It is an important question because on our side of the aisle – in a desperate bid to stop socialism – we have become identified not so much as the party of free markets, but the party of big business. We’re trying to defend the right of a small businessman to run his business but we’re often ending up defendng the ability of a JP Morgan/Chase to loot the economy. We have to be careful about what we’re really about – and this article by Luigi Zingales is the best explanation I’ve seen. I do recommend reading the whole thing – here is what struck me as vitally important for our national debate:
…because the free-market system relies on this public support, and this support depends to a certain extent on the public’s impression that the system is fair, any erosion of that impression threatens the system itself. Such erosion occurs when government connections, or the power of entrenched incumbents in the market, seem to overtake genuine free and fair competition as the paths to wealth and success. Both government and big business have strong incentives to push the system in this direction, and therefore both, if left unchecked, pose a threat to America’s distinctive form of capitalism.
Although the United States has the great advantage of having started from a superior model of capitalism and having developed an ideology to support it, our system is still vulnerable to these pressures — and not only in a crisis. Even the most persuasive and resilient ideology cannot long outlive the conditions and reasoning that generated it. American capitalism needs vocal defenders who understand the threats it faces — and who can make its case to the public. But in the last 30 years, as the threat of global communism has waned and disappeared, capitalism’s defenders have grown fewer, while the temptations of corporatism have grown greater. This has helped set the stage for the crisis we now face — and left us less able to discern how we might recover from it.
In our financial system, especially, who among us would deny that entrenched interests heavily connected to government rule the roost? And if this is capitalism, then we can see why people are getting dismayed with it – but it isn’t capitalism; its a mockery of capitalism…a quasi-socialist, corporate-Statism counterfeit of a free market system. A place where the Masters of the Universe (in government and corporate board rooms) will stoutly assert that the market is free, but unless you come with suitable introductions, don’t try to enter it.
On our side, we must become the defenders of the free market against both Big Government and Big Corporation. Because someone works on Wall Street it doesn’t necessarily follow that he’s in love with freedom and the free market…he might be very much in love with sweetheart deals and backroom bribes. The author concludes in part:
We thus stand at a crossroads for American capitalism. One path would channel popular rage into political support for some genuinely pro-market reforms, even if they do not serve the interests of large financial firms. By appealing to the best of the populist tradition, we can introduce limits to the power of the financial industry — or any business, for that matter — and restore those fundamental principles that give an ethical dimension to capitalism: freedom, meritocracy, a direct link between reward and effort, and a sense of responsibility that ensures that those who reap the gains also bear the losses. This would mean abandoning the notion that any firm is too big to fail, and putting rules in place that keep large financial firms from manipulating government connections to the detriment of markets. It would mean adopting a pro-market, rather than pro-business, approach to the economy…
And that is it, in a nutshell: pro-market, not pro-business. We don’t care if any particular business lives or dies. We only care that the playing field is level, that no one is getting a rake-off from the taxpayers and that anyone who wants to enter the field may do so. America is a meritocracy and it must remain such – if we cease to be a place where the little guy can get ahead, then we’ll just become another socialist dystopia heaving for slow death, as most of Europe is now.
Obama and his Democrats – along with the entrenched, big corporate interests – see this crisis as the prime opportunity to completely close down the avenues of advancement. They wish to freeze us in place and turn us in to mere cogs in a government/corporate machine…where government pretends to help us and corporations pretend to compete. It will be “fair” in the mind of the left because (a) the left will be in charge, (b) the top people in government and business will be very well off and (c) everyone will have just enough government hand-outs to maintain a comfortable slavery. But we won’t be free – and we will start to die, just as the Europeans have.
Our ancestors built this nation for the Average Man – not the privileged man and not the lazy man. Just the average person who wants to work hard, play fair and get ahead to the best of his abilities. As such a nation we will continue to grow and secure for the world this bastion of liberty – or, we can choose to go Obama’s route, and slip in to a senescent slavery, where bureaucrats in government and business tell us where to live, where to work, what to buy, how much money we’ll have…
I want to live in the America our ancestors built – where do you want to live?