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Article posted May 14 2013, 9:16 PM Category: Economy Source: James E. Miller Print

How to Not Attack Capitalism

by James E. Miller

The mark of any flunk economic thinker is the statement "we live in a capitalist system." Without a doubt, the United States, along with the rest of the West, is still gifted with a market-based economic system. But calling it capitalism – the uninhibited buying and selling of goods and services – is a crime against words and their meaning. In the U.S., the state has its filthy presence in practically every marketable transaction. A true, unadulterated market has not been allowed to proliferate in over a century; perhaps more.

The greatest peddler of the "laissez faire" myth are often university professors, decrying the immorality of profit-seeking while assigning their own textbooks to the student body. In one of the most poorly written, unthought out pieces of economic diagnosis I have ever had the displeasure of reading, DePaul University professor Paul Buchheit gripes at that "raw, unregulated capitalism" is "acting like a cancer" on America. And the guy is serious; absolutely sincere. Modern liberal tirades that put free markets through the wood chipper are, on occasion, backed by criticism of seemingly untainted sectors of the economy. The best of these handily ignore the influence of government. While incorrect in diagnosis, at least the reasoning of many capitalism-skeptics can be followed and made to seem plausible once state interference is removed from the equation. But Buchheit doesn't even attempt to do that. He simply issues a laundry list of complaints, and proceeds to attribute unfettered enterprise to those failings. Calling himself a professor of "economic inequality" at DePaul University should have rung the alarm in my head as to the simpleton nature of his critique. I read on anyway, only to be infuriated at the stretched-beyond-reason conclusions.

Buchheit's first target is the common villain of subtly Marxist left-wingism: capital investment. As he writes, the income earned through speculation and finance is somehow detrimental to "vital programs" such as food stamps. The vast profits earned in the investment field are made to appear evil when compared to the paltry sum spent on welfare subsistence (neverminding the fact that the food stamps program is an enormous subsidy to large agricultural conglomerates).

This characterization should strike the economic reader as atrociously misguided if Buchheit's objective is a wealthier society, and not just an excuse to satisfy a fetish for thievery. The delaying of consumption, also known as investment, is the lifespring through which all economic progress flourishes. If humanity was composed entirely of hedonistic animals devouring everything around it, there would be no resources to devote to future purpose. The division of labor would collapse, as would the market of intermediate goods which employs millions. It is only the act of production that allows for consumption. Claiming otherwise is analogous to putting the cart in front of the horse. And as economist Robert Higgs has shown, today's economic malaise persists in due part to real private fixed investment lagging behind aggregate consumption recovery. The ensuing result has been tepid growth and employment of labor. If Buchheit can't recognize the social good brought about by high level investment, it should not be a surprise the rest of his commentary comes off as blind takedown of an imaginary enemy.

Our greed-fighting author proceeds his capitalism exposition by highlighting the plight of college graduates. He argues that not only has capitalism left only minimum wage jobs for former collegians, but it has also contributed to the incredible hike in tuition cost. Would Dr. Buchheit be happier if these graduates were not working at all? His tirade implies that free markets are the culprit behind the dismal employment picture of college graduates. He gives no explanation why except a greater number of degree holders are staffing lower paying jobs. Having a PhD in computer science, it's doubtful Buchheit is versed in the practice of logic as he easily falls prey to the post hoc ergo proper hoc fallacy. Choosing to attend university with a useless major like art appreciation or gender studies is capitalist choice. Those who graduate with little prospects have no one to blame but their gullible belief in the sanctity of higher education. Setting that aside, Buchheit pays no mind to the government's encouragement of higher education through subsidized loans.

Next, Buchheit brings in the novelty device which succeeds in eliciting both inordinate amounts of hatred and sympathy: children. He blames the declining rate of health in youngsters precisely on American capitalism, and nothing else. The truth that only private investment could have funded the advent of vaccines and better medical technology just happens to go without acknowledgement. Buchheit also fails to take note of the different methods in which the infant mortality rate is calculated in the United States when compared to other countries. Because low birth weight infants are not accounted for in the mortality rates of countries such as Canada or Germany, the land of Uncle Sam appears to harbor a murderous resentment for newborns. Funny how things work out when your goal is playing arson to a field of strawmen.

Buchheit's next victim are tax loopholes which deprive the money grubbers in Washington of much needed revenue. Here, the fussy professor offers what I can only describe as the stupidest comment ever penned by someone attempting to make an economic argument: "Loopholes and exemptions cost the public about a trillion dollars a year, and underreported income costs another $450 billion." How can any functioning human brain come up with that sentence? What the statement implies is that tax dollars are not, in actuality, taken from the public. Or that they are, but somehow the act of state plunder adds to society's stock of wealth. Just as the law "production must precede consumption" is true in every circumstance, so it is that government can only take from the private citizen. The state is a great redistributive force – passing along the stolen goods to those with political clout.

To conclude, the intellectually exhausted Buchheit bemoans the corruption of democracy at the hand of unfettered free markets. In his words, the pitiful voters are "useless" in comparison to the "greedy mass of nutrient-taking super-rich" who spend their day finding new ways to press their boot harder upon the low-class miserables. "Too much money in elections" is the last rallying cry of progressives who view corporations as shadowy manifestations of pure evil. But as George Will always points out, the amount of actual dough used in campaigns is a relatively paltry sum compared to economy-wide spending. In 2012, $6.3 billion dollars in total was spent on the cycle of political beauty pageantry. In comparison, $2.4 billion was spent on Halloween candy in the month of October. Regardless of the surprisingly low amount of money put to electing patsies, bribing public officials does not fall within the realm of the free market. Cash is transacted sure, but the marketplace if based on volunteerism – not the funding of potential compulsion on the innocent. Capitalism has as much to do with the political system as President "maim women and children" Obama has to do with peace, transparency and impartiality.

After a temper tantrum of an argument filled solely with complaints of unfairness a teenage girl might formulate, Buchheit posits a remedy of localism combined with solar panels is the magic bullet to kill the beast of laissez faire. But as made clear at the beginning of this rebuttal, there is no free enterprise dragon to slay. Buchheit is Don Quixote tilting at windmills.

I do not state this lightly: Buchheit's post was one of the most stupid, inane and illogical pieces ever written on modern political economy. Not only should be apologetic for publishing the piece, DePaul University should be embarrassed to even have this man as an instructor to students. God only knows what garbage the graduates of Dr. Buchheit have instilled in their head. Yes, this is an ad hominem attack, but if there is anything more deserving of one, it’s the author of such an intellectually grotesque piece of writing that fails at deserving to be called an “article.”

Respect is reserved for serious thinkers who, rightly or wrongly, make their case in a coherent manner. This was not a respectable argument by a respectable writer. It was the juvenile ramblings of a leftist who reads way too much of Arianna Huffington's online rag. Murray Rothbard once quipped that it is "no crime to be ignorant of economics" but it is "totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance." Dr. Bucheit might fancy himself a serious educator of the "dismal science" but his knowledgeable makeup is composed entirely of progressive sound bites, swallowed and regurgitated much like a robin's supper for her offspring.
James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada. Send him mail

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