a problem simply because the rich get richer faster than the poor get richer. It's a problem only when the rich get richer at the expense of the poor [emphasis added].

Stephens argues that Mr. Obama's numbers (comparing present-day income with that of 1979) are simply wrong:

Friess: More Fat Cats, Please!

"What the 'supposed 99 percent' don't realize," writes businessman Foster Friess in Newsweek, "is that they are better off if there are more fat cats, not less."

He cites a few examples of fat cats' largess: David Koch's $100 million gift to cancer research. Bill Gates' $28 billion to global health initiatives, which saved an estimated 5.8 million lives in Africa alone. Mark Zuckerberg's $100 million to New Jersey public education.

Friess argues that asking fat cats to pay higher taxes only "enlarges government" and "creates divisiveness."

For example, if you want to buy a Cadillac and I want to buy a Ford, we go to our respective dealers and we’re both happy. But if the government starts issuing automobiles, suddenly you and I become political enemies over how we position our favorite car. We have so many government activities that divide us. If it were left to the private sector, people would not have those animosities.

An enlarged government also leads to waste. Who in their right mind would voluntarily contribute to any of these "investments" made by our own government:

• $700,000 for a pig flatulence study in Thailand,
• $500,000 to study shrimp on a treadmill,
• $1.9 million to study the drinking habits of prostitutes on the job ... in China?

He doesn't say, but could have, that free-market capitalism, and the fat cats it creates, have lifted more people out of poverty throughout the world than any redistributionist government system.

The Welfare States of America

"If the false charge against capitalism is that it allows 'the strong' to exploit 'the weak'," write Yaron Brook and Don Watkins in Forbes, "then the true nature of the welfare state is that it allows 'the weak' -- i.e., the unproductive -- to exploit 'the strong' -- i.e., the productive."

And exploiting they are. The Davey family, for instance, made headlines in 2010 for receiving £42,000 in state-provided benefits while driving a Mercedes, enjoying cutting-edge electronics, and continuing to have children (at the time of the story they had seven with another on the way). Mrs. Davey had never worked, and Mr. Davey had quit his job after he figured out he could do better by living on the dole. “I don’t feel bad about being subsidized by people who are working,” Mrs. Davey told The Daily Mail.

This sort of story does not represent some bizarre failure of the system—it captures the system’s spirit.

The U.S. has its own examples: the Michigan lottery winner who continued to collect food stamps and the prison inmates using food stamps behind bars.

On July 12, the Obama Administration added a powerful new weapon that the 'unproductive' can use to fleece the 'productive'.

Trumpeting Capitalism

Under the headline, The Speech That Mitt Romney Should Give, Kyle Smith makes a great case for capitalism, profits, the private-equity business, and jobs:

A private-equity shop is a little like a trauma surgeon in the ER. You don’t want to meet us. Chances are, you’re having a near-death experience. You don’t go to the ER with a headache. A lot of the companies we dealt with were falling apart. Close to bankruptcy. We did our best to save them. Sometimes we didn’t succeed. But I’m happy to report that we had more success than not. Other companies we did business with were like newborn babies—weak, and desperately in need of support. We provided startup capital for them.

Surgeons, if they’re good at what they do, are handsomely rewarded. So are private-equity shops, if they know what they’re doing. But I think if you talked to the average surgeon, he or she’d say they’re not in it for the compensation. They’re in it for the challenge. They’re in it because they’re good at solving problems, and they’re willing to go to work in a high-stress environment every day because they think they’re up to some of the most hair-raising challenges imaginable. They do society a lot of good. Ultimately the people whose lives they save go on to have children of their own, and those children go on to have children of their own. Ultimately a lot of people are alive because of what ER doctors do.

The immediate challenge is to restore the patient to life. The patient may go out and get hit by a bus tomorrow, but the doctor’s focus is on the health of the patient today. They restore life and health. In private equity, that life and health we try to restore is called profitability. Profitability has to come first. Ultimately no business can survive if it’s not making a profit. Unless it’s the government, in which case it just raises your taxes or borrows money from China that your grandchildren will have to figure out a way to pay.

Profit is not a dirty word. Profit means the health of American business. And when American business is healthy, that’s when it can get on with growth. With creating jobs. ...

Using Apple (Steve Jobs), Facebook (Mark Zuckerberg) and Staples, Smith illustrates the free-market system's positive ripple effect on society, what he calls the "blessings of American capitalism."  Worth a full read.

"Here's Why I Love 'Greed' and So Should You"

The Wall Street Occupiers have it completely wrong. Human greed, writes Walter Williams, "gets the most wonderful things done."

When I say greed, I am not talking about fraud, theft, dishonesty, lobbying for special privileges from government or other forms of despicable behavior. I'm talking about people trying to get as much as they can for themselves.
Before the rise of capitalism, the way people amassed great wealth was by looting, plundering and enslaving their fellow man.
Capitalism made it possible to become wealthy by serving one's fellow man. Capitalists seek to discover what people want, and then produce it as efficiently as possible [emphasis added].

Ironically, free-market capitalism's enemies are the political tyrants, intellectual elites, and useful idiots who prefer pre-capitalism's "despicable behavior" path to wealth. What they want, concludes Williams, "is congressional permission to share in the booty from looting their fellow man."

Read the full article.

Socialists Losing Their Free-Market Sugar Daddy

Precious little humor can be found in Greece's economic death spiral, but Rachel Marsden's "Who'll Volunteer to Save the Socialists?" will provoke a bittersweet smile from conservatives even as it reminds us how dangerously high the stakes are in our own nation's budget debates.

Stand Up, Conservatives!

Last winter, David Limbaugh told conservatives to quit apologizing for capitalism.

"It's a testament to the power of propaganda and the appeal of emotion over reason that a system that has produced the greatest prosperity in world history is castigated on moral grounds," wrote Limbaugh, "while those systems that have proliferated abject misery, poverty, tyranny and subjugation are hailed as morally superior."

More recently Texas Governor Rick Perry challenged conservatives to "stop apologizing" for taking conservative positions on social and fiscal issues. "Our loudest opponents on the left are never going to like us, so let's quit trying to curry favor with them."