Remove the 'Excesses' of Capitalism, and You Remove Its Essence
http://www.realclearmarkets.com/articles/2018/12/27/remove_the_excesses_of_capitalism_and_you_remove_its_essence_103554.html
If you invent a better mousetrap, the world will indeed beat a path to your door - and steer clear of the door of those who produce what used to be the better mousetrap. It often takes time to build capital and create wealth - but you can lose all of it in a heartbeat when someone comes up with a better way of doing what you do.
That is why capitalism is not a halfway house. You are either free to create, to invest, to pursue wealth and opportunity - or you aren’t.
Many argue that we can remove the “excesses” of capitalism, and preserve its “essence.” In fact, the essence of capitalism is its excess. It offers the opportunity to reap enormous potential reward in exchange for taking enormous risk. It leaves little point in trying to temporize or split the difference, to pursue material progress in small bites rather than giant gulps.
People concerned about the impact of globalization on its supposed “losers” offer the compromise notion that we can somehow obtain its long-term benefits without running the risk that some may bear short-term costs. But it is simply not in the nature of capitalism to pursue progress in measured doses. One either tames the animal spirits into submission, or allows them to flourish.
A good example is Uber, and the decision of the New York City Council to restrain its growth. Reacting to a spate of suicides by cab drivers who have seen their livelihood disrupted by ride-sharing apps, New York City has imposed a one-year freeze on the number of Uber and Lyft drivers while the local government studies the impact on the industry.
Outer boroughs will be more poorly served, many neighbourhoods will not have a transportation backup, and visible minorities will again have to struggle to get a ride. It is disingenuous to point out that there are currently 100,000 Uber and Lyft drivers, and their opportunity to continue to provide the service will be unaffected by the freeze. Ride sharing, like any gig industry, is extremely flexible; indeed, flexibility is one of its greatest strengths. Many if not most drivers will not be on the road from one year to the next - such as students, recent grads, restaurant servers and people trying to break into a creative or entrepreneurial industry.
It is similarly disingenuous to suggest that the ban will only last one year. Potential drivers, investors and users cannot be sure of that, and any ban at all will cause both human and financial capital to dry up. And it is not the way of bureaucracies to simply slow things down, rather than bring them to a halt. Too many industries and people have a vested interest in cutting off progress and preserving the status quo.
One cannot turn down the tap on such a new and fast-growing sector without running the risk of turning it off altogether.
Henry Ford understood this. He recognized that his goal as an entrepreneur had to be to meet people’s needs, not simply to address them. As Ford somewhat disdainfully pointed out: “If we asked people what they wanted, they probably would have said faster horses.” That is why entrepreneurship is so rare; it requires enormous vision, the ability to recognize what can be rather than what is, the capacity to summon it - and the incentive to do so.
Even many who have the vision to create often do not have the ability to recognize its full value. Alexander Graham Bell probably thought he was being a cock-eyed optimist when he fearlessly predicted that “some day, every town in America will have a telephone.” Instead, every resident of every town has a phone, and most people carry it around in their pocket.
Quite simply, when people were afforded the opportunity to own a phone, no one wanted to settle for sending a telegram. Capitalism makes it possible for people to obtain what they want, rather than settle for the only thing that used to be available. As a consequence, we no longer employ telegraphers, but employ many people in call centres.
Capitalism cannot be ladled out in chewable portions. People have an endless appetite for the things it can provide. It must offer an all-you-can eat buffet, not an a la carte menu.
Allan Golombek is a Senior Director at the White House Writers Group.
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