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Capitalism vs. Free Enterprise

October 10th, 2011 // 11:18 am @ Oliver DeMille

The New Culture War

During the Cold War, people came to equate the three ideas of democracy, capitalism and free enterprise.

This made sense at some level, since the whole world seemed inescapably divided into authoritarian, totalitarian, socialist and communist nations on the one hand and democratic, capitalistic and free enterprise nations on the other.

In the decades since the Berlin Wall fell, as CNN’s Fareed Zakaria has pointed out, there has been a growing divide between the nations emphasizing democracy and those focused on capitalism.

The differences between these two groups are both interesting and significant to world events.

But an even more nuanced and impactful division is the difference between capitalism and free enterprise.

I wrote about this in my book FreedomShift, but it is a point of great magnitude in our current society and bears repeating.

Unfortunately, very few people have considered the differences.

Most still equate capitalism and free enterprise, even in the post-Cold War era.

This is a weighty mistake with a high potential for negative ramifications in the 21^st Century.

A simple defining of terms points out the crucial importance of the distinction between these two brands of economics.

To summarize: capitalism gives special government-supported benefits to capital and those with capital (wealthy individuals, families and business entities).

This is the opposite of socialism, which promotes special government-supported benefits to those without capital—the proletariat, as Karl Marx put it.

In contrast to both capitalism and socialism, free enterprise establishes good laws and government policies that treat the rich, middle and poor the same.

Some people may believe that this is the system we live under in the United States today—that the law treats all the same.

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.

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 levels and amounts are set by law) are able to invest in such offerings.

This naturally benefits the wealthy to the detriment of wage earners.

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.

In a free enterprise system, the law would allow all people to take part in any investments.

The law would be the same for all.

If this seems abstract, try starting 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 nine employees, and then keep track of what fees you must pay and how many hoops you must jump through.

Have your agent announce to the same agencies that a separate company, a big corporation, is bringing in a large enterprise that will employ 4,000 people (or, in a more urban setting, 24,000 people)—all of whom will pay taxes to the local area and bring growth and prestige.

Then simply sit back and watch how the two businesses are treated.

In most places in the United States, one will face an amazing amount of red tape, meetings, filings and obstacles—the other will likely be courted and given waivers, tax breaks, benefits and publicity.

Add up the cost to government of each, and two things will likely surprise you: 1) how much you will have to spend to set up a small business, and 2) how much the government will be willing to spend to court the large business.

Of course, I don’t really suggest that anyone announce such a fake business.

But imagine, theoretically, what would happen if you did.

Our current mentality in government is to treat big business better than small business.

This is the natural model in a capitalist system.

Capital gets special benefits.

In free enterprise, in contrast, the costs and obstacles would be identical for the two businesses.

In free enterprise, the operative words are “free” and “enterprise.”

Note that American business and ownership stayed mostly small—with most people owning family farms or small businesses—until the 1960s.

It was debt (often promoted by government) which wiped out the farming culture that dominated the South and Midwest, and the rise of big corporations over family-owned businesses came after the U.S. commercial code was changed by law to a capitalist rather than a free enterprise model.

If we altered today’s laws at all levels so that government entities treated all businesses and citizens the same, regardless of their level of capital, the natural result would be the spread of more small businesses.

Note that nearly all major growth in America’s economy since 1985 has come from small business.

Today, small businesses are struggling under a veritable “mountain” of regulatory red tape—the result is economic downturn.

And, while some in government hold an anti-business attitude, even many of those ostensibly promoting pro-business policies are more aligned with Wall Street corporations than the needs of small business.

Capitalism, sometimes called “Corporatism”, is not the same thing as free enterprise.

Both are certainly preferable to socialism or communism, but free enterprise is considerably more conducive to freedom and widespread prosperity than capitalism.

History has proven the following: 1) Under capitalism, the divide between rich and poor naturally increases; 2) In a free enterprise system, the prosperity, freedom and dignity of nearly everyone in the society inevitably rises.

Alexander Solzhenitsyn pointed out that while modern American capitalism was clearly better than Russia’s twentieth-century communism or Europe’s contemporary attempts at socialism, the U.S. implementation of capitalism left much to be desired.

For example, he noted, under American capitalism the question of, “is it right?” became less important to many people and companies than, “is it legal?”

Likewise, the culture of capitalism frequently asks, “is it profitable?” before (or instead of) asking, “is it good?”

American capitalism, Solzhenitsyn said, created a nation more materialistic than spiritual, more interested in superficial success than genuine human progress.

Note that Solzhenitsyn was adamantly anti-communist and anti-socialist.

