Lately capitalism and the free market have been given a bad rap due to the current economic crisis. Many people who think they understand why it happened blame it on “reckless corporations” and “Wall Street greed” and have been making claims that this has proven why capitalism has failed us. The very few champions of the free market who are willing to speak out in the MSM (mainstream media) are either getting ignored or ridiculed by the pundits who act like they deserve an apology for what happened. For instance, Jon Stewarts recently called out MSNBC over their lack of journalistic integrity and foresight of the economic crisis and specifically targeted Jim “Mad Money” Cramer. Now I’m no fan of MSNBC or any of the big news corporations, but Cramer was an easy scapegoat to pick on due to his sensationalist style and I thought it was a low blow and completely uncalled for. If Stewart would have done a quick search on YouTube he probably would have come across the viral “Peter Schiff was right 2006-2007″ videos which show Schiff warning about this financial crisis for the past several years on MSNBC and many other the other news networks. Schiff has repeatedly tried asking the producers of Stewart’s show to let him on so he can clear up the picture, but so far they have refused. I think Stewart’s secretly intimidated by Schiff and would hate to be made out as a fool like Stewart himself has done to many other people (on Fox for instance). [6/11/09 UPDATE: Jon Stewart invited Peter Schiff on his show on 6/9/09, so I retract my last statements as Stewart has somewhat redeemed himself. A video of the interview can be found here: http://www.europac.net/Schiff-CC-6-9-09_lg.asp].
What our economy has devolved to these days hardly resembles the capitalism we once had during the early days of our nation with Laissez-faire government. Now the government can’t keep its hands off the economy and they are so interconnected that its grown to the point of fascist communism (more on this later). In these modern times we have all kinds of different taxes on businesses, thousands of bureaucrats creating new business rules every day, regulation upon regulation that destroys small business and benefits big corporations, NAFTA which claims to enforce “free trade” between countries, corporate welfare giving bail outs and subsidies to businesses that would otherwise fail, complete disregard for private contracts (AIG), and a Federal Reserve which sets our interest rates, prints money, and plays god with our economy. If this is what people are now calling capitalism then Adam Smith is rolling in his grave.
Washington has been doing its best job to bind and gag the free market the past century, and this is the real reason behind our current economic crisis. Those who believe in big government will use this as an excuse to give the government greater power in order to prevent future disasters and to justify more regulations to stop the “greedy capitalists” from running roughshod over our economy. Sadly they are missing the entire point. Bush stated during the end of his presidential term that “Wall street got drunk with greed” to explain how we got into this mess. But why doesn’t anyone ask who was giving Wall Street the alcohol? It was the Federal Reserve!! (Our “fourth” and most secretive pseudo-branch of government). As the MSM and our politicians rail against the greedy corporations, the Fed is getting away with murder. Of course, if you were the Fed and guilty for an economic crisis of epic proportions, you’d keep yourself in the shadows too. As Tom Woods says in his article Supporters of Capitalism Are Crazy, Says Harvard on Mises.org, “This is exactly why, in my book Meltdown, I call the Fed ‘the elephant in the living room.’ We’re not supposed to notice it, and we’re supposed to pretend the damage it causes is the result of wildcat capitalism, unfettered free markets, or whatever other juvenile phrase is currently in vogue to describe the usual bogeyman.”
Doesn’t anyone wonder why all of a sudden we had a bunch of greedy people making mistakes in the same sector of business? It’s definitely not a coincidence this happened! Generally one’s greed is kept in check due to the balancing of excessive risk. But when risk is eliminated and the chance of failure negated, then greed can only rise and this is what creates moral hazards. This is exactly the case with the Fed’s loose monetary policies the past decade combined with government policies and GSE’s (government sponsored enterprises such as Fannie Mae and Freddie Mac) which eliminated risk and promoted bad business in the housing and financial sectors. Gerald P. O’Driscoll Jr. put it this way, “To better understand moral hazard, consider the case of a gambler going to a casino. If he bears the losses, his bets will be constrained by that risk. If someone were to guarantee him against loss, but allow him to keep the profits, the gambler would have an incentive to make the riskiest possible bets. He gains all the profits but bears none of the losses. One might designate such a system as ‘casino capitalism.’ Current Fed policy has encouraged casino capitalism in the housing market.”
