CAPITALISM NOT ONLY PROMOTES FREEDOM. CAPITALISM IS FREEDOM.
I’d like to start this week’s newsletter by first defining the term ‘capitalism’, by capitalism I mean, an economic system based on the private ownership of the means of production and their operation for profit, with minimal interference from the state. A system that is built on a free exchange of goods, services, ideas and money, and where the distribution of these is based on supply and demand, not central planning.
On the contrary, ‘socialism’ simply means that the government owns and manages economic resources such as money and other forms of capital. The citizens of the country work to generate wealth, which is then distributed to everyone. It is characterized by workers’ self-management of the means of production and is based on the premise that what is good for one city is good for all of them.
The environment is much better in capitalist countries than in planned economies. The American G.D.P. has more than doubled since 1970, while energy consumption has risen only modestly. On the other hand, the greatest environmental degradations are committed by planned economies like Russia and China
Socialist countries restrict the choice of the citizens in a truly authoritarian fashion. They deny an individual’s right to life, liberty and the pursuit of happiness.
Government ownership of the means of production is very ineffective take Cuba and Venezuela for example. It diminishes the worker’s incentive to work hard and massively reduces the costs of production.
Socialism eliminates profit motives that drive people to learn, improve and alleviate themselves from poverty.
Cuba has had a socialist political system since 1959 based on the one-state – one party principle. Cuba is constitutionally defined as a Marxist–Leninist socialist state and is guided in part by the political ideas of Karl Marx, Friedrich Engels, and Vladimir Lenin. The average monthly salary is projected to trend around 1050.00 CUP/Month in 2021 which converts to 43.75 USD.
The Cuban government controls about 90 percent of the official economy, says Jorge Salazar-Carrillo, director of the Center of Economic Research at Florida International University in Miami.
In Cuba, which has what is considered a well-planned economy and has state-run industries, you cannot live with your own salary.
Luna Cardenas- an ex-doctor in Cuba isn't eager to return to the government payroll, she is currently working for a non-profit in Havana that promotes cooperation between U.S. and Cuban artists and is making 300 CUCs a month which is ten times what she made as a doctor.
“It's not fair at all, because I spent a great part of my life to be a good doctor, and I can't work as a doctor because I have to pay for a lot of things,” she said.
Ricky Rodriguez, a math professor, quit teaching because he says he was making peanuts.
Now, he sells them, as snacks, and makes 10 times as much as he did before.
Many Cuban citizens turn to prostitution or end up selling contraband to make ends meet.
The ‘labor theory of value’ which is very popular among socialists, states that the amount of work that you put into your labor dictates the value of labor, which in no way is sensible since it could basically mean that a laborer working day and night on a building should be earning more than a very successful entrepreneur.
Ben Shapiro, in one of his speeches at a university, responded to a question by a socialist who gave the example of Milton Friedman, who had once said
“Look at this lead pencil. There is not a single
person in the world who could make this pencil.
Remarkable statement? Not at all. The wood
from which it's made, for all I know, comes
from a tree that was cut down in the State
of Washington. To cut down that tree, it took
a saw. To make the saw, it took steel. To
make the steel, it took iron ore.”
The socialist, argued that without the workers, the owner would be left with only raw materials which would be worthless, he then went on to argue that majority of the profit goes to the owner and the investors, whereas, the workers are left underpaid,
Ben replied, ‘The owners and the investors are the ones carrying the risk not the worker, and thus, they are the ones that reap the benefit. If the company were to go bankrupt the owners would be the ones paying off the debt, the worker does not pay off the debts. It is the owner who risks millions of dollars buying patents for machinery and visualising the company to make the workers productive, the labour without that machinery would have been useless. Who do you think put more in the owner who spent millions of dollars of his own money buying all the machinery, leasing the place making sure there was a management structure, doing the LLC formation, making sure all the tax code was in compliance or you standing outside because you can stick a piece of graphite into a piece of wood.’
“Right now, under capitalism, vegetarians and vegans have more options every year. But there aren’t very many of them. Five percent of Americans are vegetarians. Three percent are vegans. Would “the workers” find a societal need to produce vegan meat or milk substitutes? No one knows the answer.
What if a majority of workers decided that only English-language commercial reading material should be printed in the United States?
Socialists are attuned to the ways individuals are vulnerable in capitalism but blind to ways that it frees us from the preferences of the majority.”
- The Atlantic
Friedrich Hayek puts it this way, “Our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes, we can turn to another. If we face a monopolist we are at his absolute mercy.”
🔗 WEEKLY HIGHLIGHTS
check out:
SOURCES
https://www.theatlantic.com/ideas/archive/2018/08/a-risk-that-democratic-socialism-poses-to-all-minorities/566528/
https://www.nytimes.com/2019/12/05/opinion/socialism-capitalism.html
https://www.cbc.ca/news/world/cuba-government-jobs-black-market-1.3878622
Ben Shapiro - Capitalism Unfair to Workers
Great points! Have you heard about the baseball card analogy? Similar to the pencil, paints a really good picture of why central planning usually backfires, even if you were to pick the smartest possible people to plan it.