PART TWO: Free Enterprise is Better than Capitalism
December 27th, 2016 // 7:50 am @ Oliver DeMille
Part II: The Central Issue of the Trump Era*
“The median [U.S.] family debt went from an average
of $25,000 per family in 1989 to over $70,000 in 2010.
It’s getting harder to make ends meet,
and harder to stay financially afloat.”
—The 5 S’s of Money (citing the Center for American Progress)
LET’S get straight to the point. The biggest battle in the Trump Era probably won’t be capitalism versus socialism. It will be free enterprise versus crony capitalism. For America’s future, free enterprise simply must win.
But crony capitalism is far ahead in this battle right now.
To understand this, we need to define some terms. There are two major types of economies: market economies and command economies. The first is based on freedom, the second on force.
Within these two branches there are a number of subtypes, including various kinds of command economies such as socialism, communism, fascism, collectivism and different applications of economic authoritarianism and totalitarianism.
The divisions of market-style economies are sometimes more confusing to people from free societies, because most of us have been trained to evaluate political and economic issues in binary mode where we narrow any debate down to only two sides—such as liberal vs. conservative, socialist vs. capitalist, democratic vs. totalitarian, good or evil, Allies or Axis, believers and atheists, idealists and realists, free or not free, and so on.
That said, we live in an era where the various types of market economics are now in conflict. During the Cold War the world was divided between two great camps, with market economies of all types firmly allied against the command economies–the NATO nations of the West versus the Soviet Bloc and world communism.
But after the Cold War (and especially in the post-9/11 world), this has dramatically changed. There are forces supporting each of the various types of market economies, and these are often pitted against each other in ways unthinkable before the fall of the Berlin Wall in 1989.
Capitalism Deconstructed
Differentiating between these sub-types is important for anyone who wants to accurately understand what is happening in today’s world. When people use the term “capitalism,” they may be referring to any of the following five types of market economies. And the truth is that each of these models has drastically different goals and processes:
- Mercantilism: A system where the law allows market forces but gives preference and special benefits to the sector of the economy owned (or directly controlled) by the government. Also known as “state capitalism.” This system was historically used by the British Empire. As Parag Khanna put it in 2016: “…all countries practice some form of ‘state capitalism’ today, whether subsidizing strategic industries, restricting investments in key sectors, or mandating financial institutions to invest more at home.” (Khanna, 2016, Connectography, 33)
- Corporatism: A system where the law encourages market forces and also gives preference and special benefits to the sector of the economy owned by big corporations within the nation, sometimes referred to often as “Big Business,” “The Military-Industrial Complex,” or simply “The Establishment.”
- Keynesianism: A system where the law allows market forces but gives preference and special benefits to companies and institutions that are so big that they tend to care more about their public image for societal responsibility and promoting social justice than about profit(s), market share or stock value. According to Keynes himself, Keynesianism seeks the goals of socialism through market means.
- Capitalism (crony capitalism): A system where the law encourages market forces and also gives preference and special benefits to the sector of the economy owned by big capital—including big corporations like in Corporatism, but also wealthy foreign and multinational corporations, and highly influential non-corporate institutions such as rich foundations, moneyed trusts, political parties, well-funded lobbies and special interest groups, affluent non-profit entities, wealthy families, moneyed foreign investors, and others with large amounts of capital. Under this system, the rich rule society, and they naturally influence government to maintain policies that benefit the rich more than others.
- Free Enterprise: A system where the law encourages market forces and gives no special preferences; it protects equal rights for all individuals and entities and leaves initiative and enterprise to private individuals, groups, businesses and organizations that are all treated equally and with minimal legislation by the legal code.
All five of these sub-types are market-based, and sometimes called “free market” or simply “market economy” systems. But please carefully re-read the differences between these five economic models, because, again – while they are all market systems, they differ drastically in theory and practice.
For the last three generations, these five types of market economics have frequently been lumped together under the label of “capitalism.” While this is technically inaccurate—because capitalism is a sub-type rather than the whole of market economics—this is the way the word “capitalism” has been used and understood by most people.
Under this popular definition, capitalism is synonymous with “market economics” and is a label for the entire free-market model. But even when people use this broader definition, it is important to distinguish which of the five types is being discussed—because the future of freedom under capitalism, corporatism or mercantilism will be a very different reality than it would be under true free enterprise.
So, to summarize, we have five definitions of “capitalism” in the current usage, and another definition which uses “capitalism” to refer to all the five types together. Naturally, these definitions are frequently confused in our contemporary language. Note that even the broader definition of “capitalism” includes every market approach from corporatism and Keynesianism to mercantilism and crony capitalism. In all of this, free enterprise is often forgotten.
Even worse, in the realm of modern politics all five of these systems are frequently lumped together and referred to as “democracy” or simply “freedom.” While this is a partially accurate definition, it confuses the fact that these five kinds of systems behave very differently and offer different results to society.
Madison Weighs In
Understanding the details and nuances of how these words are used is extremely important to maintain freedom. The American founders dealt with several similar language challenges, such as when Madison felt the need to write Federalist Papers 10 and 14 explaining the important differences between democracies and republics.
He also used papers 18, 19 and 20 to clarify the differences between federations and confederations, as well as national and federal governments. Without such clarity, the Constitution would have been confusing to many Americans who were deciding whether or not to ratify it. The fact that today most Americans don’t understand these differences illustrates how far we have devolved from the level of education exemplified by the founding generation.
