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24
February 2008
Free
Market Capitalism
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A
“rich prick”. That’s what Finance Minister Michael
Cullen called the Leader of the National Party two months ago.
That vitriolic attack during a Parliamentary debate revealed
the Labour Party’s loathing of capitalism (and how rattled
they are about their declining popularity).
How
hypocritical that “rich prick” comment now seems in the
context of their grovelling around billionaire funder Owen
Glenn, not only dishing out New Years Honours, but also
allegedly promising Cabinet Posts and diplomatic jobs. By
Labour Party standards industrialists are to be despised -
except when they are feathering the Labour Party’s nest it
seems.
Karl
Du Fresne, freelance journalist and former editor of The
Dominion, explains the disquiet caused by this demonising of
wealth creators: “What’s
troubling about this is that Dr Cullen, as Minister of
Finance, is the politician charged with ensuring New
Zealand’s economic wellbeing. Far from disparaging
successful capitalists, he should be holding them up as
examples to the rest of us, because we depend on successful
capitalists to keep the economy ticking over. Either he fails
to understand what drives a capitalist economy or he secretly
dislikes capitalism and resents the fact that it makes some
people rich. Perhaps both. Either
way, he hardly seems a suitable choice for Minister of Finance.
“A
big part of the problem, of course, is that Dr Cullen and most
of his Labour parliamentary colleagues have had very little
direct engagement in the private, capitalist economy that
provides most of us with our incomes. He is a former
university academic, as is the prime minister. They have been
on the public payroll all their working lives. Look around the
Labour caucus and it’s much the same story. It’s stacked
with former academics, teachers, public servants and trade
unionists. Some Labour MPs have never known a life outside
politics. Only a handful have had meaningful private-sector
experience, although it’s the private sector that generates
our wealth as a country.” (See “Cullen’s insult cause
for disquiet” >>>)
History
has shown free market capitalism to be the most successful
path to prosperity for any society.
It allows people with good ideas to get ahead by creating
products and services wanted by others. There is no compulsion
– the exchange is voluntary. It allows money to pass from
consumers to producers of the goods and the suppliers of the
raw materials. There
are no losers in this exchange – everyone is better off as
voluntary exchange improves the overall well-being of
societies. Ironically the relationship is one where the public
is the master - the “industrialist” the servant - not the
opposite as socialists would wish us to believe.
In
his iconic book Free to Choose renowned economist
Milton Friedman explains it this way: “In the past century a
myth has grown up that free market capitalism – equality of
opportunity as we have interpreted that term – increases
inequalities, that is a system under which the rich exploit
the poor. Nothing could be further from the truth. Whenever
the free market has been permitted to operate, wherever
anything approaching equality of opportunity has existed, the
ordinary man has been able to achieve levels of living never
dreamed of before. Nowhere is the gap between rich and poor
wider, nowhere are the rich richer and the poor poorer, than
in those societies that do not permit the free market to
operate”.
He
goes on to state: “A
free society releases the energies and abilities of people to
pursue their own objectives. It prevents some people from
arbitrarily suppressing others. It does not prevent some
people from achieving positions of privilege, but so long as
freedom is maintained, it prevents those positions of
privilege from being institutionalized; they are subjected to
continued attack by other able, ambitious people. Freedom
means diversity but also mobility. It
preserves the opportunity for today’s disadvantaged to
become tomorrow’s privileged and, in the process, enables
almost everyone, from top to bottom, to enjoy a fuller and
richer life”.
The
political left hates free market capitalism. Why? Because a
free and “democratic” marketplace disenfranchises those
who believe they know better than others.
In a free market, the public hold the power and their
collective will prevails. Contrast that with socialist state
control which imposes - by force or regulation - the wishes of
the ruling elite over a population.
Professor
Peter Saunders, the Social Research Director of the Centre for
Independent Studies and this week’s NZCPR Guest Commentator,
has been involved in the debate on the virtues of capitalism.
