And then there’s falsehood #2: Capitalism is an economic system that is un-regulated – In truth there is no economy anywhere in the world that is completely “un-regulated.” The notion of an un-regulated economy exists only in people’s minds, on paper, and on hard drives, but nobody is trying to implement such an idea as official governmental policy.
Consider, again, your computer. It was designed and built under close scrutiny from governmental regulators. The electricity that powers it is generated under heavy governmental regulation. And if you’re reading this indoors, the structure that you’re in was built under heavy governmental regulation.
President Obama likes to say that Republicans “drove the economy in the ditch” and caused the economic crash of 2008, because they de-regulated banking, lending, and Wall Street. And while it is true that several of the complex if not clever financial instruments that sparked the financial meltdown were not adequately regulated (things like derivatives and mortgage-backed securities), it is false to say that a lack of government regulation caused the crash. Indeed, the crash was caused in no small part because of government regulation itself. Laws that either required or incentivized lending institutions to issue mortgages to unqualified borrowers were a huge part of the problem. And government guarantees that offered to “bailout” lenders if they got in trouble with their sub-prime borrowers incentivized even more reckless lending.
Notice the “fixes” that are implied, as we seek the truth about capitalism. If, for example, our governmental leaders quit demonizing financial success as being “greedy” and began implementing policies (and rhetoric) that encouraged it, then the wealthy among us may be incentivized again to invest in businesses and to grow the labor market. And what if politicians got out of the way and actually allowed the health insurance markets to be competitive nationwide, and allowed consumers to purchase health insurance from across the country (current law forbids this currently)? If your health insurance provider knew that you might quit and go to a competing company, they’d likely want to treat you better.
Capitalism can restore our nation to greatness. But will Americans embrace the facts, and abandon the falsehoods?
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.