There are numerous similar examples, and part of being a free people is taking the time to understand the nuances of economic and political freedom and the language of liberty. No nation in history has long maintained freedom at a level deeper than that understood by the regular citizens in the society. And note that few things are more essential for free people than clearly understanding what type of economic system they want.
Based on the definitions above, consider the following three observations:
- All five types of market economies are better (meaning they have more freedom, opportunity and prosperity for more people) than all types of command economies.
Even the market approaches with the least freedom (Keynesianism and mercantilism) are significantly better than the command systems with the most freedom (collectivism and socialism).
- Still, when comparing the five subtypes of market economies, free enterprise is significantly better (with more freedom, opportunity and prosperity for more people) than mercantilism, corporatism, crony capitalism, and/or Keynesianism.
- The United States, Canada, Britain, France, Switzerland, Japan and other leading free nations of the world today have far too much mercantilism, corporatism, crony capitalism, and Keynesianism—and not enough free enterprise.
This is surprising to most citizens of America and the free world. For example, many conservatives in the United States argue that we are a “capitalist” nation or vote for the “capitalist” candidate and conclude that all is well, when in fact free enterprise is under attack from socialism but also just as strongly from mercantilists, corporatists, Keynesians and crony capitalists.
Voters and citizens must know what to look for when a policy or candidate claims to promote “capitalism.”
Real Life Differences
Some might argue that most of this is mere theory, and that the United States today is a free enterprise society rather than a crony capitalist system as outlined here. Such an assumption is incorrect. The U.S. commercial code has numerous laws which are written specifically to treat people differently based on their wealth—and extending special benefits to those with more capital.
For example, it is illegal for those with less than a certain amount of wealth to be offered many of the best investment opportunities. Only those with a high net worth (the amount is set by law) are able to invest in such offerings. This is capitalism, not free enterprise. Under free enterprise, the law would be the same for all people.
Also, in many cities employees of the wealthy are allowed special legal benefits—such as carrying firearms (personally or through body guards), operating under false names, or traveling with different security measures—that are withheld from the regular citizens. However a person feels about gun laws or financial policies, such laws specifically treat the rich and powerful differently than the rest. Crony capitalism gives them special benefits.
This bears repeating: The laws of the United States stipulate that if you have more money you can invest in business opportunities that people with less money cannot (to study this in more depth, see the terms “sophisticated investor,” “accredited investor,” and SEC regulations on private investment offerings). The specific amounts and details are changed by law over time, but we are absolutely a crony capitalist nation where the laws give higher benefits to the rich.
In fact, many of these laws, including all the examples above, specifically benefit the wealthy to the detriment of wage earners. Regular working people are excluded by law from the best investments and various other perks and benefits. This system is called capitalism, and it is a bad system—better than socialism or communism, to be sure, but not nearly as good as free enterprise.
With all this said, the amazing thing is that this reality is basically ignored by almost everyone, mainly because those who point out the flaws of capitalism tend to be promoting socialistic solutions rather than free enterprise.
As a result, people are accustomed to attacks on the rich by those who want bigger government. But almost nobody has experienced those who want more free enterprise and much smaller government pointing out that the rich have terribly unfair legal advantages in our society—and that this is a bad system.
In fact, this is so deeply ingrained in most people that when they hear anyone criticizing the unfair benefits enjoyed by the rich, they seldom believe that the speaker is making a case for smaller, limited government and less socialism. We are so conditioned, that this possibility just does not compute.
Some may say that I am overstating this point. “Of course the rich and powerful are treated differently than the rest. After all, they are rich and powerful!” While this may be true, such a view is itself a symptom of aristocratic society with preferential class divisions. And in nations where the laws and government treat the rich and powerful differently, freedom is always in decline.
In free enterprise systems, the law allows all people to take part in any investments. If there are laws about bodyguards, firearms, using false names, or anything else, they are the same for every single citizen in the nation. This is what free enterprise means, because such a system gives everyone truly equal opportunities. In a system where Congress creates one set of laws for some, and different laws for those with wealth, status, or position, free enterprise isn’t allowed to give people the full benefit it should.
Indeed, in our system, Congress goes so far as to exempt its own members from certain laws and guidelines; this is especially harmful when members of Congress are allowed special financial opportunities that other people are not. Thus it isn’t surprising to see people elected to Congress and within a few terms become extremely wealthy, even though their actual salary could never generate such prosperity. They are allowed (by their own votes in Congress) to make deals that are illegal for regular people. This is crony capitalism, not free enterprise.
The Local Test
Another way to test the level of free enterprise in your society it to start a business in your local area. In fact, start two. Let the local zoning commissions, city council and other regulating agencies know that you are starting a business, that it will employ you and two additional employees, and then keep track of what fees you must pay and how many hoops you must jump through to gain the needed approvals.
At the same time, have your agent announce to the same government officials that a separate company, a big corporation, is bringing in a large enterprise that will employ 4,000 people—all of whom will pay taxes to the local area and bring growth and prestige. (Don’t really announce this—because if it’s untrue you might be breaking the law, unlike big corporations that are allowed to routinely float such trial balloons.)
Then simply sit back and watch how the two businesses are treated. In most towns, counties and cities in the United States, the small business will face an amazing amount of red tape, meetings, filings and obstacles—the big business will likely be courted and given waivers, benefits and government-funded publicity.
Add up the cost to government of both of your proposed businesses, and two things will likely surprise you: 1) how much you will have to do to set up a small business, and 2) how much the government will be willing to spend to recruit the large business.
