July 10, 2021
Fellow libertarian John Stossel has won 19 Emmys for his journalistic expertise and is the former host Fox Business’ Stossel and ABC’s 20/20. He’s also authored several best-sellers, including his most recent book, Give Me a Break: How I Exposed Hucksters, Cheats, and Scam Artists and Became the Scourge of the Liberal Media.
Today, John makes the for why most people are dead-wrong about capitalism…
Capitalism Makes Us Better Off
Everywhere, people trash capitalism.
But what they think they know about capitalism is usually wrong.
My new video debunks some myths about capitalism.
“No one ever makes a billion dollars,” complains Rep. Alexandria Ocasio-Cortez. “You take a billion dollars.” In other words, capitalists get rich by taking money from others.
That’s nonsense, and Myth No. 1.
People believe that myth if they think that when one person wins, someone else must lose. It’s natural to believe that if you think there is a finite amount of money in the world. But there isn’t.
Free markets increase total wealth. Competition encourages entrepreneurs to find new ways to release more value from both people and resources.
Because capitalism is voluntary and consumers have choices, the only way capitalists can get rich is to offer us something that we believe is better than what we had before.
That creates new wealth.
Steve Jobs became a billionaire. But by creating Apple, he gave us more: millions of jobs and billions of dollars added to our economy.
Research shows that entrepreneurs only keep 2.2% of the additional wealth they generate. “In other words, the rest of us captured almost 98% of the benefits,” says economist Dan Mitchell of the Center for Freedom and Prosperity.
“I hope that we get 100 new super billionaires,” he adds, “Because that means 100 new people have figured out ways to make the rest of our lives better off.”
But former Labor Secretary Robert Reich says we should “abolish billionaires.” He wants some form of wealth tax to hold their wealth down. “Entrepreneurs like Jeff Bezos would be just as motivated by $100 million or even $50 million,” Reich claims.
But Mitchell points out that if their income is limited, “Maybe they just take it easy … retire … sail a yacht around the world … consuming instead of saving and producing.”
I want them saving and producing! Billionaires have shown that they’re good at cutting prices or improving products or both.
As Mitchell puts it, “I’m not giving Jeff Bezos any money unless he’s selling me something that I value more than that money.”
Even if they don’t — even if they run out of ideas — their wealth is useful.
One reader called me “a complete moron” for saying that. He argues that “more money in the richest hands means money sitting in the bank doing nothing.”
But that’s an ignorant view of banks. Because banks loan that money out, they enable other people to buy homes, start new businesses and get educated.
Abolish Billionaires? How About Abolishing Poverty?
Still, I hear that “the rich are getting richer, while the poor get poorer!”
That’s Myth No. 2. Yes, the rich got lots richer, but the poor and middle class got richer, too.
“The economic pie grows,” says Mitchell. “We are much richer than our grandparents, and our grandparents were much richer than their grandparents.”
For thousands of years, the world had almost no wealth creation. Only when some countries tried capitalism did gross domestic product grow.
Capitalists helped everyone, including the poor.
The media suggest that today’s wealth gap proves that’s no longer true. But they are wrong. Capitalism’s gradual progress continues. Census Bureau data shows that the average family today is almost a third richer than 40 years ago (yes, adjusted for inflation).
The media also say, “The middle class is in decline.”
It’s true, Mitchell points out. “It’s shrinking because more people move into upper-income quintiles! The rich get richer in a capitalist society. But guess what? The rest of us get richer as well.
Myth No. 4: Capitalism creates unsafe workspaces.
“Greedy capitalists” will risk workers’ lives to increase production if government, through agencies such as the Occupational Safety and Health Administration (“OSHA”) doesn’t stop that.
It’s logical to assume that government regulation saves lives. Workplace deaths dropped after the OSHA was created. Government officials like showing a graph of the decline.
But if you bother to also look at data from before the OSHA’s creation, you see that deaths fell at the same rate before regulation began! Why?