But he also found capitalism lacking.

In every particular, however, Solzhenitsyn’s criticisms of capitalism don’t apply to the free enterprise model of economics. When the law treats all people and businesses the same—regardless of their size, connections, power or wealth—an interesting consequence occurs.

Put succinctly:

In socialism the government ignores, downplays and literally abuses prosperity and freedom to the point that both are lost for nearly everyone.

Under capitalism, the laws promote the wealth and license of a few above the freedom and prosperity of all, with the cultural result of valuing attainment of wealth above almost everything—including virtue, compassion, and the liberty of all.

In free enterprise, the laws treat everyone the same, thereby incentivizing freedom, prosperity and enterprise (as long as such enterprise doesn’t violate the inalienable rights of others). The application of this model is rare in human history, but the results when it has been applied are nothing less than spectacular (see Ancient Israel, Athens, the vales period of Switzerland, the Saracens, the Anglo-Saxons, and the United States—which by 1944 had 6% of the world’s population and produced over half of its goods and services).

The lesson?

Freedom works.

Enterprise works.

And the outcome when the two are combined is breathtaking.

We are capable of so much more than we’ve accomplished so far, and free enterprise is the most powerful economic system yet to be tried by mankind.

Isn’t it time for an end to the outdated debate about socialism versus capitalism and a national return to the free enterprise system which made America great?

During its first century-and-a-half of application, free enterprise brought us major wealth, a standard of living for most citizens that rivals or surpasses the lifestyles of history’s royals, world power, major technological and medical advancements, and the end of slavery.

It also brought the repudiation of racism, male dominance, religious persecution and a host of other ills that have existed for millennia.

With all these areas of progress, imagine what we could do if we re-adopted the free enterprise values and culture in our time.

Laws that give special benefits to wealth and capital while withholding such opportunities from the rest can never bring the progress, advances, freedom and prosperity that free enterprise will.

It’s time for a change, and the first step is for all of us to start using the phrase “free enterprise” a lot more.

We need to study it, think about it, discuss and debate its various applications, and make it a household topic rather than an obscure economic reference.

The future of America is inextricably linked with the future of free enterprise.

We will sink or swim exactly as it does, whether we realize it or not.

Isn’t it time to admit this reality and make it the leading topic in our national dialogue?

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Oliver DeMille is the co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

He is the co-author of New York Times, Wall Street Journal and USA Today bestseller LeaderShift, and author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Business &Community &Culture &Current Events &Economics &Entrepreneurship &Featured &Government &History

Review of Don Peck’s “Can the Middle Class be Saved?”

August 29th, 2011 // 2:00 pm @ Oliver DeMille

This article in The Atlantic by Don Peck is a must-read for those who are interested in the future of American freedom and prosperity. Highlights from the article include:

The United States is “now composed of two distinct groups: the rich and the rest. And for the purposes of investment decisions, the second group” doesn’t matter.
The new name for this state of society, coined by three analysts at Citigroup, is “plutonomy.”
“A 2010 Pew study showed that the typical middle-class family had lost 23 percent of its wealth since the recession began, versus just 12 percent in the upper class.”
The lifestyles of non-professional college graduates now more closely resemble those of high-school dropouts than of the professional class.
The meritocracy is increasingly only a meritocracy of the upper classes.
“Among the more pernicious aspects of the meritocracy is the equation of merit with test-taking success.”
“For the most part, these same forces have been a boon, so far, to Americans who have a good education and exceptional creative talents or analytic skills.”
Most Americans don’t want the middle class to disappear or continue to shrink, and such a development would certainly bring a drastic change to the people-based freedom that has characterized the historical successes of the United States.
These trends, and the growing divide between the rich and the rest, are increasing the longer the economy remains sluggish.

Peck gives a number of suggestions for improving this situation, including:

Increasing the funding for effective job training and education.
“Removing bureaucratic obstacles to innovation is as important as pushing more public funds toward it.”
Changing our public policy to accelerate innovation.
Significantly improving our schools.
Creating clear paths of training and skilled work for those who don’t go to college.
Altering current immigration policy to allow more “creative, highly skilled immigrants” to come to the U.S. more easily.

Whether or not you agree with Peck’s recommendations, one reality is clear: The success of these things ultimately depends on incentivizing entrepreneurship, innovation, creativity and economic growth.

By spurring significant economic growth, we will directly and indirectly address most of our national economic problems.

On the other hand, if government policies continue to thwart major innovation and growth, little can be done.

Peck makes a case for higher taxes, but hardly mentions that Washington has a serious spending problem.

