Capitalism Gives Back

Posted: Oct 01, 2011 12:01 AM

This is one of the best articles I have read in a long time. Andy Kessler eloquently dismantles the arguments from the left.

As you may or may not know, I live in one of the most left wing areas of the country. The recent statements by Massachusetts far left Democratic Senate candidate Elizabeth Warren were being repeated and put on Facebook pages everywhere.

“You built a factory out there? Good for you,” she says. “But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.”

She continues: “Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

Kessler takes the socialist/communists to the woodshed.

Give something back? Greatbatch did well specifically because he provided something that society needed. His and Medtronic’s profits are what you and I are willing to pay above costs for these life-enhancing devices. This is true of Apple iPhones and Genentech Herceptin and Google Maps and Facebook Likes.

Ever since the mid-19th-century era of so-called Robber Barons, this country has had a philosophical divide over the role of business in a democracy. It’s time to set the record straight.

History has proven that the road to increased standards of living and wealth was built on productivity—doing more with less. It was the Industrial Revolution that got us out of the growing fields and into factories, which allowed us to pay for roads and teachers and civil servants. And now the move out of factories into air-conditioned offices is creating anxiety. It shouldn’t. Labor replacement is productivity. James Spangler’s vacuum cleaner. The Walker brothers’ dishwasher. Clarence Birdseye’s flash freezing. DuPont’s Kevlar. And John Simpson’s guidewire catheter for angioplasty and heart stents—the list goes on. Each invention generated wealth because it improved our lives, not because someone “gave back.”

Click over and read the whole thing. It’s really brilliant and echoes what I have been writing about here regarding entrepreneurship, and “social justice“.

People on the right often quote the Chinese proverb, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”

However, the sentiment is correct but the real point is missed. Someone has to invent and manufacture the fishing pole, the reel, the line, the sinker, the hook, the bait, the knife, the charcoal, the cooker, the silverware, and the plate before he can eat that fish. They all raise our standards of living.

Society pays them for their service-but society gets back far more in consumer surplus than it pays. That’s the grand bargain of capitalism.