Has Capitalism Failed

by Robert Villegas

  “Louis XVI did not welcome Turgot’s reforms and dismissed him in 1776. Some historians claim that had Turgot’s reforms been kept, the French revolution might not have erupted thirteen years later.”[21]

  Implicit in Turgot’s ideas is an unexpressed argument for morality. More than anything, the idea of a limited government recognizes the sovereignty of man; the principle that he is his own moral agent and that his mind is capable of reason; capable of deciding what is in his own best interest. It rejects the idea that he is a helpless pawn of nature and that only a powerful government can mold him to a collective goal. It recognizes that the "utopian" ideal of forcing men into collectives is a deadly one that results in concentration camps, genocide and poverty.

  It is time to reject collectivism and recognize that the Founding Fathers (and Robert Turgot) had the right philosophy all along when they held that man possesses inalienable rights derived from his nature; that he should be left alone by government and left free to deal with one another peacefully. We need freedom, property rights, individual rights, the pursuit of happiness and a government that protects rather than expropriates.

  The Fallacy of Re-Distribution

  I was once engaged in a political discussion with a young lady and made a big mistake. The discussion was about Barack Obama and I was explaining to her that I thought his work, through the years, had been based upon a close involvement with a radical group from Columbia that later became known as ACORN (Association of Community Organizations for Reform Now). Since this was a general conversation, I did not have sources and details at my disposal but I told her that the first organizers of the group had, as their original goal, the registering of large numbers of people for welfare in New York in order to bankrupt the government and cause a socialist revolution. [22]

  I pointed out that later the leaders of this early group moved to Arkansas and started what is now ACORN, the organization that fraudulently registered voters for Obama and was instrumental in creating the sub-prime crisis. I informed her that Obama had actually filed a law suit in the early ‘90s to get the government to lower lending standards at the behest of ACORN.

  Then came the killer question from this young lady. She said, “Well, I’m sure that they did not foresee the sub-prime crisis while they worked in the early ‘90s and certainly they did not think their actions would bring down the economy. Is it possible they were just trying to help more people get homes?”

  Was I wrong? Did I fall for the smears of the right and was Obama just merely someone seeking to help the poor? The first clue to understanding this issue is in the question she asked: Is it really possible that they were just trying to help more people get homes? Many consider this goal to be a good one and few would be against it. If they were merely trying to help people and not trying to bring down the system, what does that mean? That they are really good?

  It is true that many people believe in redistribution because they genuinely want to help the poor or needy. Yet, this genuine hope to help the poor is the very reason that groups like ACORN gain undeserved trust - and cause economic disasters. In my opinion most well-intentioned people have not thought carefully enough about the issue and don’t realize that they are being deceived by the notion that re-distribution of income actually does good for the economy or the poor. As Hazlitt averred[23], they are confusing desired intent with actual result.

  Many well-meaning leftists today are the victims of a massive intellectual slight of hand. They think that income redistribution can actually accomplish the desired result – a fairer, more caring society. Yet, let’s observe the very telling fact that altruistic re-distribution: after decades and billions of social welfare dollars poured down the drain, has not reduced poverty.

  What if income redistribution is actually harming the people whose resources are being used to obtain the intended goals – and harming the poor as well? What if they, the well-meaning leftists, are violating the principle that makes a good civilization possible, all the while thinking, blindly, that they are doing good?

  Civilization is a long-term proposition. If you want to live in a civilization, you, the individual, must operate according to long-standing principles. One such principle of civilization holds that you cannot accomplish short-term results by sacrificing long-term social stability. This violation is frequently made by progressives who claim that they want to give someone a benefit today which has a long-term negative consequence down the road. The sleight of hand takes place when the progressive claims that there is no long-term damage done at all and that he is merely manipulating the existing circumstance by re-distributing money. By seeking to accomplish, let’s say, subprime loans for the poor, he ignores the fact that banks must use the savings of productive Americans in order to accomplish the loans that cannot be paid off by the borrowers with bad credit ratings.

  A proper civilization can only be a value to an individual if there are no mechanisms for exploitation of productive citizens. If living in a civilization is to be an actual benefit for all individuals – every form of re-distribution would create one more nail on the coffin of civilization. If any benefit for one individual requires coercion against another individual, then that act is improper and invalidates the long-term benefits that a proper civilization is supposed to make possible.

  The appeal to pity is a common method of deception by re-distributors. This approach stoops to depicting the needy as so dreadful that one must certainly do something to help them by giving up one’s own values. I call it guilt-tripping because it seeks to induce guilt upon any person who chooses not to help the poor.

