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OpenMarket: Morality of Capitalism

  • Bastiat Society Rallies Business Leaders Together

    July 27, 2015 11:06 AM

    My venerable colleague Fred Smith and I just returned from the Hoosier State, where we were honored to be guests of the Indianapolis chapter of the Bastiat Society. Our event featured a few dozen local business leaders: executives, attorneys, and entrepreneurs, as well as a few elected officials. We all gathered to discuss the role that businesspeople can play in defending the free market and reviving an appreciation for the virtues of capitalism.

    It may be surprising to some, but not every business owner is a Hayek-quoting ideologue who has a photo of Ayn Rand on his desk. The majority are focused overwhelmingly on their customers, employees, and the day-to-day work of running their company. We have found that most business people spend very little time on politics in general, much less the intellectual arguments over the morality of capitalism and the ideas of classical liberalism.

    At the same time, we have also found that it’s difficult for think tank types and academics to defend the enterprise of capitalism without at least a few actual capitalists speaking up as well. Fred, in his essay “Countering the Assault on Capitalism,” explains this dynamic and its history quite well. The late economist Joseph Schumpeter theorized this conflict as far back as the 1940s – most business leaders would stick to what they know best, and leave the public debate over morality and economics to others. With discussions of the proper role of government dominated by groups with little sympathy to private enterprise, the rise of big government was easy to predict.

    Fortunately, we now have a robust cadre of scholars as well as a growing network of free market professionals, including the members of the Bastiat Society around the globe, as well as members of groups like the Adam Smith Society and Benjamin Rush Institute. With events like our dinner this week, we’ll be working to bring those two groups together to stand up to the ever-increasing expansion of the regulatory state.

  • What Cartoons Can Teach Us about Capitalism

    July 17, 2015 9:00 AM

    The Freeman has an excellent article by FEE advisory board member Robert Anthony Peters on economic lessons in popular culture—in this case focusing on the wealthiest of Disney’s characters, Scrooge McDuck. It may seem odd to look for pro-capitalist storylines from a character named after literature’s most famous miser, but Peters explains how the character’s originator, Carl Banks, made Scrooge McDuck an exemplar of the virtues of hard work, honesty, and strategic thinking.

    In a series of stories that highlighted economic concepts like subjective value, mutual gains from trade, and entrepreneurship, Banks sent Scrooge and his grand-nephews on a series of adventures in which they manage to escape peril and achieve success through quick thinking and smart financial decisions. He debunked utopianism a la Jonathan Swift when the gang visits “Tralla La,” a mystical land where greed is allegedly unknown, and showed the potential of free exchange in “Maharajah Donald,” a story in which Huey, Dewey, and Louie start off with an old pencil stub and end up, after a series of shrewd trades, with enough money to buy a steamboat ticket all the way to India.  

    And Banks certainly didn’t stumble upon these pro-market parables by chance. When he was writing for Uncle Scrooge comics, he knew he was confronting the collectivist trends of the mid-20th Century, once saying “I’m sure the lesson I preached in this story of easy riches will get me in a cell in a Siberian gulag someday.” Fortunately Banks escaped the gulag, and generations of viewers have been enriched because of it. Scrooge McDuck’s persona as a frugal but talented and honorable person even persisted into the 1980s cartoon series DuckTales, in which Uncle Scrooge delights in a fortune made through wise investments and honest deals.

    If you’ve got young children, you might want to brace yourself for 2017, when Disney will be launching DuckTales re-boot to be broadcast on Disney XD. Let’s hope the spirit of Carl Banks will continue to guide the writers and producers in the 21st Century version.

  • Do Conservatives Really Care about the Poor?

    July 15, 2015 1:15 PM

    American Enterprise Institute president Arthur Brooks has a new book out this week, The Conservative Heart: How to Build a Fairer, Happier, and More Prosperous America. In the past, Brooks has expressed concern that a large portion of the American public doesn’t believe that conservatives (and libertarians) have much of a heart—that they don’t care much about the problems of the poor and disadvantaged. He has made countering this impression a major part of AEI’s mission, sponsoring events like AEI’s “Vision Talks,” in particular this one from last June, titled “A Conservative Vision for Social Justice,” which featured Brooks himself as well as former New York City social services guru Robert Doar and Bloomberg View columnist Megan McArdle.

    In the book, Brooks observes that the spread of the institutions of free market capitalism has been consistent with dramatic reductions in poverty around the world—the percentage of people living in “starvation-level” poverty, for example, had declined 80 percent since 1970. And he names the five institutions that he thinks have been most important: globalization, free trade, property rights, the rule of law, and entrepreneurship. With this history of increasing prosperity, one would think that a capitalist economic system would be pretty popular among advocates for the poor. But, of course, Brooks reminds us of the paradoxical reality that we see today.

