WASHINGTON, Jan. 6, 2016 — Presidential candidate and U.S. Sen. Bernie Sanders delivered a major policy speech Tuesday. The speech focused on financial issues and included proposals to cap credit card and ATM fees, take government control of credit rating agencies, introduce a tax on financial transactions and jail bank executives.
The Vermont Democrat told supporters in Manhattan, “Greed, fraud, dishonesty and arrogance, these are the words that best describe the reality of Wall Street today.”
He added, “To those on Wall Street who may be listening today, let me be very clear. Greed is not good. In fact, the greed of Wall Street and corporate America is destroying the fabric of our nation.”
Sanders’ speech was designed to fire up his supporters—who responded throughout with cheers and boos, jeers and applause—and to contrast himself with Hillary Clinton, who’s carried on political affairs for years with Wall Street bankers. Those relationships draw far more ire from the left than do her husband’s relationships with other women, so it’s important to Sanders to emphasize his distance from Wall Street.
Sanders vowed to break up big banks and introduce a “21st-century Glass-Steagall Act.” His speech impressed Sen. Elizabeth Warren, D-Mass., who tweeted on Wednesday, “I’m glad @BernieSanders is out there fighting to hold big banks accountable, make our economy safer, & stop the GOP from rigging the system.”
While Sanders and Warren are populist supporters of making Wall Street subservient to Washington, they stop short of calling to replace America’s capitalist economy with some other system. Yet they remain deeply suspicious and harshly critical of capitalism and capitalists. What they rail against, however, is a caricature.
Capitalism is an economic system that rests on three basic institutions: limited government; private property rights; and contractual freedom. It does not rest on the assumption or celebration of greed, and profit is a motivating assumption of neoclassical economics, not a requirement of capitalism.
Limited government means just that. It is a government bound by law, a government unable to intrude arbitrarily into the economic sphere. Government, as an instrument of society, can set the rules by which we play the economic game, but once those rules are set, it can’t violate them, nor can it change them except through established legal procedures.
Private property rights mean that we have the right to use, modify and exchange resources (including our labor), and that the right is exclusive and well-defined. You have the exclusive right to wear clothes that you own or to destroy or sell them if you wish.
You don’t have a right to the air around you, but it would be extremely difficult to define exactly which air you owned or what you could do to it without affecting the air breathed by others. Issues like noisy parties and feedlot odors are usually dealt with by laws on nuisance rather than by trading property rights in a market.
Contractual freedom gives you the right to negotiate with others on the terms by which you’ll exchange property or property rights. If you want to shoot basketballs through a basket and people want to pay you to do it, then congratulations. If you build cars that no one wants to buy, you can’t force them to and you’ll go broke.
Contractual freedom must be genuinely free; no one can be coerced into a contract—no godfathers making offers that can’t be refused—and contracts based on fraud can’t be valid.
Those three institutions are capitalism in a nutshell.
Capitalism lets you buy wood, turn it into furniture, then sell the furniture for whatever people are willing to pay. You can give it away if you like, or you can share the profits with your workers or give the money to the poor.
You can be greedy or altruistic, selfish or civic-minded. You can be Ebenezer Scrooge or Mother Theresa, start a co-op or a commune or a corporation.
Capitalism lets you be you. So why does Bernie Sanders have a beef with capitalism?
Because capitalism doesn’t really exist.
Pure capitalism doesn’t exist because politics does. Politics is human nature; it’s what we do when we gather together into societies. We play politics with our spouses, at PTA meetings, when we’re trying to choose which movie or restaurant we’ll go to with friends, when we’re deciding where to put our roads.
Once you start playing politics with the economy, you see the opportunities to get rich without working for it. Why compete for business when you can get your competition regulated out of existence? If you can play the law to avoid paying taxes, isn’t that as good as inventing a new widget? Access to the public purse can be more valuable than the patent on Viagra.
Sanders and Warren hate big banks and big finance. But big finance isn’t big because it’s so good at capitalism; it’s big because it’s so good at politics.
The more rules that come out of Washington and the more power Washington has to decide winners and losers, the more big business will flock to Washington. As long as she has power, Goldman-Sachs will give Hillary flowers and tell her they’ll respect her in the morning.
And like Evita, Hillary will use them and play them and dump them when the next big bank comes along.
There is no one, no one at all, never has been, and never will be a lover, male or female , who hasn’t an eye on, in fact they rely on tricks they can try on their partner.
They’re hoping their lover will help them or keep them, support them, promote them.
Don’t blame them, you’re the same.
The problem with capitalism isn’t that it’s too powerful, but that Washington is. This isn’t to argue for anarchy. Capitalism can’t work without government, without laws and the stable framework that government provides.
That government is best that governs least, but governing least is still governing.
Sanders, Warren and other left-populists have a vision of capitalism that is of greedy corporate tycoons oppressing employees just because they can, like the cartoon villains of “Captain Planet.”
Only government can save us from these monsters.
People being what they are, there will always be those who want to humiliate and oppress others. They aren’t made that way by capitalism, but by human nature. Give them a company, and they’ll oppress their workers. Give them a government, and they’ll oppress the nation.
We need laws and rules to protect us from each other, but when banks and corporations fall into bed with government, those protections are gone.
Sanders is wrong that lack of regulation has created financial giants and giant corporations. Government has done that. Adding more government won’t fix the problem, but will instead create new opportunities for the political allocation of resources.
It isn’t time to run away from capitalism. It’s time to give it a try.