This is the natural model in a crony capitalist system. Capital gets special benefits and a different level of treatment by the government. The result in such a system is that the rich get richer, the poor get poorer, entrepreneurialism is discouraged, and many jobs, innovation, investments and growth move to other nations.
In contrast, under free enterprise, everyone is treated the same by the law. Free enterprise is a better system than capitalism—it provides more freedom, opportunity and prosperity to many more people.
Bait and Switch
All of this is more than a mere philosophical or semantic argument about which word we should use. The truth is that many people, probably most people, who feel positively about capitalism actually mean free enterprise when they say “capitalism.” The things they admire about “capitalism” aren’t special benefits to the rich and different laws for the rich versus the poor or middle class, but rather a true free market where everyone is treated equally by the law and where each person has true and equal freedom of opportunity.
The problem is that this definition of capitalism seldom makes its way into official government policies or the law. People support free enterprise, which they call “capitalism,” and the government implements public policy that is certainly capitalism (because it favors those with more capital) but violates the principles of free enterprise. This “bait and switch” is one of the main problems with using the term capitalism.
If by capitalism we mean true economic freedom and laws that treat everyone the same, regardless of their level of wealth, and if this thing we call capitalism made it into our laws and became our operational policies, I would ardently support it. In fact, I would support such a system whether we called it free enterprise, capitalism, or even zebra- or giraffe-ism. The system, not the label, is the important thing.
The problem occurs when people support a thing called “capitalism” because they believe it is free economics for all, and then those in power take this popular support and use it to enforce something very different. This is the current reality, and it is hurting the middle and lower classes by decreasing their opportunities and abilities to prosper. Again, most people don’t even realize this is happening to them.
Freedom for All
In short, call it what you will, but we need a system of truly free economics with laws that treat everyone the same. Words mean things, and the word “capitalism” emphasizes special benefits to the wealthy with capital just as naturally as the phrase free enterprise promotes freedom and enterprise for all. Still, it is the actual system that matters, and all of us would do well to carefully observe political and economic details and nuances—regardless of how things are labeled.
When the laws are altered at all levels so that government entities treat all businesses and individuals the same, regardless of how much capital they have (or don’t have) in the bank or as assets, the natural result is the spread of more business, innovation, entrepreneurialism, jobs and economic growth. Free enterprise, not government favoritism of any sort, is the most effective economic model.
If we want to call the future of our society by the name capitalism, fine. But we must find ways to effectively change the current model to a system where the law treats everyone the same by maintaining true freedom and opportunity for everyone—without special government benefits for a few elites.
It is important to recognize that this is about more than quibbling over what word to use. As long as our society gives special legal and financial benefits to elites, while withholding them from the rest of the people, freedom will continue to decrease and the gap between the 1 percent, and even the .01 percent, and the rest will keep expanding. For the typical family, this means they will have to work longer and harder in increasingly scarce jobs in order to earn less and less. This is a bad economic model—bad economically, and bad for freedom and society.
Today’s Major Challenge
To put this all in perspective, the Trump Era is on target to emphasize mercantilism, corporatism, Keynesianism, and especially crony capitalism.
This needs to change. We need to focus on free enterprise.
But first, people need to realize that this is even an issue. The truth is, the battle between free enterprise and other types of capitalism isn’t just an issue right now—it is the central issue of the Trump Era.
We need to start acting like it.
*(Note to Reader: This post is part of an upcoming new book by Oliver DeMille, entitled Free Enterprise versus Capitalism: Battle for the Future of Freedom.)
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Challenges with the Trump Administration?
December 27th, 2016 // 7:03 am @ Oliver DeMille
Problems in History
I recently recommended an article from The Wall Street Journal because it addresses the fact that during the Obama Administration the executive branch greatly expanded its power. Unfortunately, the newsfeed on my iPhone gave me clear access to the article, while those following the link I provided were expected to subscribe to view the content.
My apologies for the inconvenience! I’ll address the issues directly here.
The concern is that the Trump Administration could use this expanded power in ways that continue to hurt the nation—giving more and more power to the executive branch and agencies and further reducing the powers of Congress and the States.
Since the Court has largely supported this increase of presidential and executive-branch power, the problem is growing. The article noted that presidents from both political parties have generally increased executive branch power, and that very few presidents have done anything to curtail it.
Though the article emphasized historical presidents in the early part of the twentieth century, the truth is that nearly all presidents have pushed for increased power to the White House. Clearly FDR emphasized this approach, but so did Eisenhower, Johnson, Nixon, Reagan, Clinton, both Bushes, and Obama. It is unclear whether Trump will do differently.
The American electorate should keep a very close eye on this.
Future Watch
Another challenge is that these same presidents tended to simultaneously decrease the power of the States while increasing the power of executive branch agencies, officials, and bureaucracies. The Trump Administration may or may not follow this damaging pattern.
The American citizenry needs to keep a close eye on these two very important issues in the new Administration:
- Keeping the executive branch firmly within its Constitutional limits in its dealings with Congress
- Keeping the executive branch from further degrading the powers of the States
These are vital issues, and they are currently quite perilous. The Trump Administration will hopefully take the right approach on this, but it is ultimately the responsibility of the people to ensure that freedom is maintained. Whoever you supported during the elections, these two issues are very important for the next four years–and beyond.
