Economic Reality and Freedom

Posted on August 2, 2018 by Robert Ringer Comments (44)

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Given the increasing intensity of the battle between socialism and capitalism in America, it’s time for rational people to focus on two issues:  economic reality and freedom.

All people of goodwill can certainly agree that freedom is a good thing.  Where they can respectfully disagree is whether or not freedom is the best path to prosperity for all able-bodied people who are willing to work hard to get ahead in life.

That said, I have long felt that one of the most perplexing mental disorders known to mankind, going all the way back to the days of America’s first limousine liberal, Andrew Carnegie, is the guilt-soiled minds of so many wealthy capitalists.  I say perplexing, because not only has the capitalist system made them wealthy, they have been able to witness firsthand the jobs they have created, the lives they have improved with their products and services, and, in most cases, the good they have accomplished through their charitable endeavors.

Bill Gates is the most high-profile example of someone who has hall-of-fame credentials in all of these areas.  But he’s not alone.  Warren Buffet, Ted Turner, and a whole generation of dot.com billionaires are infamous for disingenuously crying out for higher taxes on the rich.  I say disingenuously, because when confronted with the suggestion that they should voluntarily pay higher taxes, they mysteriously demur.

Guilt-ridden billionaires have somehow come to believe that the system that made it possible for them to become wealthy is inherently bad and must be fundamentally changed through government force.  The problem is that government force is in direct contrast to freedom, and capitalism is nothing more than a subcategory of freedom — the freedom to sell your labor, products, and services at the highest prices others are willing to pay for them.

To the extent government force is injected into the equation, capitalism becomes less and less pure and the marketplace becomes skewed.  What all industrialized nations practice today is state capitalism, which is capitalism that is controlled — and stifled — by government intervention.

Today, one of the most outspoken limousine liberals is a relatively unknown billionaire by the name of Nick Hanauer.  Hanauer has founded thirty companies and was the first non-family investor in Amazon.com.

To his credit, he openly declares that he’s a proud, unapologetic capitalist.  In fact, he says that capitalism is “the greatest social technology ever invented for creating prosperity,” but adds the caveat “if it is well managed.”  Oops … capitalism is based on a free market, not a managed market.

Hanauer explains what he means by “well managed” in his TED Talk lecture when he says, “Government creates prosperity and growth by creating the conditions that allow both entrepreneurs and their customers to thrive.”

In this lecture, his main focus is on the necessity to raise the minimum wage to $15, which he helped to bring about in his hometown of Seattle.  He says his main reason for wanting to raise the national minimum wage to $15 is that “If we don’t do something to fix the glaring economic inequity in our society, the pitchforks will come for us.”

I have news for Hanauer:  The pitchforks are always coming, but they rarely gain any traction.  Astroturf groups like Moveon.org, Occupy Wall Street, and Black Lives Matter will always be with us, because they are indispensable tools of the Radical Left.

Of course, there’s always the possibility that the artificial protests created by rich and powerful lefties could spin out of control and bring a Lenin or Castro out of the woodwork at just the right time to foment a bloody revolution.  But in the United States of Goldman Sachs, that’s unlikely to happen, because the establishment powerholders simply have too much money, too much power, and too much legal cover to lose control.

And even in those rare cases where charismatic revolutionaries have succeed in grabbing power, the smart, the powerful, and the well connected soon rise to the top and give credence to George Orwell’s memorable words in Animal Farm:  “All animals are equal, but some animals are more equal than others.”

Back to Hanauer, he also argues that raising the minimum wage to $15 is good for the economy.  He says that he is not making a moral argument that economic inequality is wrong, but that rising economic inequality is stupid and ultimately self-defeating.  “It’s not just the pitchforks,” he says; “it’s also terrible for business.”

Hanauer believes that those who argue that forcing employers to pay more than double the current minimum wage would result in higher unemployment are wrong.  To prove his argument, he points out that since 1980, the wages of CEOs have gone from thirty times the median wage to five hundred times.  Yet, raising the cost of hiring CEOs has resulted in more CEO jobs, not less.

