It seems to me, very few people the world over actually understand what the market system really is, most have fallen into the trap set for them by new class Marxists, that the market is evil and government is good. As long as the new class elite can maintain the fiction they spew we are on a path to predestined serfdom. The global elite quake at the thought that the hoi polloi discovering the ruse. If enough of us did understand what real capitalism is, we wouldn’t stand for their bigger government solutions that never work, but only make the problems worse. That is why we are constantly bombarded by spurious arguments like, the gap between the rich and poor, the market needs regulation, capitalism only benefits the rich, the wealthy got that way by stealing, etc… always made by the uber rich to blind us to the truth that we haven’t lived under a market system anywhere on the planet for generations. Ignorance may be bliss, but it is the best way to keep us in a state where our slavery is all but guaranteed.
What the world struggles under today is called “welfare state capitalism.” It is to the market system as bone cancer is to astrology. Welfare state capitalism is a system where the government redistributes the profits of free market interactions, from those who worked and took risks for them, to those who didn’t. In doing so, the government gains terrific power to destroy businesses that are not politically favored, enrich those who are, hold people in generational poverty, wipe out class mobility, destroy the family unit and create a permanent upper class… all in the name of fairness.
In a real market system, people get rich by taking risks, providing service and value to their customers. Under a welfare state however people get rich by having political favor. When those with political favor fail, they are bailed out by the government, (you and I), but in a market system, failure is paid for by he or she who fails. Moreover, failure in a market system leads to new ideas and greater efficiency, while in the welfare state, failure leads to more of the same, since there are no consequences to the elite, only the people. That is why too big to fail banks were bailed out with enough money to pay off three quarters of all the home mortgages in the US, and QE3 was sufficient to create eighty five thousand millionaires a month! Meanwhile, you and I were stuck with falling house values, wages and financial repression. All because of the bubble created by government policies. Not a real market by any measure!
In a functional market system deflation is the norm. That is one of the ways you can be certain that we have not lived under a market system for generations. The cost of those things we need and desire gets cheaper and cheaper. This is because the market system drives down the cost of everything by increasing productivity. That increase in productivity also has the effect of raising real wages. A carpenter with a nail gun and precut studs can frame a wall in seconds, where a carpenter, even a much better trained one, using a hand saw, hammer, nails and rough cuts, takes an hour. That increase in productivity lowers the cost of the final product even as it raises the wage of the carpenter. Raising his or her standard of living and making the work easier and less taxing on the body.
In welfare state capitalism however deflation cannot be allowed. Government runs a perpetual deficit to maintain the illusion of a functional market and prosperity through bubbles, and so, if the elite were to allow the market to do it’s normal operation and deflate the cost of everything, that huge debt would quickly become unserviceable. Inflation is needed to evaporate the debt through currency devaluation. Without inflation lowering your wages and driving up the cost of everything, the government would collapse, as many have in the past, and the elite would be out of their cushy high paying jobs. A disaster that the elite cannot allow to happen. So they inflate bubbles, watch them pop, destroying the meager wealth hard working people have saved up by the sweat of their brow… and the government inflates the next bubble, to maintain the illusion of economic growth.
Welfare state capitalism is a system where the elite decide who gets rich and who doesn’t. It undermines the market’s innate class mobility. The old saw, “shirts sleeves to shirtsleeves in three generations,” is rendered inert by the state’s interference, allowing the half witted grandchildren of the elite to remain wealthy, despite themselves. This is done by the state requiring everyone to get permission from the state for every economic activity. Those who are the children and grandchildren of the elite not only get permission, but the largess to engage in market activities, (as in Solyndra), while the children of the plebeians have to fight, pay bribes and struggle to get even the smallest of permissions. Crony capitalism is created this way.
Harry Truman said, “Anyone who gets rich in politics is a God damned crook!” Since the all powerful welfare state decides who will get what, the benefits will naturally flow to politicians, their cronies and family. Others who would compete are frozen out. Ways to measure this… are the number of small businesses in an economy, how many are started in a year and the rate of expansion of small businesses to medium and large. Moreover, people will spend absurd amounts of money to gain political office… so they are the ones to decide who gets what, insuring their business isn’t destroyed, and giving them the power to destroy their competitors. In a country where welfare state capitalism is at it’s apex, small businesses cannot compete with large ones because of political favor, and therefore, there will be few small businesses, and most of them will be engaging in illegal activities, ie, doing business without the proper licenses, paying employees under the table, selling non pasteurized milk, exceeding the weight limit of a road, idling a truck so a worker can get out of the cold, hauling without the proper permits, cutting hair without a license, etc…
The new class elite have to keep us in the dark about the market system. To that end we are inculcated in a doctrine that has no basis in reality… that crony capitalism is the market system, that we need the elite to regulate the economy to protect us from it, we are taught to hate those trying to get rich by providing value to us, and love those who get rich by political action. Our children are programmed in school to have a visceral reaction to the term “capitalism,” as a bad thing, and socialism is lionized as the solution to all the world’s problems. The bloody history of socialism is glossed over with absurdities like, “Marxism has never really been tried.” If most of us understood the fiction we have been inculcated with, is just that, fiction, we would demand real capitalism, and that cannot be allowed. The elite have too much at stake… their power, wealth and prestige.