  The argument of appeal to pity is that some people lead such pitiable lives that one cannot in good conscience refuse to help them. What the argument ignores is that all people are metaphysically equal and their condition in life is primarily a result of their value choices. The virtue of justice would reward an individual according to his deserts, according to what he has earned in life and the lot of one person has nothing to do causally with the lot of another. Pity, then, being an emotion, can only be a derivative cause which must be checked by reason, not a primary cause which automatically demands a solution as a matter of moral imperative.

  As Aristotle tells, us, “…pity is occasioned by undeserved misfortune,…”[24] and it is reasonable to conclude that the emotion does require that the person who pities is required to do something about it. To use pity, then, as a means of motivation, regardless of the relationship of the pitied to the one who pities, is properly considered to be a logical fallacy as well as a moral fallacy.

  Certain low-income or no-income people are considered to be worthy of owning homes, even though they have earned low credit scores. They are considered to be victims of an “unfair” economic system that demands they be good credit risks before they take out loans. This is supposedly the fault of a racist capitalist system; and the available statistics supposedly “prove” that this is true.

  It is irrelevant to the professional parasites at ACORN that these poor cannot afford to pay for these homes. The lack of home ownership by the poor is a matter that needs to be “fixed” and the people who have put their savings into banks and mortgage companies (not the same people) are required to pay for the homes by loaning their savings to the poor credit risk “victims”. This is re-distribution.

  Redistribution is evil because it demands sacrificial victims. The best must give up their earnings in order that the favored “victims” are able to survive. The lie in this scam is that sacrifice is proper; and even worse is the idea that the sacrificial lamb should want to give up his/her life-blood to the collective. If the collective (represented by the government) demands it, who are they, mere individuals, to disagree?

  Politicians have been propagandizing for centuries that self-sacrifice (re-distribution) is a form of “caring” for others. By this scheme, it is a foregone conclusion that if a person "cares" for others, it means he is a good person as opposed to the person who dissents.
Politicians are quick to declare that it is more important for the government to “care” about citizens rather than to defend and protect their rights and freedoms. President Obama, in particular, thought that the Founding Fathers got the Constitution wrong when they did not include a power of re-distribution in the Constitution.

  This view clearly establishes Obama as an enemy of freedom. You can't have both individual rights and re-distribution in the same society. Eventually, individual rights will fall by the wayside or people will revolt and demand that individual rights should be re-instituted.

  The basic argument for sacrifice in any economic system is that sacrifice is good in the eyes of most people. It is also a statement that there is no such thing as an individual right for men, that they should submit to being dictated to by government. For instance, when I question the imperative to sacrifice, in the opinion of most people, I am doing something bad. Forget that the economy has been destroyed and that there are now more unemployed, more homeless and suffering people as a result of the re-distributionist sub-prime crisis; my questioning is somehow an indication that I do not care for others.

  The argument offered by Obama (the re-distributer) and ACORN (an organization engaged in voter fraud and bank extortion) is that this is the “will of the people”; but, properly, there should be no government authority with the right to violate the rights of citizens – regardless of its desire to “care” for people. The idea of the government “caring” for people is the excuse that justifies theft, the coming tyranny and the decline of our civilization. Yet, these people are supposed to “care” about people.

  The argument made by progressives for the government’s “caring” for people is a smoke screen that has kept people sacrificing their life blood for decades. It is a false argument. “Caring” is not what happens when the government redistributes income. In fact, the idea of the government “caring” is what justifies the violation of individual and property rights and turns “caring” into theft (otherwise known as interventionism). I’ve always thought that if you can’t get a citizen to agree to give up his income or property for others, then you should not force him to do so.

  To illustrate this point, let’s strip the issue to its bare essentials. Let’s assume there is a society of three people living in a country on a tropic island. I am the government whose job it is to keep Citizen 1 from harming Citizen 2 and vice versa. My job is to keep the peace and the only way I can do this is to outlaw force in society. Since the other two citizens consent to my authority, I am allowed to intervene should one party attack the other or try to steal from him. This form of intervention is considered appropriate since it is intended to give each individual a fair chance at survival without giving either of them the ability to exploit or otherwise harm the other.

  Everything works pretty well, except when it is discovered that Citizen 1 has built a nicer home and has amassed more fruit and meat through his own hard work. He has an arrangement with Citizen 2 to trade him food in return for arrow heads and blades that Citizen 2 makes from flint rock. They develop a division of labor where Citizen 2 does not have to hunt; he just needs to stay in his hut making the tools for which Citizen 1 pays him with the food he gathers.

  Citizen 2 decides that he is pretty secure in this arrangement and he comes to believe that he need not pay too much attention to the details of making the arrowheads and blades he is trading with Citizen 1. Eventually, Citizen 1 starts losing catches in the hunt because of broken arrowheads and he asks Citizen 2 to improve the quality of his product. Citizen 2 complains that his quality is good enough since he has plenty to eat. Citizen 1 decides to make his own higher quality arrowheads and he stops trading with Citizen 2. He dissolves their division of labor contract and starts hunting only for himself.