He is concerned that the demonising of capitalism by the
political left, has given it a bad name. In his guest opinion
piece The Romance of Capitalism, Peter explains that
part of the problem is that capitalism lacks romantic appeal:
"Where
capitalism delivers but cannot inspire, socialism inspires
despite never having delivered.
Socialism’s history is littered with failure and
human misery on a massive scale, yet it still attracts the
affection of people who never had to live under it.
Radical environmentalism also has the happy knack of
firing the imagination of idealists, for it has much in common
with old-style revolutionary socialism.
Both are oppositional, defining themselves as
alternatives to the existing capitalist system.
Both are moralistic, seeking to purify humanity of its
selfishness and appealing to our ‘higher instincts.’
Both are apocalyptic, forecasting certain catastrophe
if we do not change our ways.
And both are Utopian, holding out the promise of
redemption through a new social order.
All of this is irresistibly appealing to romantics”.
To read the full article, click
here >>>
As
Peter points out, while socialism, fascism and
environmentalism sound good, capitalism is the force that has
released much of humanity from poverty and drudgery. In
1820, 85 per cent of the world’s population lived in
poverty; today it is less than 20 per cent. Nine out of ten of
the world’s population can now expect to live beyond 60,
more than twice the average of only 100 years ago. And through
the technological developments that go hand in hand with
capitalism, the workplace has been redefined with one hour of
work today delivering more than 25 times the value that it did
in 1850.
So
are the principles of free choice alive and well in New
Zealand?
Is ours a country where people are motivated to make tomorrow
better than today?
The
450,000 Kiwis living in Australia would say no. They figure
that their chances of advancement are better in Australia. Of
course they would admit that there are constraints there too,
but nothing like the disincentives they faced in New Zealand.
Nor do they have a prevailing “rich prick” attitude
emanating from government.
Interestingly,
a Te Puni Kokiri study has revealed that Australia has also
become a magnet for Maori, with one in seven now living across
the Tasman. Their report is particularly revealing when
discussing why Maori are moving to Australia. It says they are
moving not only to make more money, but more importantly, to
escape the negative influences of gangs and violence, a whanau
environment that discouraged success, and the perceived
prejudice towards Maori. According to the study, in Australia
race is not an issue, everyone is treated equally. (See Maori
in Australia >>>)
That’s
what it used to be like in New Zealand - race was not an issue
in the days before Labour governments endorsed Treaty of
Waitangi activism. The removal of racial privilege surely has
to be a primary objective for New Zealand if we as a society
are ever to properly move ahead.
Free market capitalism works, and it’s time the socialists
amongst us accepted that. And those of us who believe that
free markets are the foundation of a free and open society
should be far more active in advocating their virtues.
Through
publications like this NZCPR Weekly newsletter, the New
Zealand Centre for Political Research wants to assist readers
in taking these ideas into workplaces and homes across the
country. This is where debates occur, where hearts and minds
are won, and where people gain the confidence and strength to
say “sod off” to those who would wish to control their
lives.
Finally,
I am pleased to announce the publication of the NZCPR’s
first EBOOK - The Treaty of
Waitangi by the distinguished Maori Leader Hon Sir
Apirana Ngata. This seminal interpretation of the Treaty is
now exclusively available as a key part of the NZCPR
subscription package.
Sir Apirana Ngata’s
interpretation of the Treaty was enthusiastically promoted
by the Department of Maori Affairs in the days before the
Waitangi Tribunal was established. They stated: “Sir Apirana
was trained as a lawyer, and had a brilliantly lucid
understanding of legal and parliamentary technicalities. His
analysis of the Treaty, article by article, is so clearly and
simply written that even young people will be able to
understand it, in spite of the complexity of the
subject-matter”. These days, however, the
document is
conveniently ignored by the Maori grievance industry. For
details of this exclusive offer – please click
here >>>.
This
week’s poll asks: Do you believe the principles of free
choice are alive and well in New Zealand today? Go
to Poll >>>
If you
would like to comment on this issue please click
>>>
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