Entry #7: Capitalism: The Real Story

A few days ago, we watched a documentary by Michael Moore's called "Capitalism: A Love Story". In this documentary, he talks about the effect of Capitalism and the adverse effect of privatization by companies. I could not disagree more. The topic was well researched and featured some top names including my favorite economist Elizabeth Warren. However, I felt the facts were severely skewed. It seemed like he was trying to blame our capitalist system while the people who were critical of capitalism should have been blamed. He was talking to about how rich people should be taxed more or there should be redistribution of wealth. But I believe you get what you deserve. America provides equal opportunities to everyone to excel in life. There are no shortcuts to success. If someone is not happy with their current position in life, they just need to work harder. Excuses and blame games do not produce results: hard work produces results.

In the movie, there was a detention facility for children.  This was owned by a private company.  To increase profits, the company bribed the judge to put more children into the detention facility for long periods of time.  This is an example of how Mr. Moore skewed facts.  It is an example of corruption, not fair capitalism.  Capitalism is based on making legal profits.  It is not based on illegal business practices.

Mr. Moore tried to appeal to the emotions of people by showing the videos of people who lost their houses to the sub-prime mortgage crisis of 2008. Yes, the banks were at fault to assume that the housing markets will always go up and gave out a huge sum of loans to people who did not deserve that money. The houses that these people lived in were financed by the bank. If one is unable to repay the bank, they cannot stay in the house any longer. There are no free lunches.  The popular “teaser payments” (mortgage payments that started low and adjusted higher) was agreed to by the homeowner and the bank.  If the person whose mortgage payment adjusted higher can no longer pay the loan, they have to give up the house to foreclosure.  People who claim they lost their houses never owned them in the first place. 

I am a strong believer in lassie faire and I consider myself fortunate to be in America. This country provides endless opportunities to individuals. This enables us to dream big and able to achieve it. This is one reason that geniuses from around the world come to the U.S. to work. The power of lassie faire is beautifully demonstrated in the rap song below. This song is written by Professor Russ Roberts from George Mason University.

Communism as a concept assumes an ideal scenario. It would work in a perfect world where one man works harder than the other for the same pay and benefits. This would mean that a Neurosurgeon and a Janitor would be paid the same amount of money. I wonder how many people would be motivated to become doctors in that scenario. We have a real world example from North Korea that follows communism. A documentary by National Geographic in 2009 showed that several people were rendered blind by a easily treated condition of cataract. People are not motivated to study challenging fields of medicine and other sciences. Volunteer eye doctors had to be flown in to treat these people. If we live in a communist world, the technological development that is growing exponentially would cease to exist.