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What’s a Capitalist?

December 1, 2011

Hey, OTT!  Do you want to know what Capitalists believe in?  Ask Daniel Hannan.  Go read the whole thing, but let me focus on two.

2. What has happened since 2008 is not capitalism. In a capitalist system, bad banks would have been allowed to fail, their profitable operations bought by more efficient competitors. Shareholders, bondholders and some depositors would have lost money, but taxpayers would not have contributed a penny (see here).

Absolutely, sir.  The situation we’ve set up in the banking system is that we have to guarantee the business success rather than the money that’s actually in the bank itself.  If a bank is pulling in boatloads of money and yet still can’t pay its daily bills, then I don’t want that bank to have my money… or anyone else’s for that matter.  BOA is still teetering on the brink, and I can’t figure out why anyone wants it around after looking at its balance sheet.  And yet, we think bailing out ruined financial systems will benefit us in the short term (hello, Europe!).

7. Let’s tackle the idea that being on the Left means being on the side of ordinary people, while being on the Right means defending privileged elites. It’s hard to think of a single tax, or a single regulation, that doesn’t end up privileging some vested interest at the expense of the general population. The reason governments keep growing is because of what economists call ‘dispersed costs and concentrated gains’: people are generally more aware the benefits they receive than of the taxes they pay.

This one always gets me.  The belief is that we can “sin tax” items that we want to eliminate, but those taxes generally hit poorer people and once a tax is enacted it rarely goes away.  As much as people want tobacco to go the way of the dinosaur, losing the tax revenues from cigarettes would kill most states, see California.  And most taxes result in government spending that benefits people who understand the system, not people who receive the benefit.

I’d encourage y’all to go read the whole opinion.  It has some other cogent points.

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