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Heads up on a must-read
December 19th, 2016 // 4:19 pm @ Oliver DeMille
Category : Aristocracy &Blog &Citizenship &Constitution &Current Events &Foreign Affairs &Government &Leadership &Liberty &Politics &Statesmanship
Free Enterprise is Better than Socialism or Capitalism
December 14th, 2016 // 8:08 am @ Oliver DeMille
In light of the recent election, a deeper understanding of the real battle facing America in the year and decade ahead is incredibly important!
But surprise: It’s not what most people think.
THERE is a hidden battle raging for the future of America. And, by extension, this battle impacts the prospects for freedom around the world. Indeed, if the great freedom system created by the Declaration of Independence and the U.S. Constitution is lost in the United States, it will likely take centuries before real freedom regains its current level of influence in the world.
This is the great struggle of this generation, but sadly the center-point of this contest is unclear to most people. Only a relative few understand what is actually going on behind the curtain. In fact, this battle for our future hinges on two main questions.
The first question is:
Will Socialism or Free Enterprise be the leading economic system of the 21st Century?
This conflict has been boiling for nearly two centuries, but it is now reaching its climax in the United States. If socialism wins the day, the future of freedom and economic opportunity in the decades to come will be bleak—in North America and around the world.
The decline of the free world will accelerate, China and other socialist-based nations will rise more quickly and gain global power (often by applying free enterprise principles), and the Founding Fathers’ experiment in constitutional self-government will end. Our standard of living will decrease in the decades ahead, the standard of living for our children will be much lower than ours, and their children will likely have a lower standard still.
If, on the other hand, free enterprise wins this battle, the future of American influence will be strengthened, freedom and economic opportunity will spread, and the free world will reboot and rekindle the philosophy of liberty for all humanity.
But the future of this battle is very much in doubt, mainly because the forces of free enterprise don’t actually know who they really are. Free enterprise is losing in both major American political parties, and in the media, academia, Hollywood, and among the political and financial elite. The combined supporters of socialism, though certainly not a unified team, are clear about their goals and strategies. In contrast, those who stand for free enterprise are fractured and unsure, because they are divided by a central confusion about what free enterprise really is. Even when they win elections, the divide remains.
In nearly all writings from the past five decades, when authors speak of socialism and its top competitor, the words used are socialism vs. capitalism. This brings us to the second great issue in the battle for our future:
The second question is:
If Socialism isn’t victorious in dominating the 21st Century, will the winner be Free Enterprise or Capitalism?
These two great questions (socialism vs. free enterprise on the one hand, and capitalism vs. free enterprise on the other) will be the guiding themes of the coming decades. If capitalism wins, the consequences won’t be as negative as socialistic dominance, but they will not be as positive as the results would be under free enterprise.
When a friend told me a while ago that he thinks socialism may be the only answer to our nation’s decline, I was surprised. It’s not what I’m accustomed to hearing from him over the years. But I think I understand what he was saying. Capitalism as we currently apply it too often wreaks havoc with our freedoms, our economy, and our future.
I don’t like the word “socialism” because it has too much baggage (totalitarianism, Marxism/Leninism, a string of failed nations that destroyed their society by attempting to adopt it, etc.) and because there is a better answer. But I do see the desperate need to deal with what modern society calls “capitalism” has done to us. When some people say “socialism”, they mean that capitalism is broken and we need a real solution—soon. And they’re right.
I’m not sure if this is what my friend meant or not, but a lot of people feel this way. It’s a common bond of many who are tired of the “politics as usual” options provided by the Establishment. The desire for something different cuts across the political divide, and its ranks are growing. It has won some surprising elections, but frequently such elections were followed by disappointment as those elected failed to bring true solutions that work.
What does this all mean? What’s behind it all? What is really happening?
Basic Training
Let’s start with the basics. Put simply, free enterprise and today’s system of capitalism aren’t the same thing. Free enterprise is strongly supportive of freedom for all people, while what usually passes for modern capitalism isn’t free enterprise at all, but actually crony capitalism. And crony capitalism deeply undermines freedom.
The problem is straightforward. Both socialism and crony capitalism are steeped in class divisions. Neither treats everyone the same before the law—whether they’re upper class, middle class, or lower class. Socialism claims to do this, but it has never created a society that actually delivered on its promises. In fact, socialist nations have some of the widest divides between the super-rich and poor in the world. And the underclasses in socialist systems are widely neglected, terrorized, and abused.
Crony capitalism is also a disaster. There is a different set of laws for the wealthy than for everyone else, laws that help the rich get richer and the powerful gain more power—while the under classes are routinely treated differently by officers of the government, regardless of what the laws say on paper. To repeat: Under a crony capitalist model, the elite classes have numerous special benefits in the law that allow them to increase their wealth and power at the expense of the rest of us. The law is written to help them, and to keep others from effectively competing with them.
The truth is, crony capitalism is a terrible system. Terrible for freedom, and terrible for prosperity. It lasts because a few elites at the top obtain huge wealth and inordinate power—and they like it that way. Likewise, socialism is terrible model. It almost never gets implemented in a way that even remotely resembles what its proponents idealize and promise. It nearly always becomes an Orwellian caricature of equality, freedom, and “prosperity for all.” Both systems are deeply flawed.
Crony capitalism gives too much power to the money elites, who frequently use it to influence government; socialism gives too much power to government elites, who nearly always use it enrich themselves and give special benefits to their families and colleagues. Both socialism and crony capitalism have proven repeatedly and consistently harmful for the regular people, the masses.
Binary Code
Part of the problem is the binary way in which most moderns see this struggle. Meaning: Many people think that if socialism increases in a nation, capitalism must be decreasing, while if capitalism declines then socialism is on the rise. The truth is that socialism and crony capitalism are natural partners. When the crony capitalists give great power to wealthy elites, the people naturally begin demanding socialistic programs from their government.