    …it is precisely the loudest champions of free enterprise—the heroes of poverty relief in the developing world—who the public trusts least to fight for struggling people here at home. Conservatives have the most effective solutions for human flourishing in our intellectual DNA. Our ideas have lifted up people all over the world. But the American people do not trust us to put those principles into practice to help those who need help right here.

  • Join the "I, Whiskey" Team

    July 13, 2015 4:41 PM

    The Competitive Enterprise Institute's newest film project, I, Whiskey: The Spirit of the Market, is currently in production, and you can help make it a success. We’re supporting the project with a crowd-funding campaign at Indiegogo, the largest global fundraising site, just launched today.

    I, Whiskey is our next installment in the I, Pencil Film Series. It will be a story about the power of human ingenuity, the market, and how these forces work together to give us the many wonderful innovations and products that enrich our lives every day.

  • Advocating Free Trade, Not Foreign Aid for the World's Poverty

    July 1, 2015 3:25 PM

    A Review of the Poverty Cure Documentary Series

    Poverty Cure is a six part documentary series directed and hosted by Michael Matheson Miller, produced by Acton Media, and was released on December 5, 2014. The film is a project of Poverty Cure, a Christian-based organization that puts together a network of institutions in an effort to defeat poverty through the means of capitalism and entrepreneurship.

    This documentary series is primarily targeted at Christians who are presumably active in their faith-based communities. It proposes that Judeo-Christian values can serve as a beneficial moral code for entrepreneurs and businessmen. The series argues that this moral code will guide and serve as the means for businessmen to run companies effectively to serve the impoverished by providing them work and a place to start businesses of their own.

    The Christian values are reiterated throughout the entire series, and at times the rhetoric distracts from the series’ main argument. However, once the viewer is aware of the organization’s values and their target audience, the Judeo-Christian language seems more reasonable.

    That aside, the series argues its case successfully, convincing at least this viewer that the developing world does not need charity, foreign aid, or philanthropy. Further, it demonstrates that developing countries and poverty-stricken populations require a free market society, open trade, and accessible investment opportunities.

    From the start, the series does well to discredit celebrity campaigns that “combat poverty,” massive foreign aid campaigns, and substantial corporate donations, which is also known as “dumping.” We see that these actions cripple local economies of developing nations. The series uses the example of a Rwandan farmer who provides his local market and community with eggs. When an aid campaign group decided that they were going to continually donate eggs to the village, they effectively drove the farmer out of business. The community then became dependent on egg donations. Consequently, when the aid campaign stopped donating eggs, the community was unable to react to the change and was forced to import eggs from another region. While the intentions may be good, they can actually cause local businesses to lose their customers, subsequently crippling the local economy by stagnating or even reversing business growth.

    The series admits, correctly so, that people start these campaigns because they have good hearts and good intentions; they want to end suffering in the world and help those who are impoverished, so they think the easiest thing to do is donate goods and services to these people. However, Poverty Cure makes it evident that these strategies do not work, and can actually do more harm to the community.

  • 2015 CEI Dinner Movie: The Magnificent 7

    June 18, 2015 2:23 PM

    Complete with cowboy boots, wagon wheels, lamps made out of whiskey bottles, and wanted posters of the most “notorious” U.S. regulators—if you’re talking to a CEI staffer—this year’s annual dinner embodied the theme: Bourbon and BBQ Bash.

    Dinner guests were not disappointed with this year’s dinner movie production inspired by some of our favorite western movies, featuring some of CEI’s best work, and of course, starring some of CEI’s most beloved staffers.

    Watch the 2015 CEI dinner movie, “The Magnificent 7,” below:

  • Excerpts from Carly Fiorina's Address at CEI's Annual Dinner

    June 18, 2015 2:17 PM

    Keynote address by business and nonprofit leader Carly Fiorina delivered at the Competitive Enterprise Institute’s annual dinner on June 11, 2015.

    Excerpts from text as prepared for delivery:

    When I was a little girl, my mother told me: “What you are is God’s gift to you. What you make of yourself is your gift to God.” My mother and father would encourage me always to work hard, to aim high, to find and make the most of my gifts. I didn’t feel gifted as a young girl or a young woman, but my mother’s words seemed like both a promise and a challenge.

    I would start my career as a secretary in a little nine-person real estate firm. One day, two men who worked there approached my desk and said: “We’ve been watching you and we think you can do more than type and file. Do you want to learn about business?”

    They saw potential and possibilities in me and so I came to see these things in myself.

    Whether it is in business or in charity or in any other human endeavor, my experience tells me that human potential is limitless. Usually, it is underutilized or worse, squandered and wasted. It is the only limitless resource we have in this world, and it is all we need to solve every problem.

    Last week I was at a fundraising event where donors brought their children: some sons and many, many daughters. At the end of the event, a little girl approached me. She asked: “Have you ever wished you were someone else?” I answered: “I used to sometimes when I was younger, but now I know that I am who God intended me to be. Have you ever wanted to be someone else?” She looked away and said: “I don't know.” She was 10 years old and at that age “I don't know” means “Yes.” So I reassured her: “You are exactly who God wants you to be. Don't wish to be someone you are not. Find out who you are.”

