Strengthening Constitutional Self-Government

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Economy

Capitalist Fool

Poor boy made good, Michael Moore says "capitalism did nothing for me, starting with my first film."  In fact, he says, " I had to pretty much beg, borrow and steal," he said. "The system is not set up to help somebody from the working class make a movie like this and get the truth out there."

Hard work, individual initiative, and compeition, isn't that what capitalism is about? 

Moore's comments remind me of this essay on "Capitalism After the Crisis," by Luigi Zingales, who writes that:

In a recent study, Rafael Di Tella and Robert MacCulloch showed that public support for capitalism in any given country is positively associated with the perception that hard work, not luck, determines success, and is negatively correlated with the perception of corruption. These correlations go a long way toward explaining public support for ​­America's capitalist system. According to one recent study, only 40% of Americans think that luck rather than hard work plays a major role in income differences. Compare that with the 75% of Brazilians who think that income disparities are mostly a matter of luck, or the 66% of Danes and 54% of Germans who do, and you begin to get a sense of why American attitudes toward the free-market system stand out.

Moreover, ZIngales notes that:

When the government is small and relatively weak, the way to make money is to start a successful private-sector business. But the larger the size and scope of government spending, the easier it is to make money by diverting public resources. Starting a business is difficult and involves a lot of risk -- but getting a government favor or contract is easier, and a much safer bet. And so in nations with large and powerful governments, the state tends to find itself at the heart of the economic system, even if that system is relatively capitalist. . . .

The situation is very different in nations that developed capitalist economies after World War II. These countries (in non-Soviet-bloc continental Europe, parts of Asia, and much of Latin America) industrialized under the giant shadow of American power. In this development process, the local elites felt threatened by the prospect of economic colonization by American companies that were far more efficient and better capitalized. To protect themselves, they purposely built a ­non-transparent system in which local connections were important, because this gave them an inherent advantage. These structures have proven resilient in the decades since: Once economic and political systems are built to reward relationships instead of efficiency, it is very difficult to reform them, since the people in power are the ones who would lose most in the change.

Finally, and this is the point that gets us back to Moore:

The United States was able to develop a pro-market agenda distinct from a pro-business agenda because it was largely spared the direct influence of Marxism. It is possible that the type of capitalism the United States developed is the cause, as much as the effect, of the absence of strong Marxist movements in this country. But either way, this distinction from other Western regimes was significant in the development of American attitudes toward economics.

Moore doesn't recognize that distinction between supporting the free market and supporting businesses.  The danger, of course, is that the more government does, the more conncetions, rather than talent, hard work, and intelligence matter.

Categories > Economy

Discussions - 1 Comment

Moore doesn't recognize that distinction between supporting the free market and supporting businesses.

To be fair, George W. Bush didn't seem to recognize that distinction, either.

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