What Every Man Needs To Know About Capitalism And Economics

An article was written recently that, as an economist who has dedicated practically all of his professional life to economics, finance, truth, and reality, I cannot let go unanswered. I found the article to be misleading and sadly was believed by many who consumed it. Of further concern, however, was the comments section that displayed a woefully inadequate understanding of economics among an unacceptably high percentage of ROK’s readership. And so to address the original article, as well as give ROK readers a basic, overarching (harsh truth) lesson in economics, I present this response.

However, understand this is not a sleight on the author of the article (for he was well-intended) or those of you who agreed with it (also, no doubt, well-intended), but a much needed explanation if not outright warning for those of you remain ignorant of the laws and realities of economics. For if you don’t get these basics down about economics, capitalism, and humanity, you will sorely misunderstand how the real world works and suffer the consequences.

First, understand that capitalism is NOT an option. It’s not an “opinion.” It’s not a “belief.” It’s not a “theory.”

It’s a law.

You have no choice but to abide by it just as you have no choice to abide by gravity.

You may not “like” that statement. You may not agree with it, but none of that changes the fact that the economic phenomenon known as “capitalism” or “free markets” has naturally formed within humanity throughout it’s entire history. To understand this “human nature” aspect of capitalism, consider gold. Doesn’t matter if you look to the ancient Aztecs, the far-removed Hindus river valley, sub-Saharan Africa, or prehistoric Europe, gold ended up becoming the default currency in nearly all ancient civilizations.

The reason why is that gold had the characteristics and traits that made it valuable to all humans and human nature. And like gold, so too did markets and the free exchange of goods, services, and labor become a naturally-forming, universal phenomenon of both ancient civilizations and our tight-knit global community today. Ergo, capitalism is not some kind of fanciful political theory concocted by a delusional, pontificating trust-fund baby elitist (that would be Karl Marx). It’s merely the economic manifestation of human nature.

If this does not convince you about capitalism being an undeniable law of human nature, then consider proving it in reverse—communism.

The whole concept of communism is that there are no free markets, there is no free trade. Prices are fixed, as is production and nearly all business and investment decisions. Naturally, the bureaucrats in charge of making production decisions fail miserably at predicting what an entire people want. So what forms in response to this controlled market?

Black markets. AKA “underground economies.”

You must understand what the existence of black markets in communist economies proves about capitalism being the default-state law of humanity. Doesn’t matter how many laws you pass, doesn’t matter how much punishment you mete out, doesn’t matter if the entire government’s resources are dedicated to banning it, in the end all that matters is that people demand something and other people are willing to supply it. Thus, underground economies were not only prevalent in ALL communist “economies,” but continue to exist today in our schools and other “drug free zones” with the “illegal” $60-billion-per-year US drug trade.

If Stalin, Mao, Kim Jong Il, and Nancy Reagan couldn’t stop black markets from forming, don’t you think it’s about time to admit capitalism isn’t optional?  And furthermore, since that is the default state nature of humanity, shouldn’t governments and economies should be built upon this reality instead of trying to change it?

Government as a means of protection rather than production

All economic success derives from the protection and enforcement or private property. Understand that governments do not produce anything of economic value. The only thing that can produce something of economic value is people. Without a people, there is no point or purpose to have a government. But how do you incentivize the people to produce?

Well, in the olden days you captured them and made them slaves, threatening them with torture, beatings, starvation, and death. Today, obviously, we need a new incentive. Enter private property.

If I’m not a slave, I’m allowed to keep the majority of the fruits of my labor. This income will go to pay for necessary things like food, clothing, and shelter, but any excess earnings can be saved up and used to buy assets. These assets are also called “wealth,” and if I build up enough “wealth” then I can become “rich” and never labor again.

This is a huge and VITAL cornerstone of capitalism because it provides not just one person, but all people with the key to their own freedom.  They are allowed to work as much and as hard as they want, become as rich as they can, all of which invigorates and mobilizes billions of people to produce (resulting in the economic powerhouses of yesteryear western civilization). However, it was all contingent on the legal guarantee that their property would be their own and not confiscated for political purposes.

However, some people are going to be better, luckier, or just harder-working than others and as a consequence will have more wealth than others. And this creates jealousy. And jealousy is all fine and good as long as you have a republic that protects a constitution, meritocracy, and property rights. But if society devolves into a democracy, the temptation has proven too tempting to the masses to merely vote for “other people’s wealth,” thus undermining private property.

This was the primary complaint of the aforementioned article. That “greedy” “business leaders” and “powers that be” were wiping out the middle class by foisting part-time work all so these “evil rich people” could earn a couple extra bucks. But the argument shouldn’t be about whether that’s “fair” or not.  The argument should be “do they have the right to do what they want with their own private property?”

You may not like the current day employment prospects our current economy offers. You may not like the part-time job becoming the default economic reality of the labor market. But the adult, male, “time-to-put-on-your-big-boy-pants” truth is that:

IT ISN’T YOUR FUCKING MONEY!
IT ISN’T YOUR FUCKING BUSINESS!

