In Defense of Capitalism Monday November 17, 3:26 pm ET By Jonathan Hoenig These days, a capitalist is routinely thought of as a a dangerous, conniving hustler who'd do almost anything for a dol- lar. Capitalism is something that needs to be tamed or con- trolled, a notion reinforced by publicity-hungry regulators (read: Eliot Spitzer) who exploit the public's bloodlust for re- venge over stock-market declines. It's a mischaracterization born from the Enron and WorldCom scandals, two isolated incidents that became a trend(y) piece in the New York Times, thus a scapegoat for a sagging stock market and ultimately a condemnation of an entire way of life. Yet nothing could be further from the truth. After all, the exe- cutive who cooks a company's books and defrauds investors isn't a capitalist, but a thief. Although its critics would have you be- lieve otherwise, capitalism isn't a license for anarchy, crim- inality or simply doing whatever you please. So why don't I skip the philosophy lesson and just stick to stock tips? Well, because a successful trader is one who isn't only confident in his ability but in the moral foundation by which he conducts his affairs. Despite grandstanding regulators and scandal-hungry media, the truth is that a capitalist isn't a crook, but a profoundly moral and just element of society. I'm comfortable saying that. Are you? Alas, few are. Under capitalism, each person's life is his or her own, not the property of the state, the public nor the "common good." As capi- talists, we are neither slaves nor masters, but traders whose re- lationships are voluntary and to mutual benefit. And while we are free to pursue happiness, we aren't guaranteed to find it nor permitted to sacrifice other individual's rights in order to ob- tain it Nor is it random that income at the poverty level in America is still significantly higher than the average wage in China, where the per-capita GDP is a mere $4,400, compared with $37,600 in the U.S. And there's a reason why people typically live 10% longer in America than in communist North Korea, where the average male dies at 68, an age we in the States now consider the prime of life, not the end of it. How are such immense differences explained? Is the water in Wash- ington, D.C., so different than that of Pyongyang? Does the sun never shine in Beijing? Are Americans born with magic powers that Iranians don't possess? Of course not. The reason is capitalism. And indeed, when pressed, even the diehard socialists would have to agree that capitalism works. From vaccines to video games, the quality of life and abundance of wealth created by a competitive, free-market economy simply can't be denied. IT'S NO ACCIDENT that the infant mortality rate in Iran is more than six times worse than in the U.S. But what most people don't realize, or most likely just don't care to admit, is that unbridled, laissez-faire capitalism isn't just efficient, it's right. Capitalism is the only social system in history based exclusively on the concept of individual rights, which our country's framers put forth as "life, liberty and the pursuit of happiness." Capitalism isn't just it's just. Open your ears people, because something frightening is happening here. Most Americans are able to appreciate capitalism's practi- cality, but few, most notably our elected and upcoming crop of political leaders, are able to enunciate its profound morality as a system that protects the largest minority group in the indivi- dual. If that doesn't worry you, then it should. Maybe that's why I'm looking abroad these days. I believe coun- tries in Latin America and Eastern Europe, for example, where capitalism is a more recent development, have the biggest poten- tial for dramatic change from it's beneficial effects. Because while the U.S. is the birthplace of free-market capitalism, we most certainly don't have a monopoly on its adoption. Jonathan Hoenig is portfolio manager at Capitalistpig Asset Management, a Chicago-based hedge fund.7 responses total.
What #0 sort of ignores is that regulation is necessary to catch the thieves -- otherwise the trust that is necessary for capitalism to work falls apart. Also, judging from all the companies that restated their earnings shortly after the Enron scandel broke I'm skeptical that it was an "isolated incident."
In the uk it's quite common - and apparently quite legal - for crooks who have set up shady businesses which fail (usually with said crook walking away with untold fortunes from client's money and pension funds) to set up another company just as soon as they can get funding, even without changing the name (much) - for example, changing from "Protex Industries Ltd." to "Protect Industries, PLC"
It happens here, too, but they usually aren't ballsy enough to use the same name twice. Generally they try to hide the history. Sort of like how oil tankers involved in major spills are usually renamed.
I suppose i better add that the names in #2 are to the best of my knowledge fictional and are in no way intended to represent or identify any current or past company or organization.
re #0: It's hard to take the author seriously after an opening paragraph like: > These days, a capitalist is routinely thought of as a a > dangerous, conniving hustler who'd do almost anything for a dol- > lar. Capitalism is something that needs to be tamed or con- > trolled, a notion reinforced by publicity-hungry regulators > (read: Eliot Spitzer) who exploit the public's bloodlust for re- > venge over stock-market declines. It's a mischaracterization born > from the Enron and WorldCom scandals, two isolated incidents that > became a trend(y) piece in the New York Times, thus a scapegoat > for a sagging stock market and ultimately a condemnation of an > entire way of life. For one thing, nobody's being hounded by Spitzer for being a capitalist, they're investigated for insider trading or for gross and self-serving abuses of trust, such as the analyst who influenced an investment recommendation in order to get his child admitted to the right preschool. For another it's the most ludicrous sort of misrepresentation to insinuate that interest in the Enron and Worldcom scandals was driven by trendiness.
mcnally, i agree taht teh shot on spitzer is a cheap shot. teh sec isn't spending the money they have for regulaton adn sptizer is filling part of teh void. btw, it seems yu msiinterpreted the scandals .. teh scandals *lead* to articles that became 'trendy.' it was not tendiness that led to teh scandals. spitezer however does find a the miniscule and exaggerate it like a chicken little. / /
whore. / /
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