In a recent marketing move, GM donated a car to Detroit pitcher Armando Galarraga after his perfect game was ruined by an umpire’s mistake. In the subhead to a feature article on the subject, the New York Times second-guessed GM, asking: “Was a prize to a pitcher for a near-perfect game, ‘some of the best dollars invested in publicity,’ or a squandering of taxpayers’ equity?”
Note that the car in question was a $53,000 Corvette; GM’s global revenues are on the order of $100 billion. It’s like asking whether a $10 million company should have purchased a $5 box of pens. Pace the NY Times, there’s nothing special about this particular decision; every business or enterprise makes similar ones daily.
And that’s the point. Previously we could take for granted that private individuals or enterprises would be allowed to make such decisions for themselves. But no longer. At the behest of our political and cultural leaders, we’re socializing property at an accelerating rate. The type of meddlesome question the New York Times poses is but one of its consequences.
For when property is socialized, as it was in the GM bailout, it’s “owned” by all of us, and therefore we must all be consulted for every question of use, however trivial. What qualifies us to decide? Simply being a member of society. True, we’ve had no hand in creating the property, we don’t necessarily know anything about it, and the impact of its use is at best very tenuously related to us.
In GM’s case, for instance, the majority of us haven’t contributed to making the company what it is. We don’t know anything about its competitive landscape in general — or about cost-effective methods of securing publicity in particular. And the consequences of deciding one way or another don’t really impact us. But that’s all irrelevant. The New York Times want us, as part “owners,” to debate and answer a question — “how should GM have spent its marketing budget?” — and then chasten GM accordingly.
Of course, given the setup, no rational answer to this or any similar question can emerge. All that can come of it is a hodge-podge of disintegrated opinions and complaints. Indeed, one root cause for why socialism always fails economically is that it attempts to substitute the inchoate, uninformed, and indifferent judgment of the collective for that of self-interested and accountable individual owners. (As an analogy, imagine the result of asking a composer to write a symphony by polling the public for each individual note!)
Socialism’s failings are well known. Yet the New York Times regularly advocates policies which lead to it, most recently with its unabashed support for socialized medicine. As a result, we’ll all soon be playing backseat drivers to doctors — debating whether their professional decisions are appropriate or, in the Times’ words, “a squandering of taxpayer’s” funds. It’s a disaster in the making.
But the failed system advocated by the New York Times is not our only alternative. Capitalism — to the extent it’s been allowed to operate — has always succeeded magnificently. Why? Because here individual owners decide what to do with their own property — and then reap the consequences of their decisions. Faced with the ongoing issue of how to best use limited capital, those who make foresightful decisions — who think and act strategically — tend to succeed, to produce profits. In other words, those who use existing property productively are rewarded with additional property to control. Under capitalism then, rather than being a social entitlement, the ability to use property is earned by virtue of producing it.
The converse holds too. Making poor decisions leads to losses. Or as TV disclaimers have it: “past success is no guarantee of future profits.” That’s the dynamism of capitalism. The pithy 19th century adage — “from shirtsleeves to shirtsleeves in three generations” — was literally true. In a free market, people are continually confronted with decisions and competition such that, over time, great wealth can be earned or lost by anyone, regardless of their initial circumstances.
So capitalism justly rewards success and penalizes failure. By what mechanism? By the uncompromising protection of individual rights. In this context, foremost by the protection of property rights, which means the absolute right of owners to use and dispose of their property as they see fit (obviously without violating the rights of others). Secondarily by allowing those who fail — to fail. Which means no bailouts, no socializing losses, etc.
Yet achieving justice isn’t capitalism’s only virtue. It also fosters social harmony. To see this, contrast it to socialism where, perforce, we’re each concerned with every decision anyone else makes. The result is a nation of intruding, whining, Monday-morning quarterbacks. Did GM overspend on advertising? Are doctors prescribing too many pain meds? Is Fannie Mae’s CEO paid too much? The list of potential affronts to redress (via government intervention) is endless.
Not so under capitalism. Here each person’s concern is exclusively with their own property. For instance, if I’m not a shareholder of a firm, I really don’t care what the CEO is paid. Indeed, if I think a particular company is overpaying its CEO, rather than it being a grievance — it’s an opportunity. Namely for me to start a business where I save money by offering reasonable compensation — thereby winning market share due to my lower costs. The beauty of capitalism is that it works by free competition; there’s no need to lobby the government to forcibly intervene in anyone else’s business.
While the narrow question of whether a pitcher gets a car is inconsequential, the general question of who controls property is crucial. For wherever and whenever property is socialized, destructive meddling, second-guessing, and other disasters ensue. Yet that’s today’s trend. For example, with the passing of ObamaCare, others will now decide if we, as patients, are worth the cost of an MRI, a specialist’s time, or even a life-saving drug regimen. There’s but one solution to this disastrous trend: reinstate the only political system which protects property rights — laissez-faire capitalism.