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OpenMarket: Morality of Capitalism

  • 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?

  • The Empire Strikes Back!

    February 9, 2015 1:34 PM

    Right-of-center groups have for some time become a bit complacent. Sure the left had the universities, the media, and pop culture—but we had the think tanks. In the world of principled and ideologically motivated policy, we were dominant—libertarian and conservative groups were growing in size and influence. We were—for a while—unchallenged.

    No longer. The left and its financial supporters have realized that gap in their force array and have poured resources into addressing that deficiency. The Center for American Progress—the left’s Heritage Foundation—and the New America Foundation (CAP’s more intellectual counterpart) have become influential counters.

    The most recent example of that is CAP’s new product, Report of the Commission on Inclusive Prosperity“Inclusive” is one of the many adjectives used to modify “capitalism,” joining terms like “crony,” “conscious,” and “creative” to suggest that—with a bit of tweaking—capitalism can be saved. The report resonates with the old themes of the left: “technological progress benefits primarily highly skilled workers” (the shift from skilled long bowmen to muskets? The shift from skilled bookkeepers to offshored data processors?); an obsession with shifts in the distribution of monetary income (very little discussion of offsetting changes in the quality or prices of goods); worries about worker mobility; a view of the market as one of power struggles rather than evolving voluntary arrangements. 

    It’s an interesting glimpse into the way the left is seeking to repackage its messages. Not much new: an appeal to envy, the plea for achieving “creative destruction” in a static economy, an unchanged belief that growth depends on government-led industrial policy, and clichés about technology and education. The left is desperate to retain control of the egalitarian moral high ground. This salvo is unlikely to succeed, but the broader approach should concern us.

  • Educating Tomorrow’s Business Leaders on Markets and Politics

    February 9, 2015 10:44 AM

    This weekend I attended a fascinating event at the University of Maryland’s Robert H. Smith School of Business on the subject of economic inequality. Prof. Rajshree Agarwal put together a program that included a series of short debates by her Executive MBA students, followed by a one-on-one debate on the same questions between University of Minnesota Prof. Paul Vaaler and Ayn Rand Institute Executive Director Yaron Brook.

    Participants argued for and against propositions such as “Taxes (existing and new) should be used to reduce inequality of outcomes” and “CEO pays should be capped at some percentage of the lowest paid employee in the firm.” The MBA students were assigned positions and debated based on recent readings, while Vaaler and Brook argued their own personal convictions on the meaning of economic inequality and the role of both business and government in responding to it.

    Prof. Vaaler emphasized the role of participatory democracy in setting societal norms for questions like the just distribution of wealth, while Brook dismissed concerns about inequality per se, arguing that economic rewards should flow to whomever has earned them, regardless of the resulting distribution. The MBA students followed up with a highly engaged series of questions for both speakers.

    Finally, the students were polled on a series of four questions having to do with inequality and had their responses contrasted with the answers they gave before the debate began. On 3 out of 4 questions, the students moved closer to Brooks’ position—that either inequality is not an issue of paramount concern in the first place, or that public policy measures like capping CEO pay were not well advised.

    While the specific result was encouraging from a free market point of view, the fact that business school students were being challenged on these issues at all is especially important. Business schools do an excellent job training future business leaders in areas like program management and creative problem solving, but don’t necessarily focus on questions of politics and morality that are, nevertheless, also vital to operating a business in a heavily-regulated, mixed economy. Prof. Agarwal, who leads the newly launched Snider Center for Enterprise and Markets at the University of Maryland, is doing an excellent job of challenging her students on these issues. I have no doubt that tomorrow’s shareholders will thank her when her students become CEOs themselves.

  • 7 Quotes about Communism: Take 2

    December 8, 2014 6:38 AM

    A few years ago I assembled several quotes about Communism that I thought would make good epitaphs for it.  Unfortunately, the ideology has turned out to be far from dead.  But the quotes I collected were pretty good, and I figure there’s no better time to dust them off again than today, the 23d anniversary of the dissolution of the Soviet Union.

  • Thanksgiving and Markets

    November 26, 2014 4:03 PM

    When the Pilgrims of Plymouth Colony celebrated the first Thanksgiving on Massachusetts’ Cape Cod, they shared a feast with the Pokanoket tribe, in thanks to God for the colony’s bountiful harvest. As Plymouth Governor William Bradford explained in his memoirs, ending the colony’s initial communal system produced the abundance of the first Thanksgiving, and marked the end to famine and plague, during which half the colony died. Governor Bradford explained that initially, “The strong…had no more in division of victuals and clothes than he that was weak and not able to do a quarter the other could...”

    The key to the Pilgrims’ success? Embrace of the market. Bradford observed the commune overcame its problems:

    The experience…may well evince the vanitie of that conceite of Plato & other ancients, applauded by some of later times; that ye taking away of propertie, and bringing in comunitie into a comone wealth, would make them happy and florishing; as if they were wiser then God. For this comunitie (so farr as it was) was found to breed much confusion and discontent, and retard much imploymet that would have been to their beneflte and comforte...

    So they begane to thinke how they might raise as much corne as they could, and obtaine a beter crope then they had done, that they might not still thus languish in miserie.

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