What I Learned in School Yesterday

Okay, I already knew it, but I hadn’t heard it explained quite this way before. And, actually, I didn’t even learn it in school, it was more like through my husband and a radio talk show host (Rush Limbaugh) about a publication I haven’t received yet. This publication called “Imprimus” is from Hillsdale College. They always have imposingly splendid articles and subscriptions are free for the asking.

The subject of today’s lesson is;

“Free Market Capitalism”

as noted through the words of Gary Wolfram
William Simon Professor of Economics and Public Policy Hillsdale College

Here, the classroom is brought to you. We’re going to hop right into the middle of his article because that’s where the meat is, so let’s get started, shall we?. Wolfram writes,
“How is it that for thousands of years mankind made very little progress in increasing the standard of living and yet today half of the goods and services you use in the next week did not exist when I was born? It wasn’t that there was some change in the DNA such that we got smarter. The Greeks knew how to make a steam engine 3,000 years ago and never made one. The difference is in how we organize our economic system. The advent of market capitalism in the mid 18th century made all of the difference.

We need not just rely on historical data. Look at cross-section evidence. I try another experiment with my students. I tell them they are about to be born and they can choose whatever country in the world they would like to be born in. The only caveat is they will be the poorest person in that country. Every student picks a country that is primarily organized in a market capitalist system. No one picks a centrally planned state. No one says, “I want to be the poorest person in North Korea, Cuba, or Zimbabwe,” countries which are at the bottom of the Heritage Foundation’s Index of Economic Freedom.

What does it mean to be poor in our capitalist society that the Occupy Wall Street crowd so hates? Robert Rector of the Heritage Foundation has several studies of those classified as poor by the U.S. Census Bureau. He found that 80 percent of poor persons in the United States in 2010 had air conditioning, nearly three quarters of them had a car or truck, nearly two-thirds had satellite or cable television, half had a personal computer and more than two-thirds had at least two rooms per person.

Contrast this with what it means to be poor in Mumbai, India, a country that is moving rapidly towards market capitalism but was burdened for decades with a socialist system. A recent story in The Economist described Dharavi, a slum in Mumbai, where for many families half of the family members must sleep on their sides in order for the entire family to squeeze into its living space.”

I could have simply said that free market capitalism is what built the largest, most prosperous Nation on the face of the earth…ever. This nation, the United States of America went on to become a world superpower. Although, that wouldn’t have been as convincing as Mr. Wolfram’s article.

The rest of the article is a worthwhile read, it was written for the Occupy crowd, entitled, Occupy Wall Street Crowd Blind to Benefits of CapitalismIt’s been my experience, a few people that occupy our government offices, also need a refresher course about what made America Great in the first place (and what works to fix the mess we’re in). Enjoy!

“Reprinted by permission from Imprimis, a publication of Hillsdale College.”
Image: nuttakit / FreeDigitalPhotos.net

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5 Responses to What I Learned in School Yesterday

  1. Tom says:

    Just had to add another line or two from the teacher: “There is no way for a central planner to know how many hot dogs 300 million Americans are going to want at every moment in time. A central planner cannot know the relative value of resources in the production of various goods and services. Market capitalism solves that problem through the price system. If there are too few hot dogs, the price of hot dogs will rise and more hot dogs will be produced. If too many hot dogs are produced, the price of hot dogs will fall and fewer will be produced.”

    Such a simple example of why market capitalism is more efficient and superior to socialism and why America has been so much more successful than other countries since the industrial age.

    • Robin says:

      Exactly, such simple solutions too – central planners need to stop pretending. Yet, government officials will have you believe it’s so much more complicated, and there is so much information they have that we don’t. They’ve deliberately tried to make it complicated with the excess power we’ve allowed them to take.

      If an athlete’s performance falls and he/she starts making mistakes – the answer is to go back to the fundamentals – the basics. I cannot see how this wouldn’t work for everything.

  2. Riga Resident says:

    Free Market Capitalism
    Just had to add another line or two from the teacher: “There is a way for a Chinese central planners to know how many widgets 300 million Americans are going to want at every moment in time. A central planner can know the relative value of resources in the production of various goods and services. Totalitarian market capitalism solves that problem through the fixed price system. If there are too few widgets, the price of widgets are fixed through currency manipulation, trade import quotas,and more widgets will be produced from China. If too many widgets are produced, the price of widgets will be controlled and fewer will be produced.”

    Such a simple example of why totalitarian market capitalism is more efficient and superior to market capitalism and why the American economy has been decimated more so than other countries since Reagonomics promoted free trade..

    • Robin says:

      Hey Riga Resident, I devoted a whole post to you and I heard nary a peep out of you!

      It’s nice to see you liked Tom’s comment so much you flattered him by copying his whole format (it could have been condescension though). I’ve just got a few questions since you’re obviously for market totalitarianism/capitalist dictatorship, how does a Chinese central planner know how many widgets 300 million Americans are going to want at every moment in time? There are too many unknown variables. The only thing I know central planning guarantees is centralized power.

      Totalitarian market capitalism solves what problem? Freedom? You lost me there.

      If the American economy was decimated by Reaganomics, why was Reaganomics followed by 20 years of growth and prosperity?

      When prices are fixed by central planners, do wages not also have to be fixed?

    • Tom says:

      What teacher are you quoting, Riga Resident? Mao Tse Tung, Karl Marx, or just some Ivory Tower economics professor sequestered from reality?

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