  When Citizen 2 sees that he is running out of food, he must decide whether to improve the quality of his arrowheads or do his own hunting. He notices that Citizen 1 is now using superior arrowheads that he made himself and that his store of food is growing. He becomes angry at Citizen 1 and thinks that he is deliberately trying to starve him. He realizes that he must find a way to get the extra food that Citizen 1 has.

  He comes to me, the government, with an idea. He tells me that we are all in this together and we should work together to survive. He declares that it should be my job to convince Citizen 1 to give up some of his food to help him? “Don’t you care about what happens to me?” he asks.

  At this point, I have a choice. I look at the contract we signed together when we started our nation and it says that my job is to protect each citizen equally from being encroached upon by the other citizen. It also says that I cannot change the contract without all citizens agreeing to the change. I tell him it is not my job to take the production of any citizen – even his.

  He responds by telling me that he has a bold new idea, "change" that will make things better for everyone. Why can’t I extend my contractual mandate unilaterally, since I control the government? I can make things better by working for the sake of the collective good and just order Citizen 1 to give some food to him. This would be good for everyone. As long as I’m acting for the collective good, I am showing that I care for everyone.

  But, I ask, if I am making a law that cares for Citizen 2 and takes away from Citizen 1, doesn’t that mean that I don’t care for Citizen 1? He responds that Citizen 1 has more than he needs and will not be harmed in any way. Yes, but I would be making a law of which Citizen 1 does not approve. He answers that we are two against his one and that the majority should rule.

  I think to myself, I’m not convinced, but, just to get rid of his lobbying for a while, I tell him I’ll think about it. I walk over to Citizen 1’s side of the island and ask him what he thought about giving Citizen 2 part of his production. Citizen 1 said that my asking such a question was a threat of force, since I am the government. I realize he is correct and apologize, but the damage is done. He informed me that he had previously talked with Citizen 2 about the poor quality of the arrowheads he was trading. He had offered to show him how to improve his product and was told by Citizen 2 that he was too busy to learn and since his arrowheads were good enough it would be a waste of time. Citizen 1 then suggested to me, the government, that unless I could get everyone, including himself, to authorize taking production from him, I had better not violate my contract. I told him I took my contract very seriously and I would defend his rights and freedom.

  I walked back to Citizen 2’s part of the island and told him that I could not violate my contract and take food from Citizen 1. Citizen 2 was very angry and made me feel uncomfortable. I told him that he should take it up with Citizen 1 and work it out between them peacefully. Citizen 2 told me that I did not understand the principle of economic justice. He said that this island would be a much better place to live if everyone was equal in terms of food and that my refusal to help him only proved that I advocated injustice and did not care for him. He said that a government that does not care for its citizens is a mean government.

  I told him that our nation worked better when all citizens engaged in voluntary trade and that my taking something from Citizen 1 by force would violate that principle. I told him that the solution to the problem would be the production of a better arrowhead by him so that Citizen 1 could resume trading with him. Unless he could do so, he was destroying his own prosperity as well as the principle of division of labor. He had proven to me that he was not willing to trade value for value. I could do nothing for him in this instance.

  He responded that I should not have been allowed to be the government. He told me that I should be replaced by someone who understood what economic justice meant. I told him to hope for a ship wreck and survivors.

  This story illustrates the basic principles that should guide a proper society and Constitutional government. When you strip society down to stark essentials you can see that the idea of re-distribution is unfair. When people are able to produce in a division of labor society,
they can live in peace and prosper. When the division of labor is attacked and citizens attempt to loot each other, there can be no peace or prosperity. In such a situation, there is no reason for the productive citizen to want to participate in that division of labor.

  Yet, just as Citizen 2 tried to do, some people attempt to justify re-distribution by accusing productive citizens of being exploitative and greedy. Attacks against self-sufficiency, self-interest and property rights are the tools of deception that progressives use in order to steal production and violate individual rights. Appeals by the government to collective solutions and sacrifice are indications that the society will soon deteriorate to looting and exploitation. Are today’s progressives trying to destroy this country? Yes, as long as they attempt to change the mandate of government from protection towards expropriation.

  If we turn this story in another direction and, let’s say, I, the government, decide to point the spear made by Citizen 2 at Citizen 1 and demand that he give me some food for Citizen 2. Through this act, I have destroyed the basis of our society and turned it toward internal warfare, otherwise known as “class warfare.” Worse than this, I have not only destroyed Citizen 1’s motivation for working and producing, I’ve destroyed the economy of the island because I've corrupted the possibility of a fair division of labor; and I’ve destroyed Citizen 2 who now knows that he need not work hard in the future; that the precedent has been set. Force is now the ruling factor in society.