Dear College Students: Capitalism Works

"Capitalism is unraveling." This is how economic leftists would like to portray the recession; unfortunately, given the average level of economic education of most Americans, we're easy prey for such propaganda. Most worrisome is that exactly that perception is out there, and it's growing. I feel as if I'll be attacked for being disloyal to conservative ideals by pointing this out. Note that I'm not arguing that capitalism has failed - I'm arguing that the perception is being promoted that it has, and unless we recognize that this perception is taking hold most effectively in young people, we'll lose a whole generation.

Young people graduating into the teeth of this recession can't be blamed for being worried, but the combination of a meltdown induced by a bloated financial sector is prompting statements like these from Jake Lear, "a digital arts major at George Mason, worked three jobs at a time through the past semester and is doing one of them full-time this summer — a resident adviser helping to look after freshmen in dorms — because he gets free housing. His parents work for a federal contractor that shrank its work force and eliminated 401(k) matching contributions...Lear gets the occasional 'panic-inducing thought' that capitalism itself is unraveling, a scary prospect with graduation ahead of him in December."

Dear college students and recent grads: I know it's tough. Suddenly being on your own in the real world is scary in the best of times. But the benefit of capitalism is sustained long-term growth, with the advantage, college graduate, to you - who has the brains and skills to create value and push technology forward. The State is not interested in economic growth, or your job, any more than it has to be to get re-elected. To that end, your productivity becomes the State's way of feeding less talented people to keep them happy. Collectivism is a short-term fix that in the medium and long run is always, always toxic and stultifying to real growth.

Fellow real-world conservatives, we have to explain to the Jake Lears of this country why capitalism and markets are the best bet for them and the best way that humans have yet found to allocate and create wealth. His generation is used to questioning everything - and they should. By all means question capitalism, and every other wealth allocation system discovered or contrived, because capitalism is the best and has survived Darwinian selection for a reason. (Adam Smith is the one pointed out the metacompetition that bred the Invisible Hand.) We have nothing to fear from open discussion and inquiry - and after all, if there really is a better system, why wouldn't we choose it?

Without Jake - and without that open discussion - the concept of the free market will lose all public support and die. How do we - conservatives (moderate Republicans, Libertarians) appeal to Jake? By prioritizing positives - education, fiscal responsibility, smart foreign policy, and smarter regulation (not more regulation) that can prevent our economy from relapsing into metastasizing too-big-to-fail de-facto-government finance agencies like Bear-Sterns et al. We won't win Jake Lear through embarrassing tantrums about stem cell research and tea bag parties.

Capitalism has been under continuous assault from ideologs since the mid-nineteenth century, but this isn't even the first time that the opinion of regular working men and women in the industrialized West has swung against it: Joseph Schumpeter wrote Capitalism, Socialism and Democracy as an attempt to preserve capitalism by appealing to its opponents, whom he recognized as in the ascendant. That's why I'll end with a quote from the Economist that I included in a previous post about preserving the public's perception of capitalism:

If the bail-outs are well handled, taxpayers could end up profiting from their reluctant investment in the banks. If regulators learn from this crisis, they could manage finance better in the future. If the worst is avoided, the healthy popular hostility to a strong state that normally pervades democracies should reassert itself. Capitalism is at bay, but those who believe in it must fight for it. For all its flaws, it is the best economic system man has invented yet. Capitalism is at bay, but those who believe in it must fight for it. For all its flaws, it is the best economic system man has invented yet.