The problem is that his analogy is wildly invalid.  Raising the minimum wage of low-level workers can be accomplished only through the use, or threat, of force, whereas companies voluntarily — and for purely selfish reasons — pay CEOs high salaries.  Thus, the increased cost of hiring CEOs does not reduce CEO employment because the demand for talented CEOs is greater than the supply.

Finally, Hanauer says that the economy is an ecosystem, and I agree with him on that.  But his view of how the ecosystem works best is flawed.  He believes that if businesses are forced to increase workers’ wages, that will increase the demand for goods and services, which in turn will increase hiring, which in turn will increase wages, demand, and profits.

On the surface, all this sounds logical, but he has his chickens and eggs mixed up.  The chicken always comes first.  Without entrepreneurship and capital, there are no jobs, no income, and no consumers.  In actual practice, no one has ever figured out how to do it any other way.

Based on historical evidence, we know that the economic ecosystem works best absent of coercion, especially government coercion.  Redistribution of wealth disrupts the economic ecosystem and misallocates resources to the detriment of everyone.

Voluntary association is the key to a healthy economic ecosystem.  The less government interference, the more smoothly the ecosystem operates and the better off businesses and workers are — especially workers at the low end of the income spectrum.

Nick Hanauer calls his theories “the new capitalism,” but the truth is that there is no such thing as new or old capitalism.  Economic freedom is economic freedom — period.  It was true two thousand years ago, and it’s still true today.

Above all, those who want to tinker with the natural economic ecosystem fail to take into consideration that taking property from one person and handing it to another is a violation of human freedom, because without property rights, no other rights are possible.  After all, if someone takes your property, he’s also taking the time, effort, and ability you put into building creating, or accumulating that property.

Thus, good intentions aside, liberty should always be accorded a higher value than all other objectives.  And that is the bottom line to economic reality and freedom.

Robert Ringer

+Robert Ringer is an American icon whose unique insights into life have helped millions of readers worldwide. He is also the author of two New York Times #1 bestselling books, both of which have been listed by The New York Times among the 15 best-selling motivational books of all time.

44 responses to “Economic Reality and Freedom”

  1. Rock Roach says:

    A lot of these examples of so called "limousine liberals" show that even very successful people aren't able to see the "forest from the trees" or that they were successful because of their hard work plus the ecosystem they were in.
    How would they feel in a society where 75 percent of their money went to government(or the few in charge)? I doubt if they would have had the ambition to accomplish what they did to get ahead.
    I'm kind of with Trump on the minimum wage thing,Maybe it should be around 10 dollars an hour,but you can't just automatically double it,for the reasons that you stated.

    • patg2 says:

      We need to look at other ways to raise wages effectively. How about providing dormitory housing for minimum wage workers? Most of them live at home and don't pay rent anyway. Whenever you raise minimum wage, you decrease the number of jobs and cut off entry level opportunities people need.

  2. D. Frank Robinson says:

    Wage extortion is a violation of the non-aggression principle. Why shouldn't employees break into employers' houses and steal their stuff?

    • Jim Hallett says:

      Wage extortion? An employee freely accepts a job for whatever was offered. If he or she is not happy with it, they are free to leave and offer their services to another emp,oyer. Stealing or destroying someone's property is always criminal!! Sounds like you attended an Antifa rally with this kind of evil, misguided response.

      • D. Frank Robinson says:

        Using the force of government to extort a "minimum" wage deprives both potential employees of jobs and employers from offering employment for jobs that have market value below the central planners holy omniscient notion of a living wage.
        And you can take your ad hominen Antifa remark and sit on it.

        • Jim Hallett says:

          I misunderstood your original comment, as we are both on the same side. I completely oppose govt. forcing a minimum wage on employers. I thought you were advocating for people to steal from employers if they thought they were underpaid, when you were just using that as an obvious example of wrong. My apologies!

