Tag: capitalism

Harris: Trump Is a ‘Tyrant’ Killing Capitalism to Stroke His ‘Fragile Ego’

Monday on MSNBC’s “The Rachel Maddow Show,” former Vice President Kamala Harris called President Donald Trump a “tyrant” for demanding concessions from law firms, universities and entertainment companies.

She claimed that destroys capitalism.

Harris said, “I am a lifelong public servant, and but I’ve worked closely with the private sector over many years, and I always believed that if push came to shove, those titans of industry would be guardrails for our democracy, for the importance of sustaining democratic institutions. One by one by one, they have been silent. They have been, you know, yes, I use the word feckless. They’re it’s not like they’re going to lose their yacht or their house in the Hamptons. And here’s the thing. democracy sustains capitalism. Capitalism thrives in a democracy and right now we are dealing with, as I called him at my speech on the ellipse, a tyrant. We used to compare the strength of our democracy to communist dictators. That’s what we’re dealing with right now in Donald Trump.”

She continued, “These titans of industry are not speaking up. Perhaps it is because his threats and the way he has used the weight of the federal government to take out vengeance on his critics is something that they fear.”

Harris added, “Perhaps it is because they want to please him and nominate him for a Nobel prize. Perhaps it’s because they want a merger approved, or they want to avoid an investigation. But at some point, they’ve got to stand up for the sake of the people who rely on all of these institutions to have integrity and at some point be the guardrails against a tyrant who is using the federal government to execute his whim and fancy because of a fragile ego.”

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China Capitalism Myth: CCP Controls Companies, Capital, and Stock Market

China apologists often claim that China is no longer communist, but such claims are complete nonsense, reflecting an incredibly selective and superficial analysis of what the reality is in China. For one thing, the ruling party is the Chinese Communist Party (CCP). And the name was not chosen arbitrarily. It is a communist country.

Apart from the CCP, there are 8 minor parties, but these parties have to concede to the ruling role of the CCP, meaning it would technically be illegal for one of them to plan or even suggest that they should replace the CCP as the ruling party. So politically, China is 100% communist.

As for the economic system, with the state controlling more than half of all companies, it can hardly be considered capitalist.

Most media and many economists mistakenly claim that the Chinese Communist Party (CCP) controls only a limited share of the economy, citing the percentage of firms directly owned by the state. But focusing narrowly on state-owned enterprises (SOEs) hides the much broader reality: state control extends through multiple layers of ownership, networks, and connections, reaching the majority of China’s corporate sector.

Of 40 million registered firms in China, about 391,000 are 100% state-owned (SOEs), 629,000 are at least 30 percent state-owned, and nearly 867,000 have some level of state ownership. Altogether, the capital of firms with state stakes accounted for about 68 percent of the economy in 2017.

State owned firms can own significant shares in other firms, extending the states reach. Scholars have identified 978,609 firms within three degrees of separation from an SOE and more than 3.5 million firms indirectly tied through joint ventures. Among the top 1,000 private owners in China, 78 percent are state-connected, 63 percent directly and 14 percent indirectly.

If mixed-ownership models are included, where SOEs hold a 30 percent stake or maintain indirect equity ties, the total number of state-connected firms ranges from 600,000 to 3.5 million. SOEs also use enterprise groups to spin off subsidiaries, list them on stock exchanges, and bring in private capital while retaining state control.

This state dominance has accelerated. Between 2000 and 2019, the number of private owners directly connected to the state nearly tripled, while indirect connections grew even faster. By 2022, 71 percent of Chinese companies on the Fortune 500 list were state-owned, rising to 84 percent by asset size. By 2021, 54% of China’s largest firms were state owned.

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Why ‘Eating The Rich’ Undermines Everyone’s Prosperity

A recent report from The Heritage Foundation argues that “the wealthy” are not “idle idols” but are instead owners and investors of wealth-creating ventures.