    It has been 95 years since women got the right to vote. 50 years since the Feminine Mystique. 16 years since I was named the first female CEO of a Fortune 50 company.

    There are only 23 female CEOs in the S&P 500. Fun fact: there are more CEOs named John than there are women. Among those same companies, there are only 19 women for every 100 Board members. 84 percent of women strongly agree that women can lead just as effectively as men. Only 43 percent of men agreed with the same statement. Companies headed by male executives receive 98 percent of all venture capital funding in Silicon Valley. That’s $1.88 billion dollars—compared to just $32 million for women. Recent studies from the NYU Child Study Center suggest that a girl's self-esteem peaks at age 9 and declines from there.

    I believe it is time to have a conversation about the state of women in America. Women represent half of all human potential. Women around the world continue to be subjugated and marginalized. Here in this country where women have more opportunities than anywhere else on earth, we still can make our country a better place by fully tapping the potential of every woman.

    Today, women hold nearly 48 percent of all US jobs, up from 37 percent 40 years ago. By 2011, this relatively small increase in the workforce accounted for one-quarter of our GDP. In other words, more than a stunning three and a half trillion dollars was generated by the increase in women’s participation in the economy: greater than the GDP of Germany and more than half of the GDP of both China and Japan. Additionally, companies with more women on their boards outperform their competitors.

    In other words, the facts are in and the data is clear. Realizing the potential of women isn’t just the right thing to do—it’s the smart thing to do.

    **********

  • How Capitalism Created the Modern Family

    April 22, 2015 1:07 PM

    Prof. Steve Horwitz of St. Lawrence University has a fascinating article up at MarketWatch, in which he argues that many of the major changes in family structure and gender roles we have seen over time are primarily a result of market forces and increasing prosperity. Serendipitously, I recently attended a lecture by Prof. Jerry Muller, presented by the Snider Center for Enterprise and Markets, in which he made many of the same connections.

    The Industrial Revolution, for example, created new opportunities for wage labor outside the home and family farm, so all sorts of poor people—men, women, and children—ended up taking those jobs to contribute to the household’s income. As real wages rose with increased productivity, more men were able to become sole breadwinners for their entire family, and children and women were able to return to the domestic sphere. Many of those children went to school rather than doing any physical work, and women generally assumed the role of what many people today consider the “traditional” homemaker.

    But in many ways that tradition was short-lived. As an array of labor-saving devices for the home proliferated in the early 20th Century, women were again seeking career opportunities outside the home. Horwitz points out that this has led, for example, to more women working with young children, a trend that itself has been made possible because women, in recent decades, have been having fewer children on average, making paid daycare a more affordable option.

    I suspect Horwitz and Muller might disagree on the second half of Horwitz’s MarketWatch article that applies the same analysis to sexual orientation and individual expression, but the overall theory—that “social” trends have a lot more to do with economic effects than many historians and sociologists acknowledge—remains a compelling one.

  • Capitalism Makes a Comeback on Campus

    February 25, 2015 12:15 PM

    There’s exciting stuff going on in the world of higher education these days for fans of free markets. Just last week, the University of Arizona’s Center for the Philosophy of Freedom received a $2.9 million grant from the John Templeton Foundation to help build a network of philosophy, politics and economics (PPE) programs at several universities around the world.

    Closer to home here in Washington, D.C., the new Ed Snider Center for Enterprise and Markets at the University of Maryland is making a strong showing out of the gate. Earlier this month the Center hosted a debate over income inequality and public policy including current Executive MBA students and outside speakers Yaron Brook and Paul Vaaler. The video content from that event is well worth re-visiting for anyone who was unable to attend in person.

  • When Kittens Explode

    February 20, 2015 11:31 AM

    A fascinating Kickstarter funding campaign just ended yesterday, and it was a major one. A new card game with the alarming title of “Exploding Kittens” (don’t worry—no actual kittens were harmed) has managed to raise $8,782,571 over the last 30 days. This makes it the third most highly funded Kickstarter campaign ever, and the one with the most total backers.

    Exploding Kittens is a wonder of the Internet age—a party game full of goofy images and bizarre characters that was 1000-percent funded in less than an hour of its launch. It’s unlikely to have attracted the venture capital bigwigs from Shark Tank or the product acquisition VPs from Parker Brothers and Hasbro. The title alone is edgy enough to make your average Toys ‘R’ Us executive nervous, yet it’s clearly a product hundreds of thousands of people are willing to pay for. Thank you, Internet.

    The advent of online crowd funding, of which Kickstarter is merely the best known platform, has become one of the most exciting developments in recent business history. At a time when voices from the left are again arguing that the history of the “self-made man” in America is built on myth, the projects that have been successfully crowd funded demonstrate that a single person—or a small team—with a good idea can produce something customers love and make some good money in the process. What could be more American than that?

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