Likewise, when socialists increase the amount of money government takes from the wealthy to offer programs for the poor, they make the government bigger and bigger—and the elites who inevitably control such governments from behind the scenes naturally absorb this increased power. The bigger the government—even in the name of social benefits for the citizens—the bigger the power of the aristocratic elite class.
These processes happen simultaneously in most modern nations of the “free world.” Centralized governments get bigger, they control more things in the lives of regular citizens, and a small number of elites enjoy a rapidly increasing share of the money and power.
Best of all, for the elites–when the regular people get upset with an arrangement that is making life harder and worse for most of them, the elites use investment (in businesses, banks, lobbying firms, special interest groups, media, etc.) and donations (to academia, think tanks, hugely powerful private foundations, and political campaigns, etc.) to increase their own influence. It works, year after year, decade after decade. Elites get more powerful and own a bigger share of the wealth.
At the same time, the regular citizen finds it harder and harder to make ends meet, and has less and less influence. Many of the elite-owned and elite-funded media organizations, academic institutions, producers of entertainment, and other top influencers fuel the “socialism vs. capitalism” debate, often using other labels (such as conservative vs. liberal, Republican vs. Democrat, etc.).
This debate makes many of the regular people think that someone is on their side; and it also gives them someone to see as “the enemy.” But both sides, many in both major political parties, and the Establishment wings of both conservatism and liberalism, are funded largely by the same small class of elites.
Again: These elites win most elections, because they fund both sides. They win most policy battles, because they fund the opposing groups. They win at the bank too, because they manage each major political, media, and cultural conflict in a way that brings more of the regular people’s money into elite-owned business services, products, and corporate bank accounts.
The solution to such behind-the-scenes elite domination is a system that treats everyone equally before the law. Everyone. Rich, poor, elite, non-elite, fat, skinny, tall, short, smart, dull. Yes, there should be a separate set of laws for minors—as a protection. But all adults in a truly free system are treated equally by the laws and government officials. This is not the case under crony capitalism. Elites get special benefits.
The Moral Law and Economy
Moreover, truly free government doesn’t have any laws that are immoral. This may seem a strange concept when we are discussing economics, but it is in fact a central truth. As Bastiat explained, the people can only morally delegate to government authority to do something the people have the authority to do. You can’t morally delegate an authority you don’t actually have. Specifically, the force of government is moral only if it is used to defend inalienable rights. Any other use of force or government is immoral.
Together these two foundational principles are the key to free society:
- Laws and government actions can only protect inalienable rights.
- The government must treat everyone equally before such laws.
Socialism doesn’t do this. It recommends using government force to do myriad things beyond protecting inalienable rights. And, historically, socialist societies don’t treat everyone equally before the law—government officials are treated according to a different set of standards. What we call capitalism today has similar problems. It purposely sets out to give special benefits before the law to those with great wealth, with lots of capital.
Both socialism and crony capitalism operate like the Queen of Hearts in Lewis Carroll’s classic book Alice in Wonderland. When the Queen plays croquet with people from her realm, she must win every shot. Not just every game, but each and every swing of the mallet. Everybody lets her win, knowing that if she is bested in even one shot the person who bested her will hear the words: “Off with his head.”
What kind of system is that?
Actually, people who live in socialist nations or crony capitalist societies are used to it. They don’t usually lose their heads, but they know that the whole system is stacked against them and their children. An elite class rules things—regardless of how proponents of socialism or capitalism claim things are supposed to work—and the elites get their way, either by law or by the actions of government officials (despite the so-called law).
In our modern “capitalist” nation, there are a number of laws on the books that treat elites very differently from everyone else, and long-standing practices and policies that treat the underclasses even worse. That’s not socialism, it’s crony capitalism. And it’s a tragedy.
Still, the answer isn’t socialism. Marx’s model is just another flawed and broken system. The answer is true free enterprise—where the government only protects inalienable rights, and actually does protect everyone’s inalienable rights (no matter their social status).
Class Divides
It’s hard for many moderns to grasp just how effective such a model can be. We simply have very little experience with it. But with true freedom, everyone has opportunity. If the upper class wants to dominate, it can’t. The law won’t let it. (Which is precisely what the “pure socialists” are looking for.) If the government wants to dominate beyond it’s proper role, it can’t. (Which is precisely what free enterprisers seek.) When this is the system, as Tocqueville put it in Democracy in America, everyone belongs to the same class—all are treated equally and appropriately before the law.
The only ones who are let down by free enterprise are the crony capitalists or elites, who truly want to dominate. Their motto, as described by an article in The Atlantic on the culture of Wall Street investment bankers, is telling: “It is not enough to succeed. Others must fail.” No win-win is good enough for them. Control is the only acceptable outcome. That’s the driving mantra of elite rule, both in applied socialism and crony capitalism.
If the word “socialism” meant stopping such elite domination and spreading a system of true freedom, I’d be all for it. But the thing is, it already has a name: Free Enterprise. And it works, as long as we don’t let crony capitalism, elitism, or socialism creep in.
Sadly, few people understand the difference between free enterprise and crony capitalism. Yet the differences are largely driving our current decline. It is time for anyone who truly cares about freedom in our modern world to clearly understand this battle, its roots, and the future it is creating for us even as we speak. Moreover, it is time to remedy this situation before it entirely restructures our society. Freedom hangs in the balance.
