Capitalism undermines feudalism and offers economic freedom to Dalits

Capitalism does a better job providing freedom and equality than any other system. It is a far better option than feudalism.

Capitalism has been allowed to flourish in India since 1991. The results have been to release large numbers of Dalits from bonded labor. Previously those individuals were restricted to the most dirty, dangerous jobs.

Check out the results in this article by Swaminathan S. Ankelsaria Aiyar, writing at Cato Institute: How Capitalism Is Undermining the Indian Caste System.

(Cross-posted from my other blog, Outrun Change.)

Article is reprinted in full under a Creative Commons license granted by the author: (more…)

Which disgustingly rich “robber baron” single-handedly saved all the whales?

Eventually I want to revisit the reputation of those horrid men who built the American economy at the end of the 1900s. They gave us massive breakthroughs in economic development.

Until I can write some extended articles, I’ll accumulate tidbits as I go.

Got to thinking about this when Bruce Oksol of Million Dollar Way pointed out

…that Rockefeller and Standard Oil single-handedly saved the whales from extinction

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The source of wealth, as explained by two musicians.

Frank Zappa and Bob Dylan explain where jobs, growth, prosperity, and wealth come from.

Hint: it isn’t from government. (cross-post from my other blog, Outrun Change.)

A Business Lesson by Frank Zappa

He puts out $250,000 of his own money to get a tour ready. He takes all that risk expecting it will pay off later. Here’s the deal: (more…)

Brief introduction to the Industrial Revolution

I am increasingly interested in economic history. We are now in a place of prosperity and health that would have been unimaginable 300 years ago and barely comprehensible two generations ago. How did we get to a place of such wealth?

If we can figure out an answer to that question we might be able to figure out how to sustain what we now enjoy. More importantly, if we figure out how those of us who enjoy the prosperity others created, we have a better chance of sharing it with other people living in countries more reminiscent of life 500 years ago.

I’ve been reading a lot of economics lately. You can tell from the blog posts. I want to write more on the topic.

This discussion is cross-posted from my other blog, Outrun Change.

Here is a great article on how we got here:

3/27 – A Fine Theorem – “Editor’s Introduction to The New Economic History and the Industrial Revolution,” J. Mokyr (1998) – The post describes a lengthy description of the Industrial Revolution. More on the underlying document in a moment.

The linked article gives a great summary. Here are the five major points in the article with a few aha! ideas that registered in my simple brain: (more…)

“I, Egg”, or, how many millions of people have to cooperate for you to boil one egg?

Check out Exxon-Mobil’s commercial. Try to take a completely wild guess how many people are involved in getting one egg to your house and the number of people and millions of dollars of investment to get a bit of natural gas to the stove:

 

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More reading on economics of the Pilgrim era

I’ve accumulated more articles on economics from the early days of the U.S. than have had time to comment on. Here is some more reading on the role private property played in early America.

Hope to roll these into longer discussions in the future. Until then, check out: (more…)

Would you rather be in the middle class today or the richest man in the world in 1836?

If it was possible to choose, would you prefer to live life in the middle class, struggling to get by in a lousy economy with an uncertain retirement, or would you rather live the life of Nathan Rothschild, who was the richest man on the planet when he departed this life in 1836?

(Cross-posted from my other blog, Outrun Change.)

John Kay discusses this idea in his article, Precise inflation figures ignore evolutions in product quality and consumer choice.

Mr. Kay points out that Mr. Rothschild was richer than either John D Rockefeller or Bill Gates. He was the second richest man in all of history.

Before you say you’d rather live his life than yours, consider this:

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Puritans started with socialism and price controls before they jumped to capitalism

There is a concept loose in the U.S. and emphasized in our educational system that the Puritans arrived in the U.S. believing in capitalism and went straight to economic prosperity.

Well, capitalism will definitely do that, but the Puritans made a few stops before getting to prosperity. Those included socialism, price controls, and severe caps on finance & trade under the guise of opposing usury. All of those policies will suppress economic development.

Jerry Bowyer explores this journey through false ideas is a series of articles, which summarize his interview with Mark Valeri, author of Heavenly Merchandize.

To encourage you to check out the full articles, I’ll try to summarize some key ideas.

7/30 – Forbes – Jerry Bowyer – Puritans vs. Capitalism: How A Theological Error Led To Financial Stagnation – In the 17th century, pastors and religious leaders were opposed to usury which included even discounting letters of credit more than a small amount. If you can’t use paper (bills of credit) to facilitate long-distance trading, there won’t be much trading.

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At its core, capitalism is moral

At the most foundational level, capitalism is moral.

The only way to succeed in the long-term is to treat customers well and honestly. That will provide money to the company to continue paying staff and vendors as well as leaving a profit for owners.

