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Opportunistic Capitalists
Wesley Wortman
DeVry University
Opportunistic Capitalists 1
On a clear night, there are innumerable stars with the possibility of solar systems on each
that have quickly multiplied on an exponential level. It appears more likely that the universe is a
place of abundance, more than it’s a place of shortage and lack. Shortages in resources are more
problems of mismanagement and location than true shortages. Karl Marx in the communist
manifesto says,
“You are horrified at our intending to do away with private property. But in your existing
society, private property is already done away with for nine-tenths of the population; its
existence for the few is solely due to its non-existence in the hands of those nine-tenths.
You reproach us; therefore, with intending to do away with a form of property, the
necessary condition for whose existence is the non-existence of any property for the
Some people in our society presume that economics is a zero sum game: where the poor are
failing, while the rich are succeeding. After the elections, the February 16, 2009 cover of
Newsweek declares “We Are All Socialists Now”(). The article lists many ways in which the
USA is already socialists and presumes a more socialist balance would be good. From the
Democratic Socialist web page, socialists want “planning and market mechanisms to achieve
equitable distribution of resources, meaningful work”(). From the Communist Party USA, the
desire is “an end to the rule of corporate America and private ownership of the wealth of our
nation Creation of a truly humane and rationally planned society that will stimulate the fullest
flowering of the human personality, creativity and talent”(). The goals and assumptions of both
groups appear similar. Many people find these goals admirable. American Capitalism has not
gone about defining itself in the same way as socialism and communism; but, it has its
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superior when the myths of its failure and the truth of socialist’s policies are examined. The
recent so called failure of capitalism has been caused by American politicians borrowing their
Both socialists and communists want to take control of and/or manage private
property. Economist Thomas Sowell in Applied Economics examined many factors effecting
economic development. He concludes that “By making property rights difficult to establish, a
country’s legal system has, in effect frozen its own assets and thereby blocked its own economic
development”(). In the United States, private property has allowed small companies to grow
large. Many of the large companies provide the greatest jobs and benefits to the largest groups of
people. Other countries with many things equal did not see the growth that the United States has
experienced. In spite of our success, socialist policies have had negative results. Granted, private
charity and limited government programs can be positive. President Jimmy Carter assisted with
the start of Habitat for Humanity. The group assists the poorest people to own a home. Veterans
coming back from various wars have been able to depend on their VA loan guarantee. Home
ownership has been subsidized positively in many government and private ways. However, a
festering socialist intrusion has changed the American dream of homeownership into a pending
foreclosure disaster. Politicians, dabbling with the banking system guidelines via legislation and
President Johnson's socialistic Great Society programs. The Community Reinvestment Act
(CRA) was a program started in 1977 under President Jimmy Carter to increase home ownership.
Housing policies have been constantly lobbied and proposed changes have brought threats by
activist groups such as Association of Community Organizations for Reform Now (ACORN).
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Provisions of CRA were changed under President Bill Clinton to make loan requirements more
lenient. Under President George W. Bush, reform that was proposed failed or was not enforced.
Many politicians were either naive or lacked the fortitude to reform financially imprudent
practices. As an example, referring to Fannie Mae in 2003 Rep. Barney Frank: "I do not think we
are facing any kind of a crisis.” In a nut shell, people that could not afford loans were given loans
and bad debt was sold and exchanged by Fannie Mae and other groups. According to Russell
Robert of George Mason University, parts of the government encouraged more bad loans for
their socialist ideology(). Admittedly, there are many opinions to the exact cause of the housing
crisis and plenty of blame to go around but much of it lies with the government. Other examples
of the government manufacturing a crisis are that of the 1970’s energy crisis where price controls
were attempted and several instances of rent control in New York City. In both cases, the results
of central planning were worse shortages and substandard housing. Adopting socialized lending
practices has wreaked havoc on the financial markets. The problem was created by socialist
policies and the government’s prescription is a, likely disastrous, socialist takeover of the banks.