Democrats typically argue for tax hikes, while Republicans now mostly champion spending cuts.

Most Independents, in contrast, would likely support both—as long as the tax hikes on the professional class were used not to increase or maintain federal spending but rather to directly help put America’s financial house back in order.

Whatever your view on this debate, it is a discussion desperately needed right now.

Too much of the rhetoric on this topic is just that—two sides deeply entrenched and firmly committed to one view only.

We need fresh ideas and inspiring leadership to move beyond this gridlock.

With all this said, Peck’s article is mandatory reading. Every American should think about its main points.

Most will find things to disagree with, perhaps, but the dialogue is needed.

If the middle class is to survive and thrive, it must increase its role of deeply considering, thinking about and making its views felt on important economic and other national issues.

Freedom only works when involved citizens of all socio-economic levels actively participate in such important national discussions.

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Oliver DeMille is the co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Aristocracy &Book Reviews &Community &Culture &Current Events &Economics &Family &Featured &Statesmanship

19 Questions Answered in FreedomShift

August 13th, 2011 // 1:56 pm @ Oliver DeMille

Following historical cycles and trends, we have recently experienced a significant recession and major unemployment. According to the patterns of history, what is the third major economic challenge which is just ahead? (Learn what it is so you can prepare for it before it comes.)
Based on the lessons of past generations which faced major economic problems, what are the twelve things every family should do to deal with the economic challenges ahead?
What are the three major choices which American citizens need to make to overcome our nation’s economic problems and restore economic growth and increased freedom?
Where did Tocqueville say that the greatness of America lies? (The answer may surprise you.)
What exactly is a FreedomShift and how is one accomplished?
What is “the Law of the Vital Few?”
How is this law drastically changing America today?
What are the three top problems that are keeping America from fixing its problems right now?
What are six predictions of the Anti-Federalists from the founding generation that have come true today and are causing major problems in Washington D.C.’s ability to lead the nation?
Is our society being run by the cultures of our Elementary Schools, High Schools, Colleges & Corporations, Government Officials, or the Adults in our society?
How can we move back to adult culture, especially in Washington?
What are the three major groups in the Republican Party, the three major groups in the Democratic Party, and the other major groups running our nation politically?
(We are much more complex than the historical two-party system that dominated during the Cold War, and only those who understand these splits in the parties will know what is really going on in the nation.)
Who is the new group that is literally running the United States now? (Hint: it’s not the Tea Party, socialists, environmentalists, the religious right, liberals or even conservatives. The answer is surprising and deeply important.)
What are the nine types of people who run both of the two major political parties?
How will they impact the election of 2012?
What should we expect in the upcoming election?
What are the eight kinds of freedom, and which have we already lost in America?
Which of the eight are we now losing?
What does this loss mean directly for your family and the economy?

These challenges can be dealt with positively, but only if we know what is coming in the decade ahead.

For the answers to these questions and more on how “regular” people like you and me have all the power to refresh our liberties, read FreedomShift: 3 Choice to Reclaim America’s Destiny, available in paperback, pdf and Kindle editions. (Audiobook version, read by the author, coming soon!)

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Oliver DeMille is a co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

He is the co-author of the New York Times, Wall Street Journal and USA Today bestseller LeaderShift, and author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Aristocracy &Blog &Citizenship &Community &Culture &Current Events &Economics &Entrepreneurship &Featured &Government &Independents &Leadership &Liberty &Mini-Factories &Politics &Prosperity &Tribes

World Stats

August 5th, 2011 // 9:57 am @ Oliver DeMille

Sometimes a few statistics and quotes tell us a lot more than any commentary. Consider the following:

“…married couples, for the first time, now make up less than half (45%) of all households.”
(“For Richer, Smarter: The Decline of Marriage,” The Economist, June 25^th, 2011)

“Percentage by which a couple is likelier to divorce if one partner has a commute greater than 45 minutes: 40” (Harper’s, August 2011)

16,000 children starve every day. (Spirituality & Health, July/August 2011)

“Traditional marriage has evolved from a near universal rite to a luxury for the educated and affluent. There was barely a marriage gap in 1960: only four percentage points separated the wedded ways of college and high school graduates (76% versus 72%). The gap has since widened to 16 percentage points…” (“For Richer, Smarter: The Decline of Marriage,” The Economist, June 25^th, 2011)

“Estimated percentage of the U.S. college class of 2011 who are moving back home after graduation: 85” (Harper’s, August 2011)

The average 2011 college graduate has $22,000 in student loan debt, even though jobs are especially scarce for this group. (The Huffington Post, July 2011)

