“This disposition to admire, and almost worship, the rich and the powerful, and to despise, or, at least, to neglect, persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.”
-Adam Smith, The Theory Moral Sentiments
There's a bit of a debate going on these days regarding the extension, or lack thereof, of the Bush era tax cuts for the wealthy. Proponents of extending the tax cuts will say, that taxes for the wealthy are too high already. That the wealthy will spend the money, (you know, on Japanese TVs and European vacations) which helps put people to work and stimulates the economy (just not ours). Those who are not wealthy, would save the money or spend it paying down debt, (you know, that thing that keeps banks rolling in dough) or if they must, on feeding babies. Extending tax cuts for the people that were just bailed out with tax dollars seems insane to me, but it got me thinking once again on the bigger idea of capitalism and American society.
My problem with capitalism is the same problem Adam Smith had in 1759. Capitalism requires that some are rich and some are poor. It functions on the fact that there is a top and bottom. Not everyone can be a millionaire, and if we were, I would hate to see how the rest of the world was coping with that. Capitalism actually makes the "American Dream" impossible for some, that's disappointing, but not my point. 250 years ago, Adam Smith, a father of capitalism and a name in every school history book ever written, acknowledged that the rich are responsible for the lively hood of every person living in capitalist society. He wrote:
“Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society.”
(Wealth of Nations)
(Wealth of Nations)
and
“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it" (The Theory of Moral Sentiments)
See, Adam Smith believed in man. He believed that the wealthy would give of themselves, because a healthy and happy society would benefit them. The truth is that the wealthy lock themselves up in extravagant homes and communities, they disconnect themselves from the realities around them and create their own society. They compete with one another to have the biggest home, the most ridiculous car and to throw the most absurd party. They act charitable, as if a movie star giving away money to Haiti then showing up on "Cribs" the next day with a pure gold toilet and three Ferraris is really all that impressive. I think perhaps the idea in that final Smith quote is quickly fading.
Capitalism is the best system we have come up with, I can't dispute that. It has immense potential for good. There is so much wealth coming from the free markets. But there is a huge gap. How can it be, in 2010, that not every person on the face of the planet has access to running water, roads and free education? I recently saw a news story regarding $800,000 of stimulus money going towards a UCLA research grant with the ultimate goal of educating African men on how to wash their genitals after sex, to avoid spreading disease. Most of the commentary on this article I have seen, is criticizing the use of tax dollars for such a purpose. When I read that, I couldn't believe we are developing 3D TVs, yet in Africa, they are struggling to learn how to wash themselves to avoid the spread of disease. I guess subsidizing the corn industry (you know, cause there's not much market for corn, seeing how its only in everything you eat and giving us all coronary artery disease at the age of 8) is a better use of tax dollars.
Capitalism is failing the least and the marginalized. Adam Smith sure had it right, wealth is the "great and most universal cause of the corruption of our moral sentiments." Tax cuts for the wealthy? How about we take that money and start an "Educating The Wealthy" grant to teach them how to be human again. Although, maybe the real lesson is, that if you are reading this, you are the world's wealthy, and we should all be a little ashamed.
Michael, you are referring to one of my favorite business minds a lot in this ramble, but Smith also said, "By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good." Now, yes, he is talking about the specific example of specialization, however, this can be expanded upon to include every man acting in his own interest to promote himself. The idea still plays true, in acting in his own interest he will still promote the rest of man although unconsciously.
ReplyDeleteSo, although I am in the top tier of wealth in the world, I do not feel bad because I am promoting the well-being of the rest of man along with my own desires. So although I am doing this unconsciously, I do have a desire to help man, but that is also probably due, in-part, to the fact that I am a believer.
Brian DeWolf
I completely agree. As much as Id like to hate Capitalism, it affords luxuries to those in the poorest of conditions. A kid sewing together soccer balls with his teeth and getting paid, is better than him dying of starvation. I still think we can do better, but it has to be a conscious thought.
ReplyDeleteWhat I fail to mention is that some of the world's wealthiest individuals are living up to Smith's hopes, but many more should and could.
Nice thought on capitalism - I feel that the problem is (and I know this isn't really original, but it is true) in the bailouts...we are no longer a capitalistic society. We have become a subsidized aristocracy where the government is keeping the rich in their mansions and stunting the growth of upstart companies. Bailouts, corporate welfare, tax cuts...all these add up to is the fact that a crappy system that doesn't any longer work and not leaving any room for people to move up that ladder. The old axiom "when one tree falls down in a forest 5 more can grow up" doesn't work when a bunch of old white guys come in a build supports and fortresses around the decrepit dying trees. There won't be any new car companies starting up in America as long as we are paying gm and Chevy to make Yukons and Suburbans.
ReplyDeleteOn another note - I think when Adam Smith was writing getting rich was not the ultimate goal of life...at least not in the "Cribs" sense of having a solid gold toilet and 3 Ferraris. People seemed a lot more concerned with honor and family and spirituality as the ultimate goals of life. Prosperity and living comfortably were certainly on the table, but not in the way we understand wealth these days.
Just a thought on a good ramble:)