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Myths About Capitalism

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I won 19 Emmy Awards by reporting a myth: that business constantly rips us off — that capitalism is mostly cruel and unfair.

I know that's a myth now. So I was glad to see the publication of "The 5 Big Lies About American Business" by Michael Medved.

"You can only make a profit in this country by giving people a product or a service that they want," Medved recently told me. "It's the golden rule in action."

Medved used to write about the movies, so he's familiar with the businessman as villain. I'll play a clip from the movie "Syriana," in which an oil tycoon makes this ridiculous speech:

"Corruption keeps us safe and warm. Corruption is why you and I are prancing around in here instead of fighting over scraps of meat out in the street."

"What's interesting," Medved commented, "is that in the old days, Hollywood would have businesspeople who were very positive: George Bailey, the Jimmy Stewart character, is a banker in 'It's a Wonderful Life.'"

No longer. Today's movie capitalists are criminals or playboys. Apparently, Hollywood writers think it's plausible that CEOs have lots of time to sip cocktails and chase women.

"In school, we all studied a book called "The Theory of the Leisure Class," which ... indicted the leisure class and these people who were out there exploiting other people and really had nothing to do except sit on their yachts and go to their swimming pools and their vacations."

In real life, that's nonsense.

"The higher up on the income scale you go, the less leisure time you have. You make money in this country by working hard."

Medved's second myth is that when the rich get richer, the poor get poorer. This is the old zero-sum fallacy, which ignores that when two people engage in free exchange, both gain — or they wouldn't have traded. It's what I call the double thank-you phenomenon. I understand why politicians and lawyers believe it: It's true in their world. But it's not true in business.

"If you believe that when the rich get richer, the poor get poorer, then you believe that creating wealth causes poverty, and you're an idiot," said Medved.

"One of the things that I hate is this term 'obscene profits.' There are no obscene profits ... . (The current economic downturn shows) "that when the rich get poorer ... everybody gets poorer."

Myth No. 3: Government is more fair and reliable than business.

"Remember the last time you went into Starbucks, and then remember the last time you went into the DMV to get your license," Medved said. "Where did you get better treated? And it's not because the barista is some kind of idealist or humanitarian. She wants a tip. She wants you to come back to the Starbucks ... ."

But the left doesn't get it.

"This is the suspicion of the profit motive — the idea that if somebody is selflessly serving me, they're going to treat me better than somebody who wants to make a buck," Medved said. But "(i)f you think about it in your own life, if somebody is benefiting from his interaction with you ... it's a far more reliable kind of interaction than someone who comes and says I'm in this only for you."

Myth No. 4: The current downturn means the death of capitalism.

"Capitalism is alive and well," Medved said.

I'm also bugged when people argue that today's problems prove that capitalism "failed." What failed? We had a correction. A bubble popped. But from 1982 to now, the Dow rose from 800 to 11,000. Had it happened without the bubble, we'd say this is one of the great boom periods.

Medved added: "This is one of the biggest lies — the idea that because of capitalism, we're all suffering. ... Poor people in America today, people who are officially in poverty, have a higher standard of living in terms of medical standards, in terms of the chances of going to college, in terms of the way people live, than middle-class people did 30 years ago. It's an extraordinary achievement of technology and of the profit sector."

John Stossel is host of "Stossel" on the Fox Business Network. He's the author of "Give Me a Break" and of "Myth, Lies, and Downright Stupidity." To find out more about John Stossel, visit his site at <a href="http://www.johnstossel.com" <http://www.johnstossel.com>>johnstossel.com</a>. To read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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Comments

4 Comments | Post Comment
Preach it! There is, perhaps, no better place to see the merits of capitalism or the devastation of its alternatives, than the neighborhood lemonade stand. There's a video called That's Not Fair that shows what happens when "The Man" takes money earned by a hard-working lemonade stand owner and gives it to her lazy competitor. http://www.youtube.com/watch?v=zZX0qIQsApU

The old management maxim is still true: You get what you reward. If we reward laziness, we'll get laziness. If we reward hard work by allowing people to keep the fruits of their labors, then we will get an industrious nation that lifts everyone's standard of living.
Comment: #1
Posted by: Greg
Wed Apr 21, 2010 8:11 AM
The 3 Faces of Capitalism:
1. Administered (By Majority)
2. Crafted(By Lobbyist)
3. Directed (By Media)
We are most aware of 1 and 2, but rarely discuss 3. This Directed Capitalism can be seen everyday on the financial show (squak box) when the segments appear to be relevant to the discussion, but are no more than a fancy, (sponsored segment) interviews of product/person/idea - most often highlighting a particular company and their marketing.
Comment: #2
Posted by: Randall
Wed Apr 21, 2010 11:32 AM
It's nice to see someone in the media still believes in a free market. A government can never grow large enough to control an economy. Even though the government is the largest single employer in the US, they only employ about 7% of the workforce, even with all the spending they do. That's why the stimulus bill was such a failure. What usually happens is that the economy has to shrink to fit the size of the government. Otherwise, France and Spain would be the largest and the most diverse economies in the world. If the government continues to spend their way into GDP control, we'll be bankrupt in 8 years. I've done the math.
Comment: #3
Posted by: Michael
Fri Apr 23, 2010 11:36 AM
"I won 19 Emmy Awards by reporting a myth: that business constantly rips us off that capitalism is mostly cruel and unfair." ~This was the Stossel I used to know

I like the new Stossel better
Comment: #4
Posted by: PatriotWorks
Tue Dec 13, 2011 8:26 PM
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