But if our so called economy has transformed into a wretched creature hardly resembling the free market that it once was, would one dare to look at the other end of the spectrum and call it the dreaded C word? Surely we aren’t a bunch of commies are we?! We’ve been told for many years that we won the Cold War, but at the same time the ideals of Carl Marx have been slipping into our system ever since Herbert Hoover and FDR. If one wants to see a pure example of socialism in America, one should study FDR’s New Deal. If you are skeptical of this claim that the US is practicing communism, then consider the 10 planks outlined in the Communist Manifesto and how it relates to us (taken from the website Libertyzone):
1. Abolition of private property and the application of all rents of land to public purposes.
Americans do these with actions such as the 14th Amendment of the U.S. Constitution (1868), and various zoning, school & property taxes. Also the Bureau of Land Management (Zoning laws are the first step to government property ownership)
2. A heavy progressive or graduated income tax.
Americans know this as misapplication of the 16th Amendment of the U.S. Constitution, 1913, The Social Security Act of 1936.; Joint House Resolution 192 of 1933; and various State “income” taxes. We call it “paying your fair share”.
3. Abolition of all rights of inheritance.
Americans call it Federal & State estate Tax (1916); or reformed Probate Laws, and limited inheritance via arbitrary inheritance tax statutes.
4. Confiscation of the property of all emigrants and rebels.
Americans call it government seizures, tax liens, Public “law” 99-570 (1986); Executive order 11490, sections 1205, 2002 which gives private land to the Department of Urban Development; the imprisonment of “terrorists” and those who speak out or write against the “government” (1997 Crime/Terrorist Bill); or the IRS confiscation of property without due process. Asset forfeiture laws are used by DEA, IRS, ATF etc…).
5. Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.
Americans call it the Federal Reserve which is a privately-owned credit/debt system allowed by the Federal Reserve act of 1913. Most local banks are members of the Fed system, and are regulated by the Federal Deposit Insurance Corporation (FDIC) another privately-owned corporation. The Federal Reserve Banks issue Fiat Paper Money and practice economically destructive fractional reserve banking.
6. Centralization of the means of communications and transportation in the hands of the State.
Americans call it the Federal Communications Commission (FCC) and Department of Transportation (DOT) mandated through the ICC act of 1887, the Commissions Act of 1934, The Interstate Commerce Commission established in 1938, The Federal Aviation Administration, Federal Communications Commission, and Executive orders 11490, 10999, as well as State mandated driver’s licenses and Department of Transportation regulations.
7. Extension of factories and instruments of production owned by the state, the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.
Americans call it corporate capacity, The Desert Entry Act and The Department of Agriculture… Thus read “controlled or subsidized” rather than “owned”… This is easily seen in these as well as the Department of Commerce and Labor, Department of Interior, the Environmental Protection Agency, Bureau of Land Management, Bureau of Reclamation, Bureau of Mines, National Park Service, and the IRS control of business through corporate regulations.
8. Equal liability of all to labor. Establishment of industrial armies, especially for agriculture.
Americans call it Minimum Wage and slave labor like dealing with our Most Favored Nation trade partner; i.e. Communist China. We see it in practice via the Social Security Administration and The Department of Labor. The National debt and inflation caused by the communal bank has caused the need for a two “income” family. Woman in the workplace since the 1920′s, the 19th amendment of the U.S. Constitution, the Civil Rights Act of 1964, assorted Socialist Unions, affirmative action, the Federal Public Works Program and of course Executive order 11000.
9. Combination of agriculture with manufacturing industries, gradual abolition of the distinction between town and country, by a more equitable distribution of population over the country.
Americans call it the Planning Reorganization act of 1949 , zoning (Title 17 1910-1990) and Super Corporate Farms, as well as Executive orders 11647, 11731 (ten regions) and Public “law” 89-136. These provide for forced reallocations and forced sterilization programs, like in China.
10. Free education for all children in public schools. Abolition of children’s factory labor in its present form. Combination of education with industrial production.
Americans are being taxed to support what we call ‘public’ schools, but are actually “government tax-funded schools ” Even private schools are government regulated. The purpose is to train the young to work for the communal debt system. We also call it the Department of Education, the NEA and Outcome Based “Education” . These are used so that all children can be indoctrinated and inculcated with the government propaganda, like “majority rules”, and “pay your fair share”. The philosophical concept of “fair share” comes from the Communist maxim, “From each according to their ability, to each according to their need.”
I’ll end with this clip of Michael Bednarik, former presidential candidate of the Libertarian Party, giving a sardonic and frank interpretation of what Communism is, why it’s evil, and how we practice many of its tenets as stated above:
Filed under: Economics Tagged: | capitalism, economic crisis, free market