Probably, the biggest myth in the area of socialism is that Franklin Delano Roosevelt got
America out of the depression. Through this argument, some people presume socialism is good
and we need more of it. The conventional viewpoint is that capitalism caused The Great
Depression and by implication capitalism causes all the boom and bust cycles. Other theories
such as the “Laffer Curve”() or the Austrian school of economics have accurately predicted
economic cycles. Austrian economists see the Federal Reserve’s meddling in monetary policy as
the cause of the 1929 crash. Thomas E. Woods book Meltdown again details the current
economic woes as having the same causes. Hoover is presumed to have done nothing about the
economy prior to the depression. From his Politically Incorrect Guide to History “Rexford
Tugwell, an important figure in FDR’s New Deal programs, acknowledged, “We didn’t admit it
Opportunistic Capitalists 4
at the time, but practically the whole New Deal was extrapolated from programs that Hoover
started”(). Hoover worked to artificially keep wages high making labor too expensive for the
markets; worked to keep American grain off the international market resulting in surpluses when
other countries produced more; raised the Smoot-Hawley Tariffs reducing exports; and raised
taxes in the Revenue Act of 1932 reducing private investment. The success of FDR is disputed
by Burton Folsom, Jr. in his book New Deal or Raw Deal. From his book in May 1939 the
“We have tried spending money. We are spending more than we have ever spent before
and it does not work. And I have just one interest, and if I am wrong…somebody else can
have my job. I want to see this country prosperous. I want to see people get a job. I want
to see people get enough to eat. We have never made good on our promises…I say after
Remember the socialists and communists wants to control labor, economics, and wealth. Again
from Folsom, FDR worked to control the following: price fixing in the National Industrial
Recovery Act; farmers paid not to produce in the Agricultural Adjustment Act; reduced
effectiveness of charities in Federal Relief Act; weakened dollar as prices of both gold and silver
were manipulated; increase unemployment by the minimum wage act; increased unemployment
by the unionization of GM and Ford since each employee had to be paid more; lower income tax
revenue as excise taxes were raised; and the list continues. Most socialist encroachments have
unintended consequences. According to Thomas E. Woods, the end of the depression was
Some would presume that socialism or communism is more moral because of its stated
belief in the helping the poor. Nobel laureate Alexander Solzhenitsyn is an exceptional critic of
capitalism and socialism because he lived under both systems. Solzhenitsyn said,
“In different places over the years I have had to prove that socialism, which too many
bureaucratic greed and corruption and avarice, and consistent within itself that socialism
sometimes include statements such as "we include almost all the commandments of the
Gospel in our ideology". The difference is that the Gospel asks all this to be achieved
Very few people have ever been seen sneaking into the communist or socialist counties but there
are always people trying to escape tyranny. What resulted from Marx was a government of
oppression where people stood in lines for necessities of life like razor blades. Solzhenitsyn
agreed that capitalism had a better quality of life but he argued that capitalism greatest benefit
was that it was more moral. Worldview Times exposes preachers Tony Campolo and Jim Wallis
citizens believe that they are morally superior by taking money from one group and giving it to
another. Others such as Jim Wallis advance their gospel by demanding more government
programs. Consider the Tenth Commandment "You shall not covet your neighbor's house. You
shall not covet your neighbor's wife, or his manservant or maidservant, his ox or donkey, or
anything that belongs to your neighbor." For clarity, there is a difference between aspiring to be
your best and wanting to be someone else. A spectrum of evil comes from wanting to take over
what another person has without doing what is required to achieve their success. What if the
Opportunistic Capitalists 6
government is acting out or at least encouraging coveting? What kind of immoral acts are being
It recent events we have heard almost daily that we need to fix this broken capitalism.
The supposition is that capitalism causes all of these bust and boom cycles. According to
Thomas E. Woods and his book Meltdown, the current economic cycle was predicted by Nobel
Laureate F.A. Hayak(). His cause for the current economic crisis is identified as the Federal
Reserve pushing interest rates lower than the market would have set them. This set in motion
actions by investors that were not based on real market conditions. Officially the Federal Reserve
is not part of the U.S. government but in reality they function in that capacity. The Federal
Reserve was established in 1913 to control the money system and regulate its value thereby
preventing a banking collapse. Folsom in his Book the New Deal or the Raw Deal says the
following:
“In practice, the Fed had raised interest rates four times, from 3.5 to 6 percent, during
1928 and 1929. This made it harder for businessmen to borrow money to invest, which
hindered economic growth. This contributed to the October 1929 stock market crash, the
race by customers to get their money out of the banks, and the closing of many banks”().
Two different authors two different time periods documenting the Federal Reserve, lowering the
interest rates and the other raising interest rates, both demonstrate that financial meddling has
disastrous results. Mark Levin president of Landmark Legal Foundation in his book Liberty and
When the individual or even a large business makes a wrong decision, its impact is
limited and more easily absorbed by the free market. However, when the Statist makes a
wrong decision, its impact is far-reaching, for he uses the power of government to impose
Opportunistic Capitalists 7
his decision on as many individuals and businesses as possible, which distorts the free
market itself().
What happens when the markets are allowed to adjust without socialist involvement? The 1920’s
was period after World War I during presidencies of Harding and Coolidge. From the Politically
embarked on no vast legislative program like the New Deal or Great Society, and involved the
United States in no major foreign war”(). Harding believed in constitutional government vs.
Wilsons earlier plans to design a new world. The 20’s were a time of reduced taxes, smaller
government, and most of all prosperity. We left capitalism again and embraced socialism in the
policies of Hoover and Roosevelt. Prosperity did not return for over a decade.
Taxes are another great myth of socialism. Their talk goes along these lines, the rich need
to be taxed more because they are benefiting and the poor are not. Taxes are a way, in their
view, to make things fairer. Supply side economics does not fit in the paradigm of the socialist.