This is about freedom, success and progress, and how all three are served better by free enterprise than either socialism or crony capitalism. It is about who we really are as people, Americans and members of the free world, and why the differences between these two ways of life—capitalism and free enterprise—are at the root of our future.
Semantic Power
For far too long free enterprise has been held back and watered down by the tenets of capitalism. In fact, perhaps the most significant reason socialism has been able to capture the support of so many people in modern times is a direct result of confusing free enterprise with capitalism.
When the differences between capitalism and free enterprise are clearly understood, and the flaws of capitalism are removed from our opinions of free enterprise, socialism will have little or no chance of winning this great battle for the hearts and minds of the people.
Before World War II many Americans combined their view of Stalin’s communism and Hitler’s Nazism into one group considered an axis of evil, and during the Cold War many people mistakenly saw communist China, Russia, North Korea, Vietnam, Cuba and others as one cohesive entity. This caused numerous flawed policies—and cost far too much in blood, sacrifice and treasure—because national leaders took action based on faulty assumptions.
Likewise, today many people erroneously lump capitalism, democracy, and free enterprise into one indistinguishable whole. But free enterprise is a system of true freedom, and while democracy is clearly better than totalitarianism and capitalism is in some ways superior to socialism, free enterprise is significantly better than all these alternatives.
Free enterprise deserves to be understood on its own merits, without the baggage of capitalism weighing it down. Nearly all of the legitimate criticisms levied against free enterprise are actually attacks on the flaws of crony capitalism. As a result, free enterprise has seldom received a full consideration on its own merits. Indeed, if the battle for the 21st Century comes down to capitalism vs. socialism, socialism may very likely carry the day.
True free enterprise, in contrast, is the best economic and political system known to mankind, and if it is understood as it truly is, free from the stains and blemishes of crony capitalism, few will see socialism as the right choice for humanity. Ideas have consequences, as the great Richard Weaver assured us, because all human actions aim at some goal, some ideal. What we hold up as our standard impacts our most important choices as a nation. As long as our ultimate objective is capitalism, socialism will always have its coffers full and its meetings packed. Capitalism is flawed; so is socialism.
In contrast, free enterprise is a very different model indeed. It is time to truly understand free enterprise, to decide as a generation if free enterprise or it’s de facto modern opponent, capitalism, deserves our support against socialism, and which model we want to pass on to our children and grandchildren.
Again, if the battle is between socialism and crony capitalism, as we have seen for generations, the victor is still unclear. But if free enterprise has a real opportunity in the full light of day, if every citizen in the free world has the chance to understand it for what it really is and choose to support or reject it, the days of socialism are numbered.
And free enterprise is not some idealistic dream. It alone is the proven system of widespread freedom and economic opportunity in mankind’s history. Free enterprise is the basis of most real and lasting freedom everywhere, whether people have recognized it as such or not. Even where capitalism has gotten credit for freedom and prosperity, the truth is that free enterprise was the actual source of success.
As free enterprise goes, so goes freedom—in every nation of the globe, and through every epoch of human history. It has seldom received its due, but it has been at work wherever freedom existed, spreading opportunity from behind the scenes.
It is now time to give free enterprise a bigger chance, to at the very least see what it stands for on its own, how it differs from capitalism, and what it promises for those who implement it in their society. This is a book about freedom, and the reality that the actual principles and processes underpinning all human freedom are found in free enterprise.
One thing the new leadership in Washington, and the people, need to clearly remember is this:
To the exact extent that free enterprise (not crony capitalism) flourishes in the 21st Century, we will see real freedom expanding its blessings in America and in the world.
(Note to Reader: This post is part of an upcoming new book by Oliver DeMille, entitled: Free Enterprise versus Capitalism: Battle for the Future of Freedom. Look for Part Two of this report, which will provide more details on this great hidden battle of our time, in another post coming soon.)
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The Hidden Meaning of the 2016 Election
November 15th, 2016 // 7:43 am @ Oliver DeMille
The election is over. Now comes the truly important part.
And it depends on you, more than you realize.
1. The Two Nations in the U.S.
Forget everything you thought politics were about in America. The Bernie Sanders and Donald Trump revolution of 2015-2016 taught us something very important about our country. We sort of knew it already, but now the evidence is clear.
We are two nations. Not one nation, but two. Distinct. With different goals and dreams. With a different view of what is good and bad. And with almost opposite beliefs about what we want in the next four years, and beyond.
Regardless of how the media has portrayed things during the long months of the election, this great national division isn’t Red versus Blue states, Republicans versus Democrats, or whites versus minorities. It isn’t the same old battle between conservatives and liberals. Something new is afoot.
We are a nation divided. A nation split–fractured, in fact. In 2016 this division came to a head, but the election didn’t put an end to it. Not even close. We are a nation split between the political class, the elites, on one side, and the great mass of citizens on the other. But the differences between these two classes are significant. Specifically:
- The masses want to put the election behind them and get back to their daily lives. They hope the agents of change they elected will make things better, so they can focus on their families, jobs, and hobbies.
- The political class from both parties, Democrat and Republican, feels slapped in the face by the 2016 election. In every way they were put in their place by the voters. They’re not used to this. In fact, they’re used to sneering at the regular people in the nation, the people who live in rural towns and flyover states (the states “important” people fly over when they travel from one coast to the other). They’re used to laughing at the idea that the masses run this country. So now, with the fresh sting of the election driving them, they’re going to go to work every day to get their power back.