  3. Peter says:

    The people who state they believe in free markets, capitalism, etc too often are quick to mention that "of course" there should be "some" regulation, such as a minimum wage etc. With these comments they reveal that they have never truly been exposed to what really makes this American economy unique: the small business person.
    If they had any such exposure, they would be acutely aware that so many of them will reveal the stories of people who approach them with offers to work for less than the prevailing minimum wage. But they are unable to hire them for fear of the severe government penalties involved.
    The fact that even government based statistics repeatedly show that each time the minimum wage is raised, unemployment goes up, is not important to them. In this age of virtue signaling and the ever increasing, pathologically powerful craving by so many to feel good about themselves, truly helping those is need (repeatedly accomplished by unregulated free markets), becomes an afterthought.

  4. kauai_mike says:

    It's all cyclical: Oppression, rise & revolt, new boss same as the old boss (oppression), rise & revolt …
    The key is to operate independent of these cycles, focusing on your own individual freedoms.

  5. James says:

    Nick Hanauer. Not Rick.

  6. Scott theczech says:

    Wage manipulation by government is wrong and counterproductive. Since human labor (a form of capital) is still such a big part of the economic system, for the sake of freedom, wages must be left alone.

  7. GCHarmon says:

    Robert, Ayn Rand would have liked you.

    • Rick G. says:

      Robert Ringer's philosophy is based, in part, on the philosophy of Ayn Rand. Ayn Rand seems to have had a great influence on him and his way of thinking.

  8. booklaurie says:

    Have there ever been any "good old days" of capitalism, during which the free market worked exactly the way it was meant to? If so, you'd think we could learn from how that was accomplished.

  9. notpropagandized says:

    A BIG problem with capitalism is when you see it is it really. Dimocrat propaganda during years of Clinton and Bush crony capitalism and big government conservatism went a long way to arm true capitalism's opponents and greatly mislead nearly 2 whole generations.
    .
    So, when Americans ponder "capitalism", are they thinking of actual lightly regulated (law and order) COMPETITIVE FREE MARKET ENTERPRISE accessible by any citizen? Remember, there are bad actor capitalists that feel compelled to shut the door of opportunity on others who might follow their example. They hire DC attorney lobbyists to appeal to squishy politicians to pass one law or another in various kinds of Trojan Horse legislation and ruin the whole system.
    .
    True capitalism depends upon fair play, honor, integrity and faith in the system to help others. Failure in those areas defeat the ideal.
    .
    Socialism is cronyism by definition for the simple reason that cronies are necessary to decide the welfare for others and simply replace blind market decision making by individual, commercial and industrial consumers.
    .
    One other point: Capitalism and freedom carry a lot of responsibility for the individual to discipline themselves, play fair, defer their greed to preserve opportunity for all. Capitalism and freedom is not well suited the pusillanimous. It is bold and the faint hearted should control their own greed rather than engineer laws and cronies and politicians to transfer (steal) from the productive to the not so productive (socialism communism)

    • William Laux says:

      Right there, you have hit on the key. It is bold. Only the bold are willing to risk. The timid, the pusillanimous take no chances. They band together, like a pack of wolves, to pull down the producers. Their motto: “You make, we take.”
      Thomas Edison famously said that he discovered a hundred ways NOT to make a light bulb. I don’t think the $15 an hour crowd would have stuck around to realize success. They would still be using candles.

      • notpropagandized says:

        $15 an hour crowd:
        The non-participants in true capitalism (not faux capitalism that may look like capitalism to the ignorant) have an excellent opportunity to be passive participants and cash in nicely through employment. Great system. But non-participants that reject that perfectly decent alternative are the ones who often screw up capitalism and besmirch its reputation among the poorly informed. We can list all sorts of dysfunction that malefactors impose upon competitive free markets enterprise. You named one of them: "$15 an hour crowd". And we know that they're crouched in waiting for becoming the "$20 an hour crowd". Their greed has no bounds just like the capitalist pirates that deny opportunities to others.

      • kauai_mike says:

        Wolves, in a group or individually, are rarely pusillanimous.

  10. Rick G. says:

    I find it baffling as to why the ultra-wealthy support ideas and political candidates who want to impose huge taxes on the them. It makes no sense to me. They seem to stand to lose the most.