Through their ownership of productive assets, they are the driving force behind overall wealth creation in the country and, in some cases, the world.  The report reveals a crucial truth that is often lost in today’s political rhetoric: the overwhelming majority of American wealth among the most wealthy (88.2 percent) consists of assets linked directly to businesses and economic production. Despite the commonly accepted belief that millionaires hold their money in real estate or “yachts, sports cars, private planes, gold bars, and jewelry,” most of that wealth is investment, not consumption goods.

Building on this important truth, we emphasize two additional insights that may inform our current policy debates, particularly as the Trump administration seeks to expand government ownership stakes in private companies.

First, we must acknowledge that capitalism, for all its flaws in practice, is fundamentally a system that rewards serving others, not exploiting them.

Look at Henry Ford: he benefited tremendously from figuring out how to mass produce cars such that the common man was able to afford a vehicle. But I submit to you that, while he became fabulously wealthy from his innovations, the real winners of this exchange were people like you and me. Everyday Americans received better access to transportation, fundamentally transforming our lives. People like Ford already had access to this then-privilege, so while he may command more wealth as a result of his efforts, the efforts themselves improved our lives much more than his.

The people who create medical treatments and vaccines against disease also often become wealthy. But when people all around the world are freed from contracting diseases, enjoying a fundamentally better and happier life, the wealth gained by their inventors seems small. 

Or think of tech moguls like Bill Gates, Steve Jobs, and Tim Cook. By bringing computing power to the masses, they fundamentally transformed the way we all live our everyday lives.

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The Chicanery Behind Inequality Data

If self-described progressives decry anything more fiercely than poverty, it is income and wealth inequality. Some have even suggested that they would prefer low-income equality to inequality, regardless of how affluent the lowest level was. What counts is the gap.

The terms poor and low-income are relative, of course. We’d be better off talking about the poorer and lower-income. Also, it’s better to be poor in America than anywhere else if we factor in immeasurables such as good prospects. However, some people don’t understand the point or perhaps don’t want to understand it. Reasonable people ask, “How am I doing and how can I do better?” not, “How much less am I making than Jeff Bezos and Elon Musk [but not Taylor Swift or Juan Soto]?”

So let’s talk about inequality—not in the legal and political sense but in terms of income and wealth. You can’t go a day without hearing politicians and commentators complain about the top 1, 10, or 20 percent. Those complaints seem to be backed up by government statisticians and parts of the economics and sociology professions. Dissenters are rarely invited on television and podcasts. The impression given, to which compassionate laypeople will be vulnerable, is that America is riddled with extreme, even obscene (so Bernie Sanders says) inequality. Is it true?

Economists Phil Gramm and Donald Boudreaux make an overwhelming case against it in their book, The Triumph of Economic Freedom: Debunking the Seven Great Myths of American Capitalism. Gross inequality is one of those myths. (Last week I discussed their chapter on poverty.)

“[T]he claim that income inequality in America is high and rising on a secular basis is almost universally accepted as true,” Gramm and Boudreaux report. But: “Census numbers overstate the difference between the top and bottom quintile household incomes by over 300 percent.” Can they back up that claim? Let’s see.

The U.S. Census Bureau tells us that in 2017 the average income of households in the richest quintile (the top 20 percent) was 16.7 times greater than the average in the lowest quintile. No one can say, without other information, whether that number is appropriate or not. But is it accurate?

“The official Census data also show,” Gramm and Boudreaux continue, “that income inequality has grown on a secular basis and, by 2017, was 22.9 percent higher than in 1947.” That’s not all. According to the Organization for Economic Co-operation and Development, the United States has the worst record on this count among the wealthy countries—and it’s been getting worse.

Let’s pause for a word about the morality of income and wealth inequality. Individuals contribute unequally to the production of wealth, which improves living standards even for those who contribute little or nothing. So why would anyone expect their incomes and wealth to be equal? Now back to our regularly scheduled program.

