“If we look at the history of the world, a huge fraction of the improvements in standard of living has come because private businesses have created new products, have given people jobs, have generated profits that raise people out of poverty and allow them to live fruitful and productive lives with reasonable standards of living.”
It’s a truth that is rarely-if-ever brought up in school or in day-to-day life. But as Harvard Professor Jeff Miron explains in a new Learn Liberty video below:
We can have much more of that if we step back from the excessive regulation and have a more capitalist system.
Prof Miron corrects three myths about the capitalist system:
- that it favors big business at the expense of individuals and small businesses,
- that it generates unfair distribution of income,
- and that it was responsible for the financial crisis.
Rather than favoring powerful corporations, Miron explains, capitalism means that businesses are forced to compete vigorously with each another, which is good for consumers. That means businesses have to work really hard to continue innovating, to find that next best product that will push them to new heights and more profit.
In reality, capitalism actually produces a fair distribution of income because it rewards the businesses and individuals who can provide something of value to their customers—capitalism rewards hard work, persistence, and out-of-the-box thinking. This applies to everyone, even those at the bottom of the income scale. Prof. Steve Horowitz notes:
Today, companies that barely existed ten years are dominating the market, while former behemoths have withered away.”]
Whether we’re talking about corporations or individuals, Horowitz maintains that capitalism provides them the best chance to improve their financial situation.
Finally, capitalism wasn’t responsible for the financial crisis. Enormous government intervention that subsidized risk and overinvestment in housing is what’s truly to blame. Richard Salsman, a Forbes contributor, explains:
Many people still attribute the financial crisis of 2008 to “greed,” Wall Street, and free-market capitalism, even though the real cause –which has yet to be acknowledged, let alone curbed or removed – was government intervention in markets. This included the Federal Reserve’s disruptive manipulations of interest rates, plus massive subsidies and regulations in housing, banking, and mortgages. For years government policy promoted reckless financial practices (aka, “moral hazard”) and then made things worse by bailing out the worst miscreants.”]
It’s time to speak truth to power and reveal capitalism’s true role in generating prosperity, peace, and happiness. This video is a great start.