The Political Inquirer

America has simultaneously been the most economically ignorant and the most capitalistic country in modern times. For over a hundred years after the founding of the country, our laissez-faire policies allowed for massive economic growth, capital saving, and wealth creation. This lack of restrictions on wealth-creating allowed for the massive capital saving that took place to continue to be invested as government policies limited economic growth in many areas. During the economic totalitarianism of World War I and II, our economy did not fall apart because of many rich capitalist families that created massive amounts of wealth and continued to invest and grow businesses.

In America, economics is a subject talked about constantly. Everyone has an opinion, but almost everyone’s opinion is wrong. The fact is, economics is not a “dismal science” about numbers and supply\demand charts divided into macro and micro economics. Instead, it is about the study of human action and proper, logical theory that numbers then only support. Most modern economics has come from looking at numbers then trying to devise a theory. This is not a proper application of science, nor does it take into effect the way humans act or any of the “hidden” causes of the numbers. Lew Rockwell wrote one of the best analogies for this situation the other day, explaining exactly what the problem is:

If we have a solid theory in mind, the facts on the ground provide excellent illustrative material. They inform us about the application of theory in the world in which we live. They provided excellent anecdotes and revealing stories of how economic theory is confirmed in practice. But absent that theory of economics, facts alone are nothing but facts. They do not convey any information about cause and effect, and they do not point a way forward.

Think of it this way. Let’s say you have a bag of marbles that is turned upside down on the ground. Ask two people their impressions. The first one understands what numbers mean, what shapes mean, and what colors mean. This person can give a detailed account of what he sees: how many marbles, what kinds, how big they are, and this person can explain what he sees in different ways potentially for hours. But now consider the second person, who, we can suppose, has absolutely no understanding of numbers, not even that they exist as abstract ideas. This person has no comprehension of either shape or color. He sees the same scene as the other person but cannot provide anything like an explanation of any patterns. He has very little to say. All he sees is a series of random objects.

There is a great deal of misunderstanding in the field of economics. It is a misunderstanding that big business and government like because it keeps the populace at large ignorant. Why do economics professors and company economists continue to use the status quo “wrong” economics in their analysis and reports, thought? The answer is simple and two-fold: they don’t want to lose their job and most of them have simply been brainwashed since their high school economics class.

The reason I brought this up is because I saw Congress trying to drill the “big oil” executives with questions about the high prices. If you turn on the radio and listen to Rush Limbaugh, you will hear him tout that the “big oil” companies are simply doing their job as capitalists and that the Democrats are evil, trying to restrict capitalism. If you listen to the Democrats, it is the other way around. I contend that both sides are wrong–conservatives refuse to learn economics beyond basic “micro” economics and do not understand that big business and government collude at all times and all places. This is not capitalism. Limbaugh and conservatives defending the “big oil” executives is not going to convince the Democrats who realize that there is something wrong. Democrats and leftists are also wrong in their understanding of economics, but the silly defense that conservatives give for big oil doesn’t help the capitalist case. As free market believers, we must be as vigilant in opposing a government-business partnershp as we are about government interference into the market.

Time and time again we are going to hear populist retorts about the government needing to interfere in the economy. While businesses may act like they object, most do not. Bear Stearnes wanted their bailout, as did the other mortage companies. Big Oil likes the way the market is set up at the moment because it is government controlled limits the competition. We always hear that government stopped child labor and reduced labor laws, but it did not–capitalism and increased production allowed for one person to work eight hour or ten hour days and make enough for a whole family. Government simply passed a law once child labor was nearly eliminated to “take credit” for it, just as safety regulations have stopped declining once OSHA went into effect. Government is here to prevent economic progress. Big business will collude with government to restrict competition via antitrust laws, regulation, etc., which might help the business itself but overall gives unfair advantages by use of government coercion.

In recent years I have realized Republicans are only defenders of capitalism on the surface. They are just as prone to regulation and bailouts as Democrats are. The worst part is that Republicans will defend business-government partnerships as “capitalism” when it is not a free market in the least, only hurting the case for capitalism. The advance of Western Civilization depends on economic understanding, but government schools will see to it that people never know the truth about economics. We will only edge closer to socialism, the most evil institution mankind has ever faced.