If you don’t like what employers are paying, then quit being a whiny, simpering bitch and start your own damn company. Because the slippery slope that ensues when you start to make claim to property that is not yours is you get something much worse than “part-time jobs” or “low pay.”  You get capital flight which results in no jobs.

Capitalism has empirically outperformed every other economic system

If you are one for empiricism, just look at history. By nearly all accounts we can admit communism has failed (6:23 mark). The USSR could only provide its people a third of what the US did. And when you compare countries with the same people, but two different economic systems, the comparison could not be more stark. Specifically the Koreas (North and South) and the Germanys (pre-unification).

However, post-Soviet collapse arguments typically fall into the grey area of “socialism” or “mixed economies,” with people on the left nearly stampeding over themselves to point out the Scandinavian countries as proof socialism can work. It is here that three minor problems come into play.

One, Norway (the darling favorite of the left) derives a goodly fourth of its economic production from oil and is better analyzed as a mideast oil emirate than a Scandinavian country. Two, the relative homogeneity of Scandinavia’s population means there’s less incentive for groups to “get theirs” by taking advantage of the welfare state, providing a rare cooperation amongst humans (but give it time). Three, population-wise compared to the rest of “socialist” Europe, they are not very relevant. Whatever may be working in Finland today isn’t working thrice over in Italy, France, Germany, and for the remaining other 500 million Europeans.

But if you want numbers, the best I’ve calculated was the correlation between long term tax rates (as measured by spending as a % GDP) and economic growth (and this included the Scandinavian countries), which resulted in a -.28 correlation coefficient. And that data, mind you, is post-1991 and therefore does not include the dismal performance of the former Soviet bloc countries.

Regardless, the point is that barring economic eccentricities and statistical outliers, capitalism has outperformed socialism and communism hands down. It really isn’t up for debate unless you want to resort to technicalities, exceptions, etc., to protect your political ego or erroneous world-view.

The US is NOT a capitalist economy

If you are an American you have got to understand that you do not live in a capitalist economy, but rather a mixed or “socialist” one.  Oh, people will laugh.  Oh, people will accuse me of “sensationalism,” but I have no opinion on this matter, just mere fact. We simply do not live in a capitalist economy.

As it stands right now the state, federal and local governments combined spend about 38% of our economy. Of that 38%, 85% of it is spent on “social spending.” Not the military. This is set to increase dramatically as the baby boomers retire and a whole host of other social expenses come into play which (depending on whose estimates you want to use) means spending will increase to around 45% GDP.

Additionally, you throw in things like a progressive income tax, a 40% statutory corporate tax rate (arguments of the effective tax rate duly noted), corporate lobbying, crony capitalists, bailouts, Obamacare, and the level of government regulation and intervention into the private economy, and we are anything but a capitalist economy.

The alternative to capitalism is far, far worse

Hate capitalism and free markets and people richer than you all you want. The alternative is far worse. And some of this is striking rather close to home.

If you look at the political affiliation of the people launching their assault on men and male culture you’ll quickly realize they aren’t “feminists” as much as they are socialists using their sex organs or “gender” as a means to play victim and get more money out of you. You may also be somewhat familiar with women voting for the state to replace men in their traditional roles.

You are no longer a man, a husband, a father or a head of household. You are a sperm donor, a trial husband, or an alimony check. And even if you think you’ll be clever, avoiding these fates by being a bachelor, understand you disproportionately pay taxes to subsidize millions of “empowered, independent women’s” tuition in worthless degrees, while paying even more taxes so they can have make-work government jobs and a surrogate husband in the form of a government check. So before you go running to the state to complain about “minimum wage” or “part time work” you may want to look at what happens when the state gets more power.

But this cultural Marxism and replacement of men is nothing compared to what happens when people start tinkering with the economy, replacing free markets with socialism. At best you can hope for is what is currently plaguing Europe. Government debts equivalent to 200% GDP. Stagnant economic growth. Youth unemployment rates of around 40%. Bank accounts being confiscated. And political correctness being shoved down your throat.

The worst you can expect is the track record of Chairman Mao and Josef Stalin. 100 million dead during peacetime due to starvation. Even Nazis during war couldn’t kill that much that fast. Alas, this is the slope you risk going down when you start contemplating granting the state more power to make things “fair” in your naive, idealistic, rookie economist mind.

Finally, because this is not a dictatorship you have a responsibility to society to educate yourself about economics.

In my book “Bachelor Pad Economics,” I dedicate an ENTIRE CHAPTER to economics. Not because of my passion for it. Not because I wanted to give a political speech. But because just as you are in charge of your personal finances, so too are you ultimately in charge of the finances of the country. Not only do you owe it to yourself to get educated about personal financial management, you owe it yourself and your fellow countrymen to become educated on the finances of your nation.

Unfortunately, too many young (and old) people treat economics and politics as something that is “cute” or “fashionable.”  Something to protest against as an ignorant and uneducated college, OWS-type moron trying to get his “crusaderism kicks” in. Or perhaps a tool for gameless betas to use by espousing the”politically approved beliefs” in the hopes it will land them some hairy armpit pussy.

Society simply cannot afford this.

Economics is nothing more the future of the entire world. And your children’s futures cannot afford suffer the consequences of your naïveté today.

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