Interview With a Capitalist

Young Russians: Socialists or Capitalists?

This is not a political blog. It’s a “systems mindset” blog.

In my December 1st post,  Socialism & Capitalism: The Systems Mindset Dissection, my primary message is not about which system is best (although, as an aside, one certainly is more efficient than the other). I use real-life topics like this to illustrate the systems mindset, not to get people to agree with me.

Here I respond to comments and personal emails.  The questions are paraphrased. 

One more thing before I begin the Q&A: If my mechanical approach challenges your sensibilities, that’s OK, isn’t it? You would rather be challenged than entertained, right?

I think your post was too long.  I agree.

What’s with this systems mindset stuff?  Working directly with dispassionate reality is the fastest way to reach goals. When one “gets” the systems mindset, things “get mechanical” and make more sense while the emotional baggage drops away. When this occurs it becomes easy to see what needs to be done in order to find personal/financial freedom. No more floundering around. In making decisions, the systems mindset is the alternative to an ideological menu, limited information, blind faith, emotional need, or frustration-based free floating hostility that is constantly searching for an outlet.

Why are you a capitalist? First of all, it’s a pragmatic, mechanical choice rather than an emotional state. But to answer your question: I ask myself, here in the world that actually exists – and not the world I wish existed – which political economic system provides the largest percentage of regular people with the most personal freedom and opportunity?  It’s unquestionably capitalism. Compared to the other systems out there, capitalism is a robust, fluid and self-correcting organism that is efficient in fulfilling its primary purpose.

You business owners care too much about profit. That’s sort of correct, but this is more precise: Profit is the number one concern. If there is no profit the business ceases to exist…and if you work for a business, profit should be your number one concern too because if the business fails you lose your job. Very simple. Another thing: Most small business owners take significant risk and work long hard hours before reaching profitablity. I slaved for fifteen years before the bottom line started to pay off.

Capitalists like you are the problem. Look at me: I’m rolling my eyes. In my defense (and indirectly, in defense of capitalists everywhere) here’s my gig: My partner and I have our own little “independent enclosed business system” called Centratel, in which we pay a good wage to 30 employees, mostly women, each of whom has responsibility for themselves and in most cases other family members. In turn, our employees provide a great value to more than 1,300 customers while each year all of us together pay many hundreds of thousands of dollars in taxes to the “government system” which in turn redistributes those tax dollars to God knows where.

Our employees depend on their jobs and my partner and I depend on our employees. Our clients depend on all of us at Centratel to provide a quality service and we in turn depend on our clients to pay us. This is called “the deal.” Get out of my face that capitalists are greedy and don’t care about other people. In fact, to use an idiom stemming from my blue collar roots, I recommend you stick that idea where the sun don’t shine.

Things could be better! Things are unfair!  You’re right. The world is an imperfect place and that’s why we want a governmental/economic system that can be constantly adjusted, not an unchangeable and scurrilous template with day-to-day decisions handed down from on-high. And in minimizing unfairness we want a system that values the ultimate minority – the individual – not “the state,” some vague generalized concept of  “the people,” or various preferred sub-groups.

The United States does not have a free market economy. You’re splitting hairs. I compared the United States economic system with the North Korean economic system. If you had to select one as being “free market,” which would you choose? In any case, check this out from the Heritage Foundation. In economic freedom, the U.S is ranked 6th. North Korea is last, at 179th.

With the capitalistic system, the rich get richer and the poor get poorer. Maybe. I hear various versions of this argument and just as many counter-arguments so let’s approach this through the side door. In a democracy there are people who have little or no money, people who have lots of money, and a whole lot of people in between (the middle class). What is too often overlooked is that in a free economic system there is a constant flow of people up and down the prosperity ladder. It’s a vibrant, fluid, active process as people search for more profit or a better wage…or they crash down from an idea that went bad. It’s not a static template like North Korea’s system, where the huge majority of society is trapped at the bottom with no hope of escaping no matter how innovative they are or how hard they work. In stark contrast, the tiny top echelon is filthy rich…and the middle class is near non-existent. In the North Korean economic system, there is little movement up or down.

Here’s a key feature of the adroit free market system: In searching for a profit, if one capitalist business owner charges a high price for a product or service, another capitalist business owner will soon see the opening and then undercut that price in order to get the customer. Over and over it goes until the price drops to its natural low. Same thing goes with quality of product: Make a less-than-optimal product and that leaves room for a competitor to create a better product and thus capture the market. It’s a beautiful system! The fast moving cleansing action of the capitalist system is powered by the preeminent human driving force: individual desire for something better.

In a heavily socialized economic system the government decides everything, thus killing personal incentive and creating general economic malaise. (And in a partially socialized country, personal incentive is partially compromised.) Go back to the December 1st  post and look at the maps of economic freedom and high prosperity. The connection between the two is stunning.

The U.S. health care system stinks. Compared to what? Much of the world has no safety net at all. In the United States, 85% of the population is already covered, the care is excellent and wait-time for complex procedures is minimal. Is health care in the U.S. too expensive? Yes, but that can be fixed if the government system would let free market competition sort things out (stop mandated benefits, do tort reform, allow competition across state lines, etc). Let the market fix itself. It’s what is most efficient. Although the French  government is terrible at executing the concept, it’s historically been called “Laissez-faire.”

Should there be a government sponsored safety net?  Yes. For those who really need it; not for everyone. Keep the program targeted and small.

Shouldn’t the government regulate?  Yes, no question, but keep it minimal so it doesn’t over-burden the free market process. 

It’s not just the economy and the government. I feel personally victimized elsewhere in my life.  This brings us to the core of systems mindset mechanical positioning. If you can “think systems,” you will automatically create systems in your life that you can personally adjust.  If you are caught up in a system that makes you crazy, extricate yourself from that system or find a way to tweak its components so you have the control you need. A bad marriage can be that way (if he beats you or she drinks too much). It’s often about a job (because the one you have is boring and it’s going nowhere). If you own a business, it can be a key employee who has an attitude (and who is slowly dragging the whole operation down). The first step is to see the systems around you and again, I call this “getting it.” (Go here and download the first part of my book for more about systems mindset positioning.)

In your opinion, what is going to happen next to our economy? Hard to say but right now my business partner and I are among millions of holed-up business owners who are stymied by uncertainty. We’re in protective shut-down because of impending government-imposed higher taxes, more regulation and even enforced unionization. Add to this a declining dollar and anemic capital markets. (Read Deflation, Inflation and the Beast I Won’t Buy.) For now, at Centratel there’s no hiring or infrastructure investing although our monthly grosses are at near record highs. By hoarding profits we will be in a better position to protect the company and our employees should the business climate continue to deteriorate. Like a huge percentage of the 23,000,000 small businesses in the United States, we’ll tread water until we’re sure that our free market system is going to remain free. Or, if the system becomes more inhospitable, we’ll get out of business altogether and buy that plot of land in eastern Oregon.

 (Next week and the week after: On December 22nd, I’ll make a Christmas/Hanukkah “get it” post. Something positive. The following week on the 29th, I’ll post this (the exact title is not settled yet but you get the idea): “Managing the Employee who has a Problem.”)

Photo by Egor Gribanov via flickr used under a creative Commons License.

Tagged as: call me a capitalist, cap and trade, capital, capitalistic, command and control economy, communist, conservative, democracy, economy, efficiency, free market, freedom, government, government systems, great employees, internal systems, liberal, primary system, private sector, sam carpenter, simple mechanics, socialist, socialistic, system, system mindset, systems mindset, trade, Work the System