These are the Establishment of both parties, the elites in finance, academia, media, Hollywood, and lobbying. Many of them live in the Boston/New York/Washington D.C. corridor, and a lot of them live in the largest 100 U.S. cities that are home to the elites in each of the 50 states.
These Establishment members, the political class, care little for the struggles and challenges faced by the regular people. This group strategizes, debates, plans, and implements its policies, while routinely telling the masses to leave politics to the experts. “We’re the adults,” the elite class smugly tells the rest of us on any major issue of politics and policy. “Leave governance to us. Only we really understand what you need.”
The masses are, naturally, upset by this approach. But the problem is much deeper than the elites admit. The political class is now angry. The elites lost the battle in the recent election. But they are committed to win the long-term war.
Two Americas indeed.
2. The Political Class versus The People
The political class includes elected officials, federal government employees and bureaucrats, the media, academia, Wall Street, Hollywood, celebrity athletes, and anyone who lives in the elite, big-money bubble that insulates them from the daily struggles of the working class in this sputtering economy. This group benefits from the way Washington has done things for the past thirty years. They are wealthy and influential in the current system. They don’t want change. They are shocked by what happened on election night 2016.
They want higher taxes and even more regulation, a bigger Washington, bigger government, bigger programs, more bureaucracy.
This isn’t what the masses want.
But as mentioned, the masses see the election as over. They want to go back to work, hoping their newly elected leaders will fix things. In contrast, the political elite class is now ready to go to work winning back their power—to do whatever they can to block the revolution that put Trump into office, to do whatever they can to keep things the same in Washington and around the nation.
And the political class does this full time. For most of them, it is their job, their career, their work—and they’re at it 60-80 hours a week, day after day, month after month.
3. A New and Different Culture War
As part of this trend, more of the regular people will find themselves feeling less tolerance for celebrities, actors, singers, sports figures, news pundits, and professors trying to use their fame or authority to influence politics. The whole elite class is now considered suspect at a deeper level than ever before. “We’ll attend their movies and watch them play basketball,” the masses now say, “but we don’t care what they say about politics. They’re part of the Establishment. What could they possibly know about what’s best for me and my family?”
The elite class hardly knows what happened on election night. They are shocked. They loved their life of influence and prosperity. They struggle to believe that others don’t love what America has become as well. They don’t quite realize that much of America doesn’t like them anymore—that, in fact, lots of Americans see them as part of the problem. This is bewildering to them. They thought they were part of the “in crowd.” Now they discover they are seen as insiders by most Americans, but that this isn’t a compliment. It’s a term of derision.
On election night, one pundit on a major news channel told how he went to the gym during a break in election coverage and heard two men talking about politics. One of the men was elated that Trump was winning, and the second man asked him how he felt about a certain Trump policy. The first man quickly replied, “Who cares? At least Trump isn’t one of them.”
The reporter immediately grasped that the man wasn’t referring to Democrats as “them”. He was talking about politicians—from both parties. “One of them” meant anyone in the political class, be it Dole or Gore, McCain or Obama, Hillary or Jeb Bush, Romney, Rubio, Sanders, or Cruz. All of “them.” Then, later, it dawned on the reporter that he was one of the “them” too.
Imagine his surprise. Was it followed by feelings of defensiveness? Was he offended? Did he want to distance himself from the “them” crowd? It may have been the first time in his adult life that he felt like he was suddenly out of the popular clique and one the outcasts. “Them! Me? Wait…”
But how did a billionaire from New York City convince the nation that he wasn’t one of “them”? The answer is amazing. He did what pretty much nobody in the elite class ever does—in Boston, New York, Washington, L.A., or the smaller state-capital elite cliques around the nation. He did something very simple: he talked off-the-cuff, like the regular people. He made regrettable gaffes and misspoke from time to time – more like a high school football coach or a construction crew foreman than a polished banker, lawyer, or doctor. He called names, pointed fingers, talked back in bombastic tones and used colorful language. Nearly every time he went on TV or gave a speech he proved that he wasn’t one of “them.”
In fact, this very behavior made him one of the most despised presidential candidates ever—in the eyes of the political class. It made the college-educated embarrassed to support him, and it made Millennials loathe him as a virtually monolithic block. To the regular people, however, it did the opposite. It gave them hope. He acted like one of working class. Their response? “Who cares. At least he’s not one of them.” And they elected him.
This is a cultural war that most elites don’t understand. They are widely socialized in college, corporations, meetings, boardrooms and other air-conditioned settings where oxford collars and blue blazers are universal, and the elite code of manners is ubiquitous. Anyone who doesn’t meet their code of behavior is quickly ostracized, not out of malice but usually just for comfort. This becomes part of their culture, their ethos.
When elites (gently socialized in this way) encounter people dressed like workmen, speaking with a regional accent (any region), they too often make certain ingrained assumptions: “slow, hick, uneducated, inferior” or something similar. It’s not meant to be a bias—the political class works very hard to never show any bias, and in fact to avoid bias at all costs (or, at least, the politically incorrect biases). But it is a bias nonetheless.
It was, in fact, this very bias that made almost all newsrooms on every national network laugh at the preposterous thought of Donald Trump actually trying to run for president. His ball cap worn with a suit, his bluster, his pugilistic stance in every conversation. All of this communicated “unworthy, inferior, lower class” to the political elites. “Buffoon” they told each other.
