Capitalism and its critics
November 25, 2003

Capitalism is a wondrous system for many reasons, not the least of which is that unlike the "isms" that have come and gone over the past century, it doesn't require the creation of a "new" man, but instead accepts man as he is and channels his activities in ways that benefit society as a whole.

Capitalism's critics have always found it difficult to accept that businessmen don't have to be angels to do good under a system that works best only for those who are producing goods and services that others want, need and are willing to pay to get.

Thus, just as the otherwise obnoxious and even reprehensible Ty Cobb managed to be the best professional baseball player ever to swing a bat, history tells us that the common economic good is often advanced by the self-acquisitive activities of men and women we wouldn't want to spend a week with at the beach.

In fact, the people who make the system work often don't really believe in it themselves. Oh, it is true that virtually all of them are well versed in the rhetoric of the free market and the virtues of unfettered competition. But what they are really about is winning by whatever means available. To do so, many of them seek in government a potential ally in their quest for success and advantage over their competitors.

Import duties, subsidies and the like are all ways in which to gain such an advantage. Many who talk about free competition but are really seeking to game the system for their own benefit eagerly seek all. The tax code contains hundreds and perhaps thousands of provisions inserted to give one business or industry an edge over the competition; the existence of those provisions makes real, systemic reform almost impossible.

Thus, when President Bush proposed to cut taxes across the board back in 2001, the reaction from some was predictable. "That's fine," they said almost in unison, "but what about us?" An across-the-board cut is, of course, acceptable, but not nearly as desirable as cuts that leave their industry or better yet their company just a little better off than the competition.

Policymakers and elected officials have to realize that it is precisely this laser-like focus on their own interests that make executives so productive and at the same time potentially so dangerous to the very system on which they depend for their existence and success. Therefore, when they are up against each other and seeking advantage, policymakers ought to remember that it is not the job of government to protect individual businesses or to "pick winners" but to safeguard the integrity of the system itself.

That is a difficult mission for men and women elected by constituents who have parochial interests that the representatives ignore only at their own peril. The owners and employees of an apparel shop in the Carolinas don't expect a lecture on the benefits of free trade when they come to Washington seeking help, and folks making their living in an industry based on old and perhaps outdated technology aren't much interested in the theory of "creative destruction" that is part of the competition that keeps the economy growing.

Those petitioners want help and to hell with the theories. One can hardly blame the people they elect to represent them from responding to their entreaties. But we ought to be able to expect others in Congress not subject to the same pressures to take a broader view.

That doesn't happen all that often, though every so often an elected official looks beyond the parochial to the general interest and manages to do so without flinching. Former Sen. Phil Gramm (R-Texas) was one who managed do to that.

During the debate over a particularly protectionist textile bill some years ago, he was visited by officials of an apparel manufacturer from his home state who wanted him to vote for the bill to help their company. He refused, and when asked how he could decline when the interests of a Texas company were so directly involved, he is said to have replied that "some things you do for your constituents and others for your party, but once in a while you have to do things for your country and your God."

Apocryphal? Maybe, but a glance at the way Congress is putting things together this year, one would hope there are a few folks up there who know the difference between special interests and the national interest.