If a company does not deliver a quality product or service that customers value with higher utility to them than the cost to provide by the company, then the company won’t be around long.

At the core level, it is moral to satisfy your customers with profit left over.

CPA Ron Baker makes this point more eloquently than me in his LinkedIn article, Are Corporations Socially Responsible?

By the way, the answer is yes.

(Cross-posted from my other blog, Attestation Update.)

If a corporation provides value to customers, both the company and customer will be better off after the transaction than before. That is a positive social value.

Doing so, within the framework of the law (as Milton Freidman points out) is the duty of a business and it is also highly socially responsible.

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Your thinking experiment for the day: What economic and political system exists in one country with expanding oil production and another country with collapsing production?

Consider the following two stories.

One country with rapidly expanding oil production with no end of the increase in sight. The other country is a member of OPEC and will start importing light crude.

I’ll ask two questions after mentioning the articles, which are reposted from my other blog, Outrun Change. (more…)

“Hockey Stick of Human Prosperity”

The following discussion is cross-posted from my other blog, Outrun Change.

Why do I copy it here?

Because at a foundational level, the radical increases in health, safety, and prosperity that started about 200 years ago are at the core a moral issue. I firmly believe it is a fundamentally moral matter to understand what caused that change and have as many people as possible share in it.

Having the vast majority of people live in squalor and die at 30 or live in comfort and die at 80. That is a basic moral issue.

Economic freedom and political freedom are just two of the key drivers in this change the professor will describe.

Here’s the discussion:

Take any one of a variety of economic indicators. Per capita income. Life expectancy. Stuff people own. Average height. Child mortality. Number of pants and underwear owned.

Graph it over the last 2,000 years.

You will see a hockey stick. Flat with no growth for century after century. Brutal, hungry, and disease-ridden short lives were the norm 3000 years ago.

And 1000 years ago.

And 500 years ago.

So far, any graph you draw of any of those indicators is a flatline.

Then, about 200 years ago, every one of the graphs took off like a Shuttle launch. Something happened.

For the first in a series of videos, Professor Don Boudreaux explains what this hockey stick looks like.

And what made things get so mind-bogglingly better.

 

 

Another idea for a hockey stick graph: number of natural teeth in your mouth at age 50.

Oh, wait. People usually didn’t live that long until a few hundred years ago.

link is http://www.youtube.com/watch?v=t9FSnvtcEbg&feature=player_embedded

How does this thing called creative destruction, or people losing their jobs, actually create more jobs, expand the economy, and make everyone better off?

Creative video from Prof. Bryan Caplan explains Make Progress, Not Work.

 

(cross-post from Outrun Change.) A few highlights:

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How did we get to the place where we can ask “Why Does 1% of History Have 99% of the Wealth”?

Why we are so much better off than 200 years ago? Explained in 3 minutes. Check out the video by Prof. Dierdre McCloskey:

(Cross-posted from my other blog, Outrun Change.)

Here’s my 200 word summary of the video:

Until 1800, the average person made the inflation-adjusted equivalent to $3 a day. It’s been that way for thousands of years. Starting in 1800, a graph of average income looks like a hockey stick, going almost straight up after being flat for thousands of years.

Why?

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Consider the radical transformation in the last 300 years. And capitalism’s role therein.

Here’s the formula: compare life for the typical person today to 30, 100, 300 years ago. The things we take for granted to today would have been an unimaginable blessing back then. I get a kick out of that story line every time I see it.

The latest in a long line of examples is from Don Boudreaux at Cafe Hayek:  Capitalism: The Greatest Engine of Equality. He ponders what a man from 1700 would think of a visit to Bill Gates. Just about every one of the astounding things observed by the visitor from 1700 is also available to almost every person living in the U.S.

(Cross-post from my other blog, Outrun Change.)

The driving force behind all of this?

Capitalism.

And property rights.

And a functional legal system.

And a functional democracy.

Read the full article. A few things that would have been beyond the wildest dream 300 years ago: (more…)

What strange, mysterious, magical force is loose that increased US production of both oil and gas by one-third in six years?

Is it targeted federal subsidies?  Breakthrough law from the Congress?  Socialist industrial policy?  Keynesian monetary policy?  Blockbuster documentary from Hollywood that changed minds across the country?  More support for college loans? A landmark special on network TV? Quantitative Easing?

No. It’s none of those things.

Barron’s is pondering the question as well:  The Secret of U.S. Energy Success.

Federal subsidies have produced a substantial increase in some things. The editorial provides a partial list. Subsidies have given us…

..our national surpluses of grain, milk, unemployment, nonprofit companies, disabilities, and mortgage debt.

Those subsidies didn’t produce the massive increase in oil production in Bakken and Eagle Ford.

The best paragraph from the editorial: (more…)