“As we become richer, we become safer,” says Mitchell.
Wealth created by capitalism lets us afford safety devices and build machines to do dangerous work. The OSHA is like someone jumping in front of a parade and claiming he led the parade.
“We need more capitalism because when people get rich, they can afford more safety!” adds Mitchell.
Sooner than most people think, millions of Americans will find themselves abandoned: pushed out of the dwindling middle class, out of private retirement and health care, and out of a decent life of liberty. To most folks, how and why this will happen is unknown. That’s why Dr. Eifrig has gone public with the most vital and comprehensive analysis of this fiscal emergency. Get the details here.
The Rockefeller Model
Myth No. 5: “Unfettered” capitalism created evil “robber barons” who got rich by “exploiting” workers and consumers.
It’s true that more than 100 years ago, a few entrepreneurs, such as John D. Rockefeller, amassed a huge amount of wealth.
But Rockefeller was neither a robber nor a baron. He was not born rich, and he didn’t rob. He got rich by offering consumers better deals.
Rockefeller developed ways to deliver oil for less. He won customers by lowering the price of kerosene from 26 cents per gallon to about 6 cents.
For the first time, average people could afford fuel for lanterns so they could read after dark. Rockefeller may have even “saved the whales” by making oil so cheap that killing whales to get whale oil was no longer practical.
His competitors hated him for cutting prices. It was they who convinced the gullible media to call Rockefeller and other entrepreneurs “robber barons.”
Cornelius Vanderbilt was also born poor. At age 11, he quit school to work on boats.
Then, he invented ways to make travel cheaper. He cut the New York-Hartford fare from $5 to $1.
Because of capitalists like them, Mitchell points out, “We went from agricultural poverty to a country characterized by middle-class prosperity.”
Still, I’m told that even if capitalism brings us cheaper or better products, it just isn’t “good for us.”
That’s Myth No. 6.
Of course, capitalism can breed nasty materialism. Fox News’ Tucker Carlson sneers, “Does anybody believe cheaper iPhones or more Amazon deliveries of plastic garbage from China will make us happy?”
Mitchell responds, “We’re not buying iPhones and plastic garbage unless we think it’s better for us than the dollars that we have!”
That’s a very important point. No capitalist gets our money unless we voluntarily choose to exchange it for whatever he’s selling. As Mitchell puts it, “Capitalism is the only system that gives people the liberty to make their own choices.”
Myth No. 7: Capitalism’s pursuit of profit drives businesses to create robots that will eventually take away most everyone’s job.
It could happen. Artificial intelligence is powerful. Maybe this time is different.
But again and again, experts predicted that employment was about to decline — and again and again, they’ve been wrong.
Some people do lose jobs. Capitalism promotes creative destruction.
It’s terrible for the fired employee.
But it’s good for almost everyone else. It’s what allows for innovation.
Mitchell points out, “The computer destroyed the typewriter builder’s job, electricity took candlemakers’ jobs,” but those jobs were soon replaced with better ones.
Capitalism has continually generated more jobs. When America began, 90% of workers worked on farms. Now, fewer than 2% do. And there are millions more of us.
“As long as our economy has the dynamism that free markets allow,” says Mitchell, “we’re going to see more job creation and higher income levels. That’s what makes the children and grandchildren of typewriter makers so much better off. No other system anywhere in the world has ever come close to capitalism’s ability to generate mass prosperity.”
I’m not sure if you remember books, America, but it’s what people used to sink their faces into to avoid dealing with family and strangers. Our editor-in-chief, P.J. O’Rourke, has written a few in his time, and he’s re-releasing his bestselling Eat the Rich, complete with a new chapter to take on the absurdity of 2021 economics. And as an American Consequences subscriber, you can have access to the newly released edition for free! Claim Your Copy Now.
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Managing Editor, American Consequences
With Editorial Staff
July 10, 2021