“On any given day, 1.6 million of us are blogging, 27 million are tweeting, and 1.5 billion are posting on Facebook. We’re emailing during meetings, texting during lectures, and talking on our cell phones as we tackle rush hour traffic.” (Spirituality & Health, July/August 2011)

“Last year China became the world’s biggest manufacturer, displacing America from a position it held for more than a century.” (“Rising Power, Anxious State,” The Economist, June 25^th, 2011)

Americans were asked in a poll who is the most trusted political journalist. The number one answer was, “Don’t Know,” and number two was, “None.” (Harper’s, August 2011)

“The fraction of the population now working (58.2%) is near a 25-year-low—lower than it was when the recession officially ended in June 2009.” (Robert Reich, The Wall Street Journal, July 15, 2011)

More than half of Americans do not know the recession is over. (Harper’s, August 2011) Part of this is rooted in the way economists define growth and recession. It takes 2.5% growth in the economy just to keep up with the natural growth of the working population, and we haven’t seen 2.5% economic growth for some time. So even though we haven’t technically been in “recession” for over a year, we are still falling further and further behind.

“By 2010, [federal entitlement] payments to individuals were 66% of the federal budget, up from 28% in 1965. We now spend $2.1 trillion a year on these redistribution programs, and the 75 million baby boomers are only starting to retire.” (Wall Street Journal editorial, July 29, 2001; cited on Meet the Press, July 31, 2011.)

The real unemployment rate in July 2011 is over 20%, including those unemployed and underemployed. (The Huffington Post, July 2011)

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Oliver DeMille is a co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Blog &Citizenship &Community &Culture &Economics &Family &Featured &Leadership

Family Roles

July 9th, 2011 // 4:00 am @ Oliver DeMille

Nothing will have more impact on the future of the world than the future of families.

This truism is sobering as we watch the decline of the family.

As we consider the industrialized world, it is disturbing to note that even amongst those who espouse, promote and live a strong family lifestyle, some of the most basic roles have been lost.

For example, consider the following from an editorial by John Rosemond:

“A journalist recently asked me to name the number one problem facing today’s family. I think she expected me to address education, the economy, or some other “hot” topic. To her surprise, I said, ‘A confusion of roles.’

“In today’s parenting universe, married women with children think of themselves first and foremost as mothers. This is confusion. If you are married with children, you are first and foremost a wife or a husband. In your wedding vows, you did not say, “I take you to be my (husband, wife) until children do us part.” Those vows, many generations old, read the way they do for a reason.

“I’ve been telling recent audiences that parenting has become bad for the mental health of women. Today’s all-too typical mother believes that whether her child experiences success or failure in whatever realm is completely up to her. If she is sufficiently attentive to her child’s needs and sufficiently proactive in his life, he will succeed. If not, he will have problems. The natural consequence of this state of over-focus is anxiety, self-doubt, and guilt.”

Marriage is the central relationship of society, and in society, no roles are more important than husband and wife.

As I talk to young people about their plans for life, career is usually the first thing they mention.

Once in a while, a young man will mention that his main goal is to be a good father, and a little more frequently a young woman will say that she really wants to be a great mother.

But I’ve never heard the following: “I want to be a great wife,” or “my most important goal is to be a great husband.”

This is a concern. In a way, feminism has had moved society by persuading our generation to focus on parenthood even more than marriage.

I’m convinced that most people who say they want to be great parents just assume marriage as part of it. But that’s the problem. Just assuming marriage isn’t enough. It reflects a lack of emphasis on our primary roles.

The future of the world certainly depends on the quality of fathering and mothering in the twenty-first century.

The quality of marriages is even more important. The state of the world ten, twenty, even seventy years from now will be determined by the depth and quality of our marriage relationships. Parenting will largely be determined by the level of success our marriages attain.

The recent politicization of the institution of marriage raises concerns in the minds of virtually everyone, no matter where they stand on the issue.

Of most concern to me is that 64% of married women and 82% of married men responded to a survey in the early 2000’s that they had been unfaithful to their marriage vows.

I see no greater threat to the institution of marriage than the tepid level of commitment of the spouses, and the way they characterize and fulfill their roles.

Marriage is hard work, worthy work–the work of a lifetime. If there is one thing we should teach our youth, it is the value of building a great marriage.

More precisely, we need to teach—by precept and example whenever possible—that “wife” and “husband” are vital roles to society, requiring preparation, consideration, emphasis and great effort.

Once married, these must always be the primary roles of each individual—not secondary to career, social endeavors, or even parenthood.

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Oliver DeMille is a co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Blog &Community &Culture &Current Events &Family &Featured &Generations