Let’s examine the facts. John F. Kennedy described supply side economics as “a rising tide lifts
all boats.” Increased economic growth is said to produce more for everyone. Supply side
economics has also been called Reaganomics. President Ronald Reagan believed strongly in
lowering taxes and reducing the size of government. President Jimmy Carter was a fan of higher
taxes, especially on the rich. A major factor in Jimmy Carter’s unsuccessfully reelection was his
mishandling of the economy. Inflation and unemployment was at the highest levels in years. The
misery index (inflation plus unemployment) was a term that Carter used against Ford; although
Reagan did not talk about the “misery index”, during the 1980 Presidential campaign, the
American people knew it. At the start of the Carter presidency, the misery index was 12.7% and
ended at 19.7%. From President Carter’s 1979 State of the Union address, “Our economy offers
greater prosperity for more of our people than ever before. Real per capita income and real
Opportunistic Capitalists 8
business profits have risen substantially in the last 2 years.” Some critics argue that per capita
income was higher during Carter but if you don’t have a job and your money is worth less, it’s
not a positive situation. It’s common for politicians to spin statistics to make political gains.
Carter is making the argument that the poor people are better off now. The economic recovery
for all people did not occur until Reagan reduced taxes and spurred growth. Looking at another
aspect to this myth, did the poor fair worse under Reaganomics? The quote from National
“The number of black families earning more than $50,000 per year much more than
doubled, from 392,000 in 1982 to 936,000 in 1988. The median salary/wage of black
males increased from $9,678 in 1980 to $14,537 in 1988 (in current dollars). Median
means half earned more than that, half less, so more than half of all black males improved
The above data was obtained from the nonpartisan U.S. Census data. Jeffrey Frankel, a Harvard
graduate, of Economic Policy Institute opposes supply side economics on the grounds of
projected national debt. This is a ridiculous argument now that the current Presidential policies
based on Keynesian Economic Policy (not supply side) will produce the highest national debts
ever seen in history. Also economist Stephen Rose PhD looks at the data that claims the rich are
getting richer.
“After adjusting for demographic changes and for rising employee benefits (counted in
GDP accounts but not by the Census Bureau), median household incomes rose by 33
percent rather than 13 percent over these 26 years. If the median (the number where half
of households earn more and half earn less) was the same as the mean (the average
household), then the median household income would have increased 48 percent. Thus
Opportunistic Capitalists 9
households above the median (the richer half) did rise faster than 48 percent — but it is
also clear that not all the growth went to the top decile. A substantial part of the growth
According to his research, all the people in the boat did float. Unfortunately in our society, the
truth is manipulated to win elections and gain power. The idea that you can guarantee outcomes
is false. People make personal finance choices that may be harmful. Buying drugs or too many
percent flat-rate income tax and also sharply reduced the payroll tax rate. The results
were striking. Tax compliance increased and the inflation-adjusted revenues from the
personal income tax rose more than 20 percent annually during the three years following
the adoption of the flat-rate tax. Further, the real growth rate of the Russian economy
averaged 7 percent during 2001–2003, up from less than 2 percent during the three years
Gwartney also sites United States and other country examples. Edward Prescott co recipient of
the 2004 Nobel Prize recipient compared the United States and France’s tax rates. He concluded
that lowering taxes also increases revenue. Murray N. Rothbard an economist opposed
“In 1980, the last year of free-spending Jimmy Carter the federal government spent $591
billion. In 1986, the last recorded year of the Reagan administration, the federal
Opportunistic Capitalists 2
government spent $990 billion, an increase of 68%. Whatever this is, it is emphatically
Rothbard argues that Reagan did not cut the size of government but his numbers show that as
Reagan lowered tax revenues they were actually higher. Supply side economics does not starve
the government of needed revenue, but actually increases it. The actual amount of spending is
not the problem; it’s the relative burden that it places on the populous. If the economy is
flourishing the government can afford more also. Also inversely if the economy is faltering
government spending should also decrease. Carl Marx and many Americans presume that most
wealth is being accumulated by the rich and they should redistribute it. The actual redistribution
of wealth occurs when money is in the hands of the people and not in the hands of government.
Newsweek magazine declares we are all socialists, Communist Party USA endorses
President Barak Obama(), and the new pastor of Barak Obama is identified as having communist
doctrines(). It’s possible people on the right are just sour grape alarmists but when we examine
history the alarm continues to go off. The results of embracing socialist policies have been a
decade of depression and a current banking crash. The next great socialist takeover is identified
as Healthcare. Pulled from a current news story, actress Natasha Richardson would likely still be
alive if she skied in capitalist Vail Colorado rather than in socialized medicine Canada(). The
claims of collectivism, communism, or socialism have never worked out as expected. What
results is less opportunity and freedom for everybody. The solution to this problem is knowledge.
The successful path is to examine history and learn not to repeat its mistakes. The founders of
this country were better informed about oppressive government and struggled to build a new
system basic on limited government and individual freedom. Reading and understanding original
intent from documents like the Constitution and the Federalist Papers will help us to find our
Opportunistic Capitalists 3
way out of socialism and its oppression. An uninformed populace is easily manipulated by
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