Civic Issue #4

“Well first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade. If you want to know where the masses are worse off, worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear, that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by the free-enterprise system.” –Milton Friedman

For its entire history, Capitalism has always been under scrutiny by critics of the system for multiple reasons. Critics say that the gap between the rich and the poor is too large under a capitalist system. They say that capitalism allows the top 1% to get richer and allow the poor to get poorer. Critics also say that there capitalism also ensures that there will never be economic equality under the system. When you look at those arguments, they all sound very similar as the main criticism on capitalism is indeed “economic inequality.” Now the word inequality is always a considered a terrible word in the English language, and rightfully so, but only when it comes to social issues. Throughout American history there has been unjust social inequality on issues of race, gender, religion, and sexual orientation. Such social inequality is morally wrong and us as a nation still has a long way to go to make everybody equal socially. And that is why the word “inequality” in general always turns off so many people. However, the main point of this article is not to talk about the wrongs of social inequality but how capitalism’s economic inequality is the best economic system for any nation.

Now, that last sentence might anger many people. However, in reality, the statement is absolutely true and can be backed up by facts. But that does not mean that the word “economic equality” is unusable in a capitalistic society. In a capitalist society, not everybody is going end up with the same amount of wealth and income, but that does not mean that every child shouldn’t have equal opportunities to be successful in the future. This is where the government can actually help by investing more in education and technical programs. Yes, children with wealthy parents will have a slight advantage as their parents will afford to invest in their kids more. However, higher investment in public education creates stronger schools and smarter individuals to give children of lower-to-middle class parents more of an equal opportunity to compete and be successful in a competitive world. Not every millionaire is the son or daughter of a another millionaire, and that’s why equal opportunity in capitalism is so great. It gives everybody the opportunity to achieve their wildest dreams through hard work no matter where the individual starts off.

In an ideal world, everybody is wealthy, lives comfortably, and doesn’t have to worry about money ever. But since there is no economic system created that can provide that for society, its at least better to have a system that allows some individuals to work hard to achieve that goal. And to achieve that goal, it is vital for government to only act as a referee for the economy rather than a manager. More restrictions on a harder working individual only restricts the individual from achieving that goal and restricts the individual to give back to people who are less fortunate. In a capitalist system, the government should provide welfare to those who need it to a certain extent. Welfare is key to a society to ensure that every citizen survives on the generosity of the government until they can get back on their feet again. However, there should be a system where welfare is only given to those who really need it and are trying to find work again. This is so that there is no mentality that a person who is able to work is vouching off a government check the rest of his or her life just to be lazy and not be a productive member of society.

But contrary to what many critics say, capitalism is actually the best system of government to reduce poverty. Factually, in socialist nations such as China and the former Soviet Union, unemployment tends to be very low, such as 2% in the former USSR compared to the 5% we currently have in the United States. In the Soviet Union however, while unemployment was extremely low, they still had a much higher poverty rate than we did during the Cold War as the communist government could not afford to allow the lower class to be paid an amount that would take them out of poverty. In a socialist economy, the economic pie is divided into rather equal amounts. In a capitalist economy, the economic pie expands so that the section of those who are in the lower class are still more fortunate than the lower class of socialist economies.

Are there aspects that are wrong with capitalism? Absolutely. Capitalism does allow greed and in theory could create an aristocratic society. But that’s where Democracy comes into play. The fact that citizens can vote for their leaders ensures that an aristocratic society in capitalism does not exist. Are there still greedy individuals in a capitalist society? Well yes, but as Milton Friedman stated earlier, greed exists in every country no matter if they are capitalist or socialist. While every economic system has its problems, Capitalism is by far the best. Capitalism is the best system because “A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.” -Milton Friedman