Capitalism vs Crony Capitalism

So its feeling like a political rant kind of day. Capitalism! I love it, and you should too. But wait.... that's not what I hear on social media, capitalism is to blame for the 1% capitalism is to blame for income inequality, its what caused the housing bubble, those greedy capitalists getting rich on the backs of poor people! Lets examine this a little further and debunk some of these myths. I'll be posting a lot of links in this one, so please take some time to check them out.


I want to start by saying we don't have capitalism here in America. We have something that resembles it, but most certainly IS NOT CAPITALISM.


Definition of capitalism

1. :  an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

I will concede that here in America we do have private ownership as well as government ownership, but when it comes to prices, production, and distribution based on free market principles we go all wrong. Any time government is used to promote or hinder a business you are no longer allowing the free market to work and capitalism is not allowed to function properly. Any time the government subsidizes a business because it isn't able to succeed it is propping up a failure and not allowing the free market to maintain balance. The whole point of a free market system is to allow supply and demand to determine which businesses are successful and which fail.

So what do we have than? Crony Capitalism, a system that closely resembles capitalism, aside from the fact that it uses the government to manipulate the markets with its power. When you hear people talk about getting the money out of Washington this is what they are usually referring to. Lobbyists from big corporations meet with government officials and offer "compensation" in return for "favors" this is how we end up with laws that make no sense and feel like they aren't in our best interest. This is where money decides the winners and the losers with the help of government overreach. There are plenty of examples of this if you want to look for some, but one that comes to mind for me was a couple years ago when all the major car manufacturers were throwing a fit about Tesla selling direct to consumer. This eliminated a lot of cost for them and made them more competitive (a free market solution to a problem) Rather than the manufacturers finding a better way to compete they went to the government to promote laws against such a thing. (Crony Capitalist approach) This is an example of "protectionism" also check out Bastiat's "The Candlemakers Petition" for a satirical example of protectionism.

Rather than try to explain the housing bubble in my blog and why capitalism isn't to blame I'll just link you to someone with a lot more knowledge than I to tell you why that is a load of garbage.

http://tomwoods.com/ep-561-capitalism-not-guilty-of-creating-the-housing-bubble/


And with that I'll end this rant. The next time you hear someone blame capitalism for problems look deeper than the surface to see if capitalism is really the problem, I would put my hard earned dollar on something else as the root cause and capitalism getting the blame.