Capitalism or Something Else

Pratt posted the article reporting that only 53% prefer capitalism over socialism. For years I have wondered why that occurs. Under free markets and voluntary exchange everyone gains -- all goods and services are produced at lowest cost and all purchases are made at lowest possible price. When government intervenes in the free market, economic growth slows, resources are misallocated, the well off stay well off and the poor remain poor. Yet, in survey after survey over the last twenty years I have found that people prefer the government to allocate scarce goods and resources whenever the good or resource is important -- health care, organ transplants, roadways, zoning, and on and on. When the good or resource seems unimportant, then people choose to allow capitalism and free markets to do the allocation -- berries at the store, candy, etc. That just doesn't seem to make sense on the surface.

But, as with most topics in economics we must examine Bastiat's broken window fallacy and concentrated benefits and diffuse costs. With Bastiat it is the unseen that bolsters capitalism and the seen which apparently bolsters socialism. The rate of growth of an economy, the increases in standards of living, the increased quality of goods, medical care, and everything else in an economy is not seen. It is instead, the "unfairness" of some getting something and others not, or of people losing jobs to better technologies or new products or new ways of doing things, that is seen. Of creative destruction it is the destruction that is seen not the creation.

Moreover, interference with markets for transferring wealth and income from some to others occurs because it benefits a few a great deal and harms everyone a little. While the free market enables anyone to achieve, to prosper, to improve, it also continuously seeks to reduce the monopoly profits, the barriers to entry, the power of a few.

Is there a solution? Are we doomed to all live in socialistic systems? I posted previously about the inevitability of democracy to lead to larger government, I can not think of a political system that won't lead to bigger government. As Thomas Jefferson noted, we need an awakening, a new beginning, a revolution to occur every generation.