Sunday, November 18, 2018

The non-capitalistic Economist

A recent article in the Economist seems to imply that capitalism is responsible for industry concentration and associated loss in societal utility. Treating symptoms never cured diseases but perhaps economists are not aware of this phenomenon. There have not been free markets and free trade in any capitalistic societies - just the opposite. And existing laws are not sufficient to aggressively prosecute monopolies, a necessary condition. More recently, ignorant policy makers have been conducting "trade wars," and protecting their bunkers with "tall and strong," walls. The Economist has to understand that these are not ideas that emerged from capitalism.

It is not capitalism that is responsible for the ills witnessed in society. Ignorant policy makers who do not understand economics and the cunning ones, who have figured out how to take asymmetric risks - as they keep the gains and get bailed out when they lose are the cause. These two cohorts of people, likely less than 0.01% of society have been responsible for the apparent failure of the "free market system." The blame has to go to lack of consistent implementation of laws. Capitalism requires that everybody is treated the same, those who travel by private jets and those in the back of the bus. Capitalism requires incompetence to fail and any policy prescription that simply bails out failed gamblers is fraught with danger.

It is not capitalism that is failing but the semblance of the idea without consistent implementation. As the pendulum swings to the left, aided by an astonishing lack of understanding of the world on the right, it is likely we are in for motion sickness for a long time. It is important that economists develop a bit of right brain, for without it, they will continue to make the wrong conclusions.