    As for the $15 an hour issue, it is a proven fact that it has hit businesses really badly, especially restaurants, whereby employee staff has to be severely cut, new hiring curtailed, employee hours cut, and many restaurants have even closed and gone out of business. Besides, many employees are simply not worth $15 an hour. They show up late for work, they're lazy and need constant supervision and discipline, and have low ouput. Why be an exceptional employee while your coworker is making the same wage and is being just pulled along with everyone else?

    • Richard Lee Van Der says:

      Yes! For myself, I learned during high school to do Sales work and work for myself! Age 82 now. Never had a boss!

    • gopcongress says:

      In a nutshell: To maintain their monopoly hold on ultra-wealth and power by becoming one of the "cronies" in "crony capitalism." In short, the freedom that many of them had in building an industry is as much an impediment as it was an assist in their rise. Why is it an impediment? Because other Toms, Dicks, and Ringers could use that same path to become competitors to the original billionaire. By implementing regulations and heavy taxation that prohibit people from achieving, ONCE the original billionaire has achieved dominance, ensures that the original billionaire controls the market and, more importantly, the political structure that guarantees that his potential competitors remain supressed.

      This was rather simplistic, to be honest, but this is the epitome of a kid who scores a touchdown to take a lead in a neighborhood street game, then runs home with the ball to prevent the other team from scoring.

      • lee says:

        That's it in a nut shell. Except that ringers can manipulate the deplorables in the trump movement and get them to buy their books and ideas and do real good for themselves.

  11. Ken says:

    Good stuff, Robert. You're right, unfortunately a lot of folks are just to short sighted to see most of what you've so eloquently outlined, and can't see past their nose and the immediate problem at hand. For instance, I would be willing to bet that many who say they agree with the necessity of freedom to do business, would also be in the line yelling, "Price Gougers … Put Them in Jail!!" at the gas station owners who double or triple their prices during a hurricane. That's always bee a pet peeve of mine. If you've got gas and someone needs it, you should be able to charge whatever you want for it. The customer either needs it that bad or he doesn't. No one ever seems to take into account the fact that the station owner will be out of business for perhaps several days until he can sell gas again at the "regular" price. That's not gouging (IMHO) but rather capitalism at work. So much for freedom.

  12. WeatherKarkinan says:

    One thing you didn't really touch on that I wish you would have is how this sort of behavior has a chilling effect on investment. Like a lot of people who came of age earlier, I have used real estate and financial assets to grow wealth, and yet now for the first time I see risks in owning such things that never existed previously. If and when the Dems come back to power, reparations for slavery and taking land from those who were here before us and only God knows what else will be on the table. The more you own, the more they will take. It's as I've been plopped down on about page 465 of Atlas Shrugged. I don't want to own any longer. I don't even want to work for such a broken, dysfunctional system. I want to pull my capital out, grow enough food to survive on and be left alone while it burns to the ground, as it must and will.

  13. Jean says:

    Interesting that Hanauer, an early investor in Amazon, wants to raise the national minimum wage to $15.00. Is he aware that Amazon routinely hires remote 1099 workers for far less than $15 to do customer service? Amazon pays no payroll taxes or benefits on these workers, they offer them no perks (not even an employee discount) and doesn't even help with technical issues, instead shifting all responsibility for tech troubleshooting off onto the contractor.

    Hanauer is another guy who likes to hear himself talk, but knows the realities of the marketplace. Technology and automation will eliminate entry-level jobs that normally pay minimum wage, illegals or otherwise unemployables (ex-cons, welfare recipients who don't want to lose government benefits) will work for cash under the table and the only real beneficiaries of a $15 minimum wage will be union members, whose COLA is indexed to the minimum wage. The consumer – or the honest person who willingly reports his or her income via payroll tax deductions or quarterly filings – gets screwed bigly.

  14. Mic says:

    The main issue with setting minimum wage to some arbitrary level is who gets to select what the level is and based on what criteria? If $15 is the magic number then ask why? What does $15 per hour buy and who gets to decide that is this is the "right amount"?

    If we are going to have people arbitrarily choose a number then why not just choose $300 per hour so everyone can afford everything? When you suggest that to a liberal they go nuts and tell you that is an absolutely stupid idea, but what is really the difference in arbitrarily setting it at $15 or $300 both are made up numbers based on forcing employers at the point of a gun to meet a standard chosen at random rather than the free market.