Gramm and Boudreaux disclose a puzzle about the government’s numbers: “According to the official statistics of the nation’s two leading statistical agencies, the bottom 20 percent of American households had an average income of $13,258 in 2017 yet, in that same year, consumed $26,091 of goods and services.”

This fact raises the obvious question of how the bottom 20 percent of households can consume twice their income. This extraordinary gap between the official measure of income and the official measure of consumption has grown more or less steadily since 1967, when funding for the War on Poverty began to ramp up.”

That indeed is a puzzle. Could it be that the government agencies do not count everything that’s relevant? 

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The “Libertarians” Who Say the Private Sector Is the Real Threat to Freedom

From its very beginnings in the seventeenth century, the classical liberals (also known as “libertarians,” or, historically, “liberals”) have been primarily focused on limiting the powers of the state. It has been state powers—not the powers of church or family or employer—that has been the great occupation of the classical liberals. After all, the movement was born in opposition to mercantilism and absolutism.

In the classical liberal view, it has always been state power that is fundamentally coercive and violent, and is the greatest threat to freedom and property rights. Moreover, because the state is monopolistic by nature, the state can exercise its powers untroubled by any legal opposition within the state’s territory. As such, the state is the organization that is positioned to most frequently and potently violate the property rights of its subjects with impunity. So, it is not surprising that historian Ralph Raico states that classical liberalism has been historically focused of preventing states from regulating the private sector, also known as “society.” In classical liberal thinking, Raico tells us, “the most desirable regime was one in which civil society—that is, the whole of the social order based on private property and voluntary exchange—by and large runs itself.”McMaken, Ryan

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Jobs Offshoring and Work Visas Are Means of Enriching Corporate Executives with “Performance bonuses”

“The U.S. Chamber of Commerce and immigration advocates, such as the American Immigration Lawyers Association, immediately went to work to defeat or to water down the amendment. Senator Grassley’s attempt to prevent American corporations from replacing American workers with foreigners on H-1B work visas in the midst of the most serious economic crisis since the Great Depression was met with outrage from the U.S. Chamber of Commerce, a business lobby determined to protect the multi-million dollar bonuses paid to American CEOs for reducing labor costs by replacing their American employees with foreign employees.”

“On January 23, 2009, Senator Grassley wrote to Microsoft CEO Steve Ballmer:

“I am concerned that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan.  As you know, I want to make sure employers recruit qualified American workers first before hiring foreign guest workers.  For example, I cosponsored legislation to overhaul the H-1B and L-1 visa programs to give priority to American workers and to crack down on unscrupulous employers who deprive qualified Americans of high-skilled jobs.  Fraud and abuse is rampant in these programs, and we need more transparency to protect the integrity of our immigration system.

“Last year, Microsoft was here on Capitol Hill advocating for more H-1B visas.  The purpose of the H-1B visa program is to assist companies in their employment needs where there is not a sufficient American workforce to meet their technology expertise requirements.  However, H-1B and other work visa programs were never intended to replace qualified American workers.  Certainly, these work visa programs were never intended to allow a company to retain foreign guest workers rather than similarly qualified American workers, when that company cuts jobs during an economic downturn.

“It is imperative that in implementing its layoff plan, Microsoft ensures that American workers have priority in keeping their jobs over foreign workers on visa programs.

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Stakeholder Capitalism and the Corporate KPI Cult

In private business “[t]here is no need to limit the discretion of subordinates by any rules or regulations other than that underlying all business activities, namely, to render their operations profitable.”—Ludwig von Mises, Bureaucracy, p. 46

In this quote from his classic 1944 book Bureaucracy, Mises explains why private, for-profit businesses need not, and should not, be bureaucratic and entangled in rules and regulations mandated from the top of an administrative hierarchy. Instead, they should, make the best use of decentralized “knowledge of time and place” to do their jobs. Mises’ admonition that the focus of capitalist enterprises is and should be to “make a profit” later became, in the hands of Chicago School economists, “maximize shareholder value.” This view is most widely associated with Milton Friedman and was accepted by American corporate management, for the most part, for many years.

