Tuesday, August 23, 2011

Top 3 Common Myths of Capitalism

Is being pro-business and pro-capitalism the same? Does capitalism generate an unfair distribution of income? Was capitalism responsible for the most recent financial crisis? Dr. Jeffrey Miron at Harvard answers these questions by exposing three common myths of capitalism.

I think capitalism is about optimizing evolution.

When every you bias the natural system (such as providing an unfair advantage to one species over another) you create problems.

For example, say you feed fish in a pond. You can increase the number of fish well beyond what the natural food sources in the pond would be. If you where to suddenly stop feeding then, many would starve to death. It would be a horrible tragedy to those fish. Rather then the natural culling and selection you'd allow all to survive then cause a massive die off that wouldn't be very selective. In addition you'd also destroy the food sources they also live in and could completely wipe out the ecosystem completely but adding and then removing the source of artificial food.

Same with Economics and businesses. With large corporations getting unnatural advantages over small businesses because they can lobby and pass laws favorable to them, this destroys small businesses that employed most of the people here. In turn they have less customers to earn money from and so they turn towards the government to get more advantages creating a vicious cycle that's decimated our economy.

Large corporations don't innovate, they operate on scales of efficiently and can't take risks like a small entrepreneur.

By giving Mc Donald's a waver from the state mandated Obama care, it destroys the little mom and pop restaurants that can't compete. This in turn turns out city's and towns in to nothing but large chain restaurants and eliminates local culture.

The same in true in many industries.

We need to restore small businesses and make a more favorable climate for them if we are to turn around the economy, and allow evolution to take it's natural course.

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