We never had Pure Capitalism

A recent Reuters article suggests that capitalism is to blame for the financial crisis. That capitalism is on its deathbed. However the current system in the United States is not pure capitalism.

Pure Capitalism is the voluntary and free exchange of goods and services, a free market so to speak. There is a misconception that, taken as a whole, the type of economic system we have in the United States is capitalism. However, sticking strictly to the definition, the United States, although leaning towards free exchanging of goods and services (and apparently drifting the other direction), does not have a completely free and voluntary market.

We never had Pure Capitalism. The type of economy we have is a mixed market, where business and government collude/collaborate, whether with good intention or ill, meddle in the voluntary and free exchange of individuals, creating a forced monopoly in an industry. A centralized entity has created a forced monopoly, in several industries, for example, education, health insurance, and banking (of which I will detail in further posts.) This is known as state capitalism.

Socialism takes the idea of the mixed economy further, rather than just regulating and/or restricting voluntary and free exchange in the market, it attempts to take matters one step further creating centralized control of the market, for example nationalizing (bailing out) banks. Socialism attempts to plan not only the means and ends of production, but also the means and ends of exchange, namely through control of money. It looks as though the United States is getting closer and closer to Socialism, unfortunately.

Cracking Down on Market Manipulation

"We need to crack down on trading activity that crosses the line to market manipulation. We need regulators that actually enforce the rules instead of overlooking them. The SEC should investigate and punish all market manipulation." - Barack Obama

Alright Barack, let me just assume that your statement is a plausible one. Cracking down and punishing market manipulation would start, not at regulating the market, but setting the market free; it would mean not interfering with the market, but letting the market do it's work.

Market manipulation includes, subsidizing and managing schools, healthcare, and retirement. Market manipulations is the Federal Reserve adjusting interest rates up or down. Market manipulations is mandating price stabilization. If you really want to stop market manipulation, nip it at its source: abolishing central control of money and interest rates, and dismantling government programs. Let the market do it's work, set the market free.

Pro Free Market, Anti Free Market, or Selective

“I believe that America's free market has been the engine of America's great progress. It's created a prosperity that is the envy of the world. It's led to a standard of living unmatched in history. And it has provided great rewards to the innovators and risk-takers who have made America a beacon for science, and technology, and discovery…We are all in this together. From CEOs to shareholders, from financiers to factory workers, we all have a stake in each other's success because the more Americans prosper, the more America prospers.”
- Barack Obama, New York, NY, September 17, 2007

"Out of work, tough luck, you're on your own. No health care, the market will fix it, you're on your own."
- Barack Obama, Speech, DNC 2008

Obama's Economic Ad: Line by Line Critique

This is a line by line response to Barack Obama's economic ad (text).

Barack Obama: In the past few weeks, Wall Street’s been rocked as banks closed and markets tumbled.
Vienna Sausage: In the past century, since 1913, America has been rocked as the money and banking became centralized and markets became more and more regulated.

BO: But for many of you – the people I’ve met in town halls, backyards and diners across America – our troubled economy isn’t news.
VS: But for many of you - the people I've met in person, or on the internet, our troubled economy isn't news.

BO: 600,000 Americans have lost their jobs since January.
VS: Every American has lost their economic freedom since 1913.

BO: Paychecks are flat and home values are falling.
VS: Money is created out of thin air, thus devaluing our dollar.

BO: It’s hard to pay for gas and groceries and if you put it on a credit card they’ve probably raised your rates.
VS: It's hard to save money if you need to put everything on credit.

BO: You’re paying more than ever for health insurance that covers less and less.
VS: You're paying middlemen insurance companies, that cover less and less, rather than exchanging directly with your doctor.

BO: This isn’t just a string of bad luck.
VS: This is a string of market intervention leading to more market intervention.

BO: The truth is that while you’ve been living up to your responsibilities Washington has not.
VS: The truth is that while personal responsibility and volition has been stripped, Washington stopped living up to its responsibility of limited government.

BO: That’s why we need change. Real change.
VS: That's why we need change. Genuine change.

BO: This is no ordinary time and it shouldn’t be an ordinary election.
VS: This is no ordinary time yet it is another ordinary election.

BO: But much of this campaign has been consumed by petty attacks and distractions that have nothing to do with you or how we get America back on track.
VS: But much of this campaign has been consumed by statist rhetoric and distractions that have nothing to do with you or how we get America back on track.

BO: Here’s what I believe we need to do.
VS: Here's what we need to do.

BO: Reform our tax system to give a $1,000 tax break to the middle class instead of showering more on oil companies and corporations that outsource our jobs.
VS: Reform our tax system, by lowering the income tax, from 10-35% of your income to ZERO percent. Stop ALL government subsidies to ALL corporations, not only to oil companies and companies that outsource our jobs.

BO: End the ‘anything goes’ culture on Wall Street with real regulation that protects your investments and pensions.
VS: End the 'bailout' culture on Wall Street, where not just reward, but risk and repercussions are all part of the market.  No company is too big to fail.

BO: Fast track a plan for energy ‘made-in-America’ that will free us from our dependence on mid-east oil in 10 years and put millions of Americans to work.
VS: Fast track ENDING government mandated monopolies on energy creation and transmission, let the millions of individual Americans choose their energy sources.

BO: Crack down on lobbyists – once and for all — so their back-room deal-making no longer drowns out the voices of the middle class and undermines our common interests as Americans.
VS: Crack down on statists - once and for all - so their back-room deal-making no longer drowns out the effectiveness of the free market and undermines our interests as individual Americans.

BO: And yes, bring a responsible end to this war in Iraq so we stop spending billions each month rebuilding their country when we should be rebuilding ours.
VS: And yes, bring an end to pre-emptive war and interventionist policies, so we can stop spending billions each month on OTHER countries when we should be focusing on our own.

BO: Doing these things won’t be easy.
VS: Doing these things won't be easy.

BO: But we’re Americans.
VS: But we're American individuals.

BO: We’ve met tough challenges before. And we can again.
VS: Individuals before us met tough challenges before.  Will you meet the challenge?

BO: I’m Barack Obama. I hope you’ll read my economic plan.
VS: I'm Vienna Sausage. I have no central economic plan, but a plan for a true free market, including free entry, free exchange, and free exit.

BO: I approved this message because bitter, partisan fights and outworn ideas of the left and the right won’t solve the problems we face today.
VS: I approve this message because emotionally laden statist ideas of the left and the right will only prolong the problems we face today.

BO: But a new spirit of unity and shared responsibility will.
VS: But a renewed spirit of unity yet individual responsibility will.