Then in 2018 Blackrock CEO Larry Fink, who managed $6 trillion in corporate assets at the time, publicly insisted that corporate executives should focus on “stakeholders” (i.e., virtually everyone connected in any way with a corporation) instead of shareholders. This was followed in August of 2019 by 200 CEOs of major corporations issuing a declaration that maximizing shareholder value was no longer their paramount goal; adding value to all “stakeholders” was.

At the time, George Reisman wrote on the Mises Wire that this showed that “many CEOs know so little about economics that they don’t know that in a free market producing for the profit of their stockholders in and of itself implies producing for the benefit of everyone.” A successful, profitable business in a free competitive market will have customers who have benefited more than they have spent; workers will be paid more than they can make elsewhere; there will be prosperous towns and cities; and it benefits all “stakeholders” generally.

What is so significant about the CEO declaration, wrote Reisman, is that “it shows to what extent America’s intellectual heritage of the right to pursue happiness (which includes the pursuit of profits) has rotted away and been replaced by a mentality ripe for socialism” (emphasis added). He then says that we must keep in mind that “as the arbitrary power of the state has grown, businessmen have been put in a position more and more resembling that of hostages held by terrorists.”

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This Is Not Capitalism

The word capitalism has no stable definition and should probably be permanently retired. That won’t happen, however, because too many people are invested in its use and abuse. 

I’m long over trying to push my definition over someone else’s understanding, generally viewing disputes about vocabulary and dictionary definitions as a distraction against the real debate over concepts and ideals. 

The point of what follows is not to define precisely what capitalism is (my friend CJ Hopkins is hardly alone in describing it as once emancipatory but now rapacious) but rather to highlight the many ways in which economic systems of the industrialized world have made a hard turn against the whole ethos of voluntarism in the commercial sector. 

Still, let’s pretend we can agree on a stable description of a capitalist economy. Let’s call it the system of voluntary and contractual exchange of otherwise contestable and privately owned property titles that permits capital accumulation, eschews top-down planning, and defers to social processes over state planning.

It is, ideally, the economic system of a society of consent. 

This is obviously an ideal type. So described, it is inseparable from freedom as such and forbids state planning, expropriation, and legal privileges for some over others. How does the status quo match up against that? In uncountable ways, our economic systems utterly fail the test, with all the results that one would expect. 

What follows is a short list of all the ways in which the US system does not comport with some ideal type of capitalistic marketplace. 

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It’ll Cost You $95 to Hear Bernie Sanders Tell You Why Capitalism is Bad

Riding in on his white horse to save the left from itself — yet again! — is perma-candidate Bernie Sanders and his new, super-preachy book, entitled, “It’s OK to Be Angry About Capitalism.” The list price of the book is $28, and here’s what’s in store for those who are foolish enough to shell out their hard-earned cash to hear a pseudo-socialist, octogenarian millionaire pontificate on why capitalism is bad:

Reflecting on our turbulent times, Senator Bernie Sanders takes on the billionaire class and speaks blunt truths about our country’s failure to address the destructive nature of a system that is fueled by uncontrolled greed and rigidly committed to prioritizing corporate profits over the needs of ordinary Americans.

But wait, there’s more. Bernie is taking his act on the road! For a mere $95, you can hear Bernie Sanders, who’s never created a job in his life and has amassed a fortune on a government salary, preach to you about the evils of America — live and in person!

Where to start with all of this nonsense? First off, there’s the hilarity that Bernie Sanders, an extremely wealthy man who has exploited the system to his own great personal benefit, is angry at capitalism. He is no such thing, he celebrates it every day. He has managed to “capitalize” on hating the successful in our society and has monetized the misery of those who look to him for guidance.

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