    Further, think about this, the Fed and their funny money policy creates inflation which is why people argue we need $15. I remember when minimum wage was $3.50 per hour when I was a teenager and I remember in college getting a job at UPS that paid $8.00 per hour and thought I was the luckiest dude on the campus, but here we are saying that $15 is the magic number. Based on nothing more than some opinions and what should be the new standard based on inflated dollars.

    I believe what Robert is saying. We should implement pure 100% laissez-faire capitalism and let the market pay what it will for all goods, products, and services. Those that are unhappy with that rate can build up skills, work harder/more to get where they want. Everyone wins. This solution comes without having to use any government thugs, guns or force. What a beautiful world.

  15. IHeartDagny says:

    There's a keyword in your article, Robert, that is the answer to the motivation of the Limousine Liberals. That keyword is "Pitchforks". A person who is a courageous truth-teller is a rare commodity. Donald Trump is one such person. How many of him do we see?

    The Limousine Liberals KNOW that if they don't toe the Democrat line and advocate for all the Democrat tax-stealing, power-grabbing bugaboos, they will unleash the mob with the pitchforks to their gates. And, that's the least that they will do. The Limousine Liberals aren't mentally ill. But, the people in the mob are. They have been driven crazy with envy, greed, victimhood, and entitlement by Democrat-run schools, Democrat-run entertainment, and Democrat-run media. Quite frankly, if you weren't born in the last thirty years with the innate ability to think for yourself and with a small amount of common sense, you are doomed to be a Democrat mentally ill, zombie.

    The good news is is that most people DO arrive in this world with their own brain and at least a small amount of common sense. Many are waking up with the truth-teller we have in the White House and in his administration. They just seem overwhelmingly like a large part of our population because they DO control the media, education, and entertainment.

    This year's elections will show just how much power they actually do have. If you want to ensure the truth-telling continues and with more power to FIX what the Democrats broke, YOU MUST GET OFF YOUR COUCHES and VOTE.

  16. Ivan says:

    Free market minimum wages have always had a demand from students and the uneducated. From there it created incentive to do well in school and get a degree or learn a trade. I have like most during my early years worked minimum jobs knowing it was temporary. Besides the minimum 15 dollar wage that they demand, lets not forget all the other perks they apply and qualify for. For instance, lower utilities, medicaid, assisted rental housing and vouchers for this and that, the list gets pretty long. I'm always surprised when I hear of another off the wall freebie or assistance. One of these days a burger flipper will be your next door neighbor in your substantial to affluent neighborhood.

  17. unabashedskeptic says:

    Nicky Hanauer, Michael Bloomberg, Paul Allen and the Bill and Melinda Gates foundation have funded every anti-Constitutional, anti-gun bill that's passed in Washington state in the last decade. One more sign of their fear of the mob they've contributed to creating via their Progressive ideology!

  18. Carol says:

    The $15 an hour mindset is a symptom of our managed capitalism. When is Trump going to eliminate the Federal Reserve? And get us back on Gold?? Solutions to much. Better to bite the bullet now than wait for the denouement that is coming under our artificially propped up economy. Regardless of personal characteristics of the man – that some find objectionable, Trump's independence, politically and personally, his willing Courage and his unrelenting focus on the foundations of this country mark him as a leader of the hour.

  19. Aundrearedonc says:

    Perhaps Amazon should practice what it preaches. Pay your peeps $15 an hour with no 1099 status to their workers. Yeah, that's right, crickets from them.

  20. patg2 says:

    Beware the wolves in sheep's clothing. Bill Gates, Warren Buffet, et al. are the enemy of all true values and ethics. They oppose the right to life, they promote mass mandatory vaccination, GMO frankenfoods, pharmaceuticals that kill, oppose the Second Amendment, The list is long. I'm afraid all they got out of Ayn Rand's philosophy is that selfishness is a moral good. No. Enlightened self-interest is a moral good. People who can see how deadly these things are, and who refuse to kill others for personal gain are our friends. Gates, Buffet, are not among their number.

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