Here are lots of reasons you really love capitalism

Do you use an iPhone, Android phone, Kindle, Mac, PC, Netflix, YouTube, Amazon, Spotify, Google, Uber, Lyft, Waze, airbnb, FaceBook, Instagram, or Snapchat? Most of us use many of those.

If you like those services, then you really love capitalism.

Why?

Where do you think all those creative, innovative, successful services and companies came from?

The following video points out that every one of those services came

….from entrepreneurs with great ideas and the freedom to test them in the marketplace.

We call that capitalism.

Now consider some other services.

Video asks if you have recently been to DMV, taken a journey through the TSA security grope line, mailed something at USPS, or tried to reach IRS customer support?

Where do those sluggish, unresponsive services come from?

The government.

Why the difference in service levels between those two groups? Video explains the reason:

One needs to satisfy its customers to survive and grow; one doesn’t

Jared Meyer of the Manhattan Institute goes into more detail, explaining Why You Love Capitalism:

 

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“Magic without wizards”, or, why is your favorite bread on the shelf when you want it?

Consider merely the way that your favorite bread is always available, usually from many bakeries. And at the time you want. The bakery doesn’t know whether you will stop in on your way to work, during lunch, or after having dinner.

How can it be that several bakeries know to have your choice of bread available, whether sourdough loafs, whole wheat biscuits, rye rolls, croissants, or cranberry bagels? How did they know to order enough yeast, oil, and flour? How did they know what mix to bake before the sun came up?

How did the wholesalers know enough to deliver the right amount of flour to all the pizzerias, bakeries, and pastry shops?

How did the farmers know enough to plant the right amount of wheat, oats, barley, and rye last spring to harvest enough this fall to satisfy all those bakers?

Hmm. What could be getting all those people working together to make sure my favorite and your favorite bread is available when you or I want it?

Ponder these and many more questions just in terms of having bread on the shelf in this video, called “It’s a wonderful loaf:”

 

 

The answer of how all that happens is readily available for all who want to find it.

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Fort Union Trading Post brochure shows the beauty of trade

Photo by James Ulvog.

Photo by James Ulvog.

During our September vacation in North Dakota, we were able to visit Fort Union Trading Post and Fort Buford. Both were a lot of fun to see.

The brochure produced by the National Park Service for the Fort Union Trading Post national historic site 25 miles southwest of Williston has lots of fun comments. I want to focus on the wages at the time and the wonderful beauty of free trade.

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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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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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“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

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…)

Capitalism is awesome because it makes us think historical flukes are normal

Café Hayek explains why Capitalism is Awesome – the amazing performance of capitalism fools us into thinking that wonderful living standards we see today are the world-wide norm across history instead of an aberration compared to what happened during preceding thousands of generations.

Wish I could quote the full comment, but that isn’t right, so consider just this. The free market can

..fool us modern folk into thinking that the lives we lead are normal – fool us into thinking that poverty (rather than wealth) has causes; fool us into supposing that people my age (almost 55), because we still have all of our teeth and aren’t remotely yet decrepit, are “middle-aged” rather than old, ancient, nearly dead by historical standards; …

We also forget that (more…)

Capitalism is awesome because of incremental changes

It’s not just the huge leaps that make capitalism so incredible. It is also the constant, small, incremental changes that make products better, cheaper, tastier, stronger, and lighter. So explains Chris Berg in Why Capitalism is Awesome.

He explains that Ikea’s idea to pack and ship flat reduces shipping costs to about 1/6th of shipping full-sized stuff. They have staff who obsess over reducing weight while increasing strength, which in turn drives down prices further.

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Q: Was the middle class created by federal law or large, profit-hungry corporations?

A: It wasn’t the generosity of Congress.

Instead, Large, Profit-hungry Corporations Helped Create the Middle Class, as explained by Voices for Reason.

Big companies looking to make a buck created large supermarkets containing refrigerated produce and a large selection of dry goods. The article quotes The Great A&P, which points out before the age of large supermarkets: (more…)

Competition is good for everyone else but I need special privileges – The difference between pro-free enterprise and pro-business

There is a dramatic difference between saying you are pro-business and saying you are pro-free enterprise or pro-capitalism. Do you want lots of competition for yourself or do you want special treatment while everyone else faces competition?

Milton Friedman explains the difference:

 

A few of my favorite comments: (more…)