What they missed, what they can still hardly even fathom, is that at the very same time millions of working-class Americans were taking notice and thinking that Trump might just be for real. Those ball caps with suits looked an awful lot like prosperity to them. The brash attitude and demeanor felt authentic and unrehearsed, and made them feel like “he’s one of us.” When he attacked the media, or lashed out at “the potential Trojan Horse” of Syrian refugees, or said mean things about opponents, the elites and college-educated saw crassness while much of the working masses saw unpracticed transparency. The masses may have been wrong about this on numerous occasions, but the elites didn’t even realize what was happening. They were oblivious, smugly sure that they were still the undisputed rulers of the nation.
In short, elites and the masses read the entire election very differently right from the beginning. Elites saw a national joke, and called him “Orange” and “clown”; the masses watched the same interviews and speeches and saw one of their own who had achieved success.
As an article in The Atlantic put it, elites didn’t take Donald Trump seriously, but they did take him literally; working people took him seriously but not literally. They didn’t see his extreme remarks as racist or misogynist, they just saw him as a villain on a reality TV show—the villain says extreme things, and this makes him/her the most popular character on the show (meaning: the villain seldom gets sent home; it would hurt ratings too much). They’d seen the same plot on Survivor, American Idol, The Bachelor, and yes, The Apprentice.
4-The Real Solution for America
But, to repeat, the masses now have a problem. The election is complete, and for the masses this means turning politics over to their newly-elected leaders and getting back to the things they really care about in life. What the working-class people of America don’t quite realize is that for the elite class the end of the election means putting their full-time work into making sure the election doesn’t change things very much at all. They want things to stay the same. They like the world where they are the elites, with special perks and higher pay than the rest of us.
They prefer ruling from the Capital while the masses work for them in the Little Towns and Villages (see the Hunger Games series). They don’t want this latest election to be a revolution, a movement, or bring about any serious change. And they don’t want the anti-Trump protests to bring about any real change either. They want exactly the opposite. And they’ll spend their full time days and evenings working toward this goal.
In other words, if you dislike Trump, don’t expect the protests (including those that will probably sweep the nation again at inauguration time) to bring any real change. The elites don’t want change. And if you like Trump and want him to fulfill his campaign promises and really change things, expect the elites to block as much change as possible. Repeal Obamacare? Trump has already started talking about keeping parts of it. Expect the elites to do much to tone down and water down Trump promises. Will a lot change? Not if the elite class can help it.
So what can the regular people do? First, we must admit that the right kind of leaders can do exactly two things to really help us: (1) get Washington appropriately out of the economy and out of peoples’ business, and (2) keep our nation safe. This bears repeating: the government is needed to keep our nation safe, and to change the regulations so this once again becomes a land of real economic opportunity. This is exactly what the recently-elected leaders have promised.
But that’s only the starting point. The rest of the work can’t be done by any elected official, any Senator or President, any Governor or Judge. It can only be done by the people themselves.
This is the hidden truth behind the election, and if we fail to grasp this one great principle, the elites will win their way because not much will actually change in Washington or around the nation. If the new leaders make our nation safer and free our economy from the crushing mountain of government red tape that has hampered small business success for the past thirty years, they will accomplish everything government can and should do well.
The rest is up to us. The American Dream has always been a two-fold reality:
- The government protects our national security and maintains a nation of economic, religious, and other freedoms. This is the “free” part of free enterprise.
- The people widely engage entrepreneurial ventures and voluntarily build millions of small businesses around the nation. This is the “enterprise” part of free enterprise. If a lot of people don’t take the initiative to fix their nation, one business at a time, the politicians will never make our nation great.
Freedom only works if the people—not the government—figure out what needs fixing and fix it, and what needs to be built and build it. If government is in charge of such things (beyond protecting us from attack and overregulation), then freedom is always diminished. To cite Hemingway, freedom is lost a little bit at a time, and then suddenly all at once.
We’ve been experiencing the loss of our freedoms “a little bit at a time” for decades. Now we need to change things before the “all at once” kicks in.
Again, the solution won’t come from politicians. That’s what happens in monarchy or aristocracy. For real, positive change to happen the right way, the free way, it has to come from the people. And this means entrepreneurship: building businesses. The term for this in our history is “The American Dream.”
Only a refocus on entrepreneurialism across the nation will actually make America great again. Nothing else will do it. Nothing else will even come close.
The 2016 election could turn out to be a positive step in this process, because this time the masses (hopefully) put leaders into power who actually see the importance of free enterprise. But, to repeat: The elite class wants to stop this approach at all costs—they really do want a few elites (them) to run the show. This keeps them in power, in wealth.
So, whatever you feel about the elections, one thing is certain: The rest of us have a vitally important job ahead. If we want to remain free, and to actually benefit from the possible changes that hopefully come from the election, we’ve got to figure out how to get the regular people in America to stop waiting for a fix from Washington, and also stop waiting for jobs and better employment to fix things for them, and instead get to work building the kind of nation we really want—in families, communities, and mostly in small entrepreneurial businesses.
We can do it. But “we the people” must do it, or it won’t get done. Whatever deregulations and increased encouragement to small business Washington can provide in the months and years ahead will be helpful, but the future doesn’t depend on elections. Elections can help, but real success depends on whether we as a people reboot the American Dream by engaging an Age of Entrepreneurial Small Businesses—and the impact such free enterprise culture always has on families, morality, communities, jobs, and prosperity for all.
This has always been the key to American greatness.
It still is, whether we realize it yet or not.
As goes small business entrepreneurialism, so goes America. And this doesn’t mean someone else needs to be entrepreneurial. This is about you, me, and any person who actually cares about our American future.
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