The election: Obama and anger

A lot of pundits are commenting on the anger in American political discourse. Here's my view of the reason. Since its founding, the United States has been the beacon of personal freedom and wealth. The major reason, often ignored in the current political debate, is our capitalist organization. We are free to use resources to produce goods and services in a competitive environment, and competition means efficiency—a larger pie of goods and services for distribution. Capitalism has favorable welfare implications: the pie has been distributed so that the poorest among us are far richer than most people in other parts of the world. Capitalism also implies personal freedom, which can be defined as the right to own resources and dispose of them as they see fit without hurting others. Milton Friedman pointed out the link many years ago in his book "Capitalism and Freedom."

The Obama Administration, however, is making a fundamental shift away from capitalist organization. Its general approach to problems of the domestic economy, even in this period of recession and high unemployment, involves transferring control of resources from the private to the government sector through increased regulation, spending and taxes. Just think of healthcare, one-sixth of our economy. The private sector is regarded as the problem, not the solution to economic health. The inevitable effect is destroying personal incentives for producing wealth. Witness the fact that current business managers are now holding back on committing large financial reserves to hiring labor because of the thrust of current fiscal policy. It seems that the government is unaware that its basic policy will directly frustrate the goal of income redistribution that Obama advocated during his campaign and pursued in governance. We may end up with more equal sharing of the pie of national income, but a far smaller pie for redistribution.

What should be of major concern,however—to rich and poor, young and old—is the loss of personal freedom. Central power vested in government stands in direct opposition to the distributed power of individuals under capitalism. Returning to the topic of this post, the Administration’s threat to individual freedom and wealth is a principal source of the heightened concern (anger) many are feeling as this election approaches.