"Life's Manmade Miracles & Their Debt to Capitalism"

Sydney M. Williams

swtotd.blogspot.com

Thought of the Day

“Life’s Manmade Miracles & Their Debt to Capitalism”

October 25, 2019

“Oh, for a muse of fire that would ascend

the brightest heaven of invention.”

                                                                                                William Shakespeare (1564-1616)

                                                                                                Henry V, Act I Prologue, c.1599

This essay was inspired by a persistent, evolutionary change in American attitudes toward Socialism and Capitalism. A Roper/Fortune Survey this past May found 43% of Americans believe Socialism would be good for the Country – a frightening conclusion for anyone who understands history. The second inspiration came from a John Steel Gordon op-ed written for the October 19-20, 2019 edition of the Wall Street Journal, “How Steam and Chips Remade the World,” in which he wrote of the world-changing effects of James Watt’s perfection of the steam engine in 1769 and the development of the Microprocessor in 1971 by Ted Hoff, a young scientist at Intel. His essay is testament to the benefits of free-market capitalism.

The basic principle of profits seems to be misunderstood by legions of young people, as well as veterans of the political scene who speak in grandiloquent terms of equality, while trying to secure for themselves positions of personal power. Their motives are selfish, not altruistic. Without profits, no company stakeholder is satisfied – not workers, customers, community, taxing authorities or shareholders, Bankrupt businesses help no one, other than a few bankruptcy lawyers.

Mr. Gordon’s words struck home, in part because with age comes reflection of things as they once were and as they now are, and of what the future holds – of how better are our lives than those of our ancestors. My grandparents saw changes their parents could not have envisioned – the automobile, elevators, flight, radio, the automated assembly line, the modern flush toilet, television, the atomic bomb, polio vaccine, interstate highways. My parents saw changes their parents could never have envisioned – commercial jet travel, ATMs, personal computers, CT Scans and MRI machines, artificial hearts. And I have seen changes my parents never saw – the internet, self-driving cars, smart phones, robotic surgeries, social media, laser eye surgery. My point is not to list all technological advances, but to show how much and how exciting and how productive change has been in the past two hundred years. I wonder as to what changes my children and grandchildren will see that I shall not – advantages we cannot even envision. All of these improvements to our lives are a consequence of individuals and private businesses seeking profits. Now I worry that this dynamism will be brought to an end by those who advocate for the federalization of company charters and for a greater role of government in our lives, for example the concept of a government mandated emphasis on “stakeholders,” not shareholders. Keep in mind as well, every American worker who has a retirement plan has a stake in the private ownership of public companies. Do we really want to destroy the capital markets?

In his essay, Mr. Gordon wrote, “For millennia there had been only four sources of energy, all expensive and limited: human muscle, animal muscle, moving water and air.” Fire might, perhaps, be considered a fifth source? Nevertheless, with the utilization of steam power things changed. Factories were built that allowed for the manufacture of food products, farm implements and transportation. They operated on Adam Smith’s belief in the division of labor, so that bread, candles and bricks no longer had to be made at home. One consequence was assembly line production, which provoked a decline in the price of consumables – bread, candles and bricks made in a factory could be done so less expensively and faster than at home. Assembly line production, admittedly boring work, operates more efficiently, and produces consumer goods at lower costs.

Before the onset of the Industrial Revolution life for most people was much as it had been for generations before them. Standards of living remained pretty much as they had for thousands of years. There had been some changes. War had become more deadly, with gunpowder coming to Europe in the 13^th Century, yet most battles were still fought with catapults, primitive muzzle-loaded long guns, longbows, crossbows and swords. Johannes Gutenberg’s 15^th Century printing press made books more available, but they were expensive and accessible to only a few. Travel by ship was limited to the wealthy, armies and trade. Few could afford a horse or small boat. Foot travel was the way most people got about.

It was not happenstance that the Industrial Revolution saw its genesis in the two countries where individuals had the greatest political and religious freedom – Britain and the United States. Democracy and free-market capitalism are born of the same parentage – a belief in the individual and his ability to function relatively freely, as opposed to a populous dependent on the State. With steam power came improvements in mining, metal fabrication, railroads, weapons, furniture, apparel. Fortunes were made by those whose talents combined intelligence, aspiration, determination, hard work, innovation, fortitude and a willingness to take risk. Income inequality, while it was not referred to in those terms, was a natural outcome. We are seeing some of the same elements today that have risen from the advent of the microchip. Enormous fortunes have been made by a few while the many have seen improvements in their daily living – from safer cars, to better communication systems, to snappier entertainment. In our love-hate relationship toward these entrepreneurs, we overlook the enormous risks they took to realize their dreams. We forget that for every success story there are dozens of failures. A good education, a bright idea does not guaranty success. Timing and luck play roles. It is unfair to disparage the successful; it is the offer of award that keep budding entrepreneurs trying. Where would we be without these foresighted dreamers, these risk takers?

It is impossible to think of the miracles that make for better and easier living conditions – everything from air conditioning, to texting, to more comfortable shoes, to the retailing of books and cosmetics – without giving consideration to the economic system that made all this possible: free market capitalism within a democratic governmental structure that celebrates the individual, honors property rights and operates within the rule of law. Why, for example, has so much of today’s technology come from America, even when many of the innovators are foreign born – many from Eastern Europe and Asia? Why have so many brilliant Chinese mathematicians and engineers emigrated from China to work in our tech companies? Why did China, then, have to steal our technology? Show me a Socialist country with similar ingenuity.

The United States does not have a monopoly on brilliant minds and aspirant individuals, but it does have a unique political and economic system that rewards success and punishes failure, but not to the point that the determined give up. Most successes are a consequence of second, third and fourth attempts. But it is also a system that recognizes and acknowledges that economic or financial equality is an impossible dream, if a country wants to continue to advance without stealing from its neighbors.

It is not government that has provided the miracles we now take for granted, but individuals. Government’s role is to ensure the sanctity of the individual – to ensure that he has the freedom to explore, invent and create, to protect her property, patents and rights. Government provides rules so that anarchy does not prevail and that there is equality before the law. This freedom is well expressed in the Constitution’s attitude toward religion, which does not provide protection from religion but for religion.  In the same way, if our society continues to provide miracles, we must be free to succeed or fail. A search for equality of outcomes is no different than Stuart Little’s search for “Margalo” – a pleasant fantasy, but a dream, nonetheless.