Monday, May 3, 2010

“Democrats Don’t Trust the Free Enterprise System”

We went to a rather amazing and informative meeting recently where a mild-mannered senior Republican Congressman was asked the following question by a self-admitted hard-nosed, go-strictly-by the-numbers accountant from a major accounting firm:

“These numbers about the deficits and debt going forward are so astounding. Why don’t the Democrat leaders of Congress such as Nancy Pelosi and Harry Reid and President Obama in the White House see the need for massive budget-cutting right now?”

The answer, calmly stated without vitriol and venom, was this: “They do not trust the profit motive in the American free enterprise system to do what is best in the interests of the nation.  And they honestly believe the only way out of this recession is to create as many public sector jobs as possible”.

This Congressman said it in such a matter-of-fact manner and without prejudice that you just had to believe that what he said was true. This also helps explain the Democrats' blind support for the massive increase in government oversight and regulation jobs to be created by ObamaCare in addition to their support for the stimulus bill which has not worked as advertised to 'create' millions of new jobs.

To that, we have to wave a humongous red flag and ask the following questions:

1. If public sector jobs are 'the way to prosperity', where do the tax revenues come from in the first place to pay for them all?

2. If the economic stimulus package was so great, how come we are still mired in the quicksand of this nasty economic recession with no strong growth in the forecast that will help re-employ tens of millions of Americans?

3. If we go to 100% public sector or NGO employment in America, will China keep lending the U.S. government money to pay for it all?  They would have to because there will be no private sector jobs or profits to tax to pay for these government jobs in the first place.  Tax revenues don't grow on trees you know...they come from taxing people who produce profits to stay in business.

4. How did America ever become the most prosperous, full-employment economic engine the world has ever known without the millions of public sector jobs for close to 85% of our history? Explosive American economic growth and success over the years should have been impossible without these millions and millions of public sector jobs, wouldn't it?

Maybe the Chinese really will be stupid enough to loan us $14 trillion each year so we can just plug everyone into a public sector job that what the government statists now in control believe? They might as well believe in Tinkerbell taking them to Never-Neverland.

This mild-mannered Congressman, let's call him 'Congressman Clark Kent' then, said the main reason why this nasty recession will not go away until 2013 at the earliest is because entrepreneurs and businesspeople are sitting on their cash and hands waiting for President Obama to not be re-elected to the White House and control of Congress changes, possibly this year.

We can not return to a time of vigorous economic growth and prosperity until the private sector is free to unleash the magnificent creativity and entrepreneurial genius that has always pushed America forward and not retreated into extended economic stagnation and sclerosis.  Right now, business people's hands are tied with the prospect of higher taxes and more regulation from the current leadership of our government, along with very little lending from the banks in the aftermath of the Wall Street meltdown.

How can you pass real economic growth policies in America when you don’t believe capitalism and the profit motive work to the good of this nation in the first place?

We believe that the private market system is the most amazing 'improver' of life conditions for human beings the world has ever known.  We wonder what America would look like if the power of free markets, zero corporate income taxes and a less litigious system were fully unleashed and allowed to flourish. We think some young American genius would invent 'The Jetsons' flying jet car that runs on hydrogen very soon, hopefully before we slip these surly bonds of earth so we can see them flying around before we go.

A bit of mea culpa here: I grew up in the idealism of the late ‘60s and early ‘70’s wanting to be an anti-trust lawyer for some reason in the tradition of ‘Nader’s Raiders’ headed up by Ralph Nader, who wrote “Unsafe at Any Speed’ about the dangers of the rear-engine Corvair. Big international corporations were portrayed to be the work of Beezelbub based on what I was learning in high school at the time and some of their overseas activities seemed to justify my interest in "breaking up big business".

However, I had a chance to work on a college internship in Golden, Colorado during the summer of 1976 at Coors Brewery and got to see 3000 people go to work every day making an unpasteurized product (therefore, 'natural' and 'green') that came from pure Rocky Mountain spring water and getting paid a fair wage to do so. They had health care coverage, a generous pension plan and seemed happy to work at Coors and then go home to raise their families in the beautiful foothills west of Denver.

All for working at a typical American corporation.  Imagine that.

The only downside was the overpowering smell of malt in the air.  After a few days, you get used to it, much like you get used to the sweet smell of tobacco dust in the air around the old tobacco manufacturing towns of Durham and Winston-Salem, North Carolina.

From that summer of 1976 on, it became more apparent with every passing day that the real strength in America lies in the hard work of creative people working every day to produce clever new products and services to be sold in the marketplace at a profit. We can not survive as America without the profit motive and free markets.

If anyone can honestly produce an argument that can show us how we can produce a government that protects us and provides a safety net without the foundation of a hustling, bustling vibrant private sector based on free enterprise and the profit motive, please tell us how. Cause we have never seen it accomplished in any historical or current event we have ever seen.

courtesy of


  1. Interesting as always Frank. While I do believe that the "free enterprise" system is the best way to go, I don't find the comment about the beliefs of Democrats about that system very surprising. But I do find it interesting that the "free enterprisers" are surprised. I think it would be much more instructive to ask what is the root of that mistrust in free enterprise, and then address that in the system rather than just dismiss the mistrust on ideological grounds. I suspect that one wouldn't have to look to far based on the past 10 years - flat income growth, lower 401K and home values, high unemployment, increasing gap between rich and poor, etc. Most people, who get a fixed paycheck, probably think that the system is at best irrelevant and at worst dominated by rich, unethical if not dishonest fat cats. They are disconnected from the profit motive that's supposed to drive the system. One could quibble about the data that I mentioned, but that's not the point. Perception is reality, and if mistrust is the perception then address it rather than dismissing those with that mistrust as idiots.

    Second, I'd like to see the supporting data on the number of business people waiting for Obama to get booted out. I more powerful hypothesis - smaller businesses (the real source of job growth) can't get credit and are reluctant to hire, and large companies are still too busy managing their stock price by cutting costs (jobs and new investment). The only businesses that worry about regulation to the point of freezing are those whose businesses are very mature - and probably won't produce any job growth anywhere.

    One has only to look at the aerial photos of the gulf oil spill to know that regulation is needed. (Is the market for oil a "free market"?) Could that whole thing have been prevented by the regulatory requrement for the "audio valves" (or whatever they're called) that the oil industry lobbied so intensively to avoid, but that most other countries with ocean wells require. Oh but wait - business has given the public yet another reason not to trust the free enterpise system.

  2. you oughta write a blog, Mark....or run for office from that island of yours.

    The guy I cited referenced his constituent work in his home district in Texas (that is as close I'll come to identifying him) where he says he invites business leaders from every large and small town to have coffee with him on Main Street somewhere and just tell him what is going on with their business.

    Without fail, he said that the vast majority of them have told him the same thing: We are not investing with the spectre of higher taxes, forced medical care coverage and more regulation like cap and trade coming down the doesn't make sense to them to put more risk capital to work and get a lower IRR as a result.

    they take all the risk and the government takes more of their results....that is a bad trade in anyone's book.

    I am not against all regulation and I am not sure it is possible to say that lack of regulation helped 'exacerbate' the BP oil spill....there have been thousands of regs passed over the years targeting safety on oil rigs and coal mines and there are still accidents that happen.

    Can we put a protective cover over everything in America based on some genius passing a law in Washington or the state capitals? Nope. We can set some general rules and regs and when they violate them, punish them or let them go out of business on their own like we shoulda let more Wall Street or Detroit businesses experience.

    That is part of 'free enterprise' that even business execs have conveniently forgotten...the freedom to get rich also connotes the freedom to go broke.


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