Capitalism and the Candidates
As a longtime advocate for capitalism, I’ve been considering the prospects for free market ideas in a White House presided over by either of the two major party candidates for president. It’s not an easy challenge. Both candidates, in their own way, misunderstand the need for, and the benefits of, a free economy. And it’s difficult to say which brand of wrongheadedness is more damaging – attacking the best aspects of our current economic system or defending the worst.
Hillary Clinton hasn’t gone after capitalism with the angry hostility of her former opponent Bernie Sanders, but she doesn’t seem to have much sympathy for it either. During a primary debate, the former senator and secretary of state said that “every so often” the American people need to “save capitalism from itself.” But as any entrepreneur will tell you, it’s a far more pressing task to protect the productive sector of the economy from overly burdensome government policies. Clinton doesn’t seem to have much sympathy for business owners either. At a 2014 rally for Massachusetts gubernatorial candidate Martha Coakley, she warned supporters, “don’t let anybody tell you that, you know, it’s corporations and businesses that create jobs.” Who actually creates jobs was left unexplained.
Donald Trump, on the other hand, is famous for building a business empire. In many ways, though, he has been more of a political operative than a capitalist throughout his career. As a native of Louisiana— where, as the locals say, “We don’t tolerate corruption; we insist on it”—I’m familiar with the phenomenon of “business” empires built on the backs of one’s fellow taxpayers. Capitalism, on the other hand, is about voluntary arrangements between parties, not about government influenced or “approved” deals.
Trump has long operated in the shadow zone between government and the market economy, where development deals often involve use of eminent domain, zoning exemptions, and government subsidies. Those operating in that shadow zone accommodate themselves to the reality that political “deals” are far more common than capitalist wealth creation. And as he often reminds us, Trump considers himself the greatest deal-maker of all time. Mastering bargains made with other people’s money might make you rich, but it doesn’t make you a capitalist.
The distinction is important because the more politically regulated a sector of the economy becomes, the less it prospers. In a truly capitalist system, entrepreneurs acquire property by purchasing it voluntarily at a price agreed to by the previous owner. Neither party seeks or receives any subsidies or special treatment. All parties hope to make a profit, but none have any guarantees or expect any bailouts. These kind of honest businesspeople helped create the smart, healthy, and prosperous society we have today. We know it works, because we see the results all around us. If a society could become rich via the government letting everyone pick each other’s pockets, Greece would have the largest GDP in the world.
As columnist Tim Carney points out, Trump and Clinton can be seen as two sides of the same coin, “with Donald Trump representing the buy-side of cronyism, and Hillary Clinton the sell-side.” Both tend to view the rest of us as a commodity to be traded. Anyone who is part of the wealth-producing part of the economy—whether you’re a worker, an investor, or a business owner—is ultimately on the hook for the deals made by those who abuse their influence. It casts us in the role of Boxer, the hardworking horse of George Orwell’s classic satire Animal Farm. Boxer works hard and helps ensure that his fellow animals are fed while Napoleon, the power-hungry pig, insists on controlling the output. After each predictable setback caused by Napoleon’s misrule of the farm, a resigned Boxer vows to work harder, right up until the burden grows too heavy and he’s shipped off to the knacker’s yard.
In today’s politicized world, it may be too much to hope for one of the major parties to nominate a candidate to carry the banner of capitalism. Ultimately, though, we don’t need a CEO in the White House. We simply need a leader with the common sense and humility to understand that government, as President Reagan put it, is more often the problem than the solution. My colleague Wayne Crews likes to say that you don’t have to teach the grass to grow, you just have to move the rocks off the lawn. And that’s what a reasonable government would do—remove barriers to innovation and entrepreneurship rather than trying to engineer prosperity via thousands of laws, regulations, programs, and penalties.
Until those politicians come along, defenders of capitalism will need to echo Boxer’s refrain: “I will work harder.”
Originally posted to Forbes.