Capitalism’s awesome. We all love capitalism. Love, love, love it. Yay, capitalism.
But there are two pernicious myths about capitalism which together have probably caused more pain, confusion, misunderstanding and outright misinformation than anything else about it:
• Capitalists want competition. No. No, they don’t. Consumers want competition. But every businessperson, from the tech tycoon to the crepe cart operator to the local crack dealer, wants monopoly. From the days of the Spanish galleons and the East India Company to the vast, multi-tentacled multi-national corporations of today, capitalists have always craved monopoly — the exclusive means and/or rights to produce and/or sell a product — above all else. (Corollary: Increased competition means you have to spend more of your profit margin to compete. Good for consumer, bad for business owner.)
• Capitalists want to create jobs. No. No, they don’t. Not if they can help it. In most businesses, labor is the highest or certainly one of the highest expenditures. Virtually every business owner on the planet who survives beyond the startup phase will at some point feel urgent pressure to keep labor costs as low as possible. (Corollary: You keep labor costs low by raising “productivity,” i.e., making employees work harder.)
Probably like you, I learned these things the hard way. We’re certainly not taught any of this in school; I’ve spoken to college classes where students had never heard such ideas expressed before.
Myth Number Two came to mind recently when the House of Representatives, on something very close to a straight party line vote, passed the euphemistically and hilariously misnamed “Working Families Flexibility Act.”
Much of the media oxygen last week was taken up — and rightly so — by the controversy over the IRS targeting certain organizations based on their politics. But as is so often the case, an equally malevolent measure made its power move under the radar.
In a nutshell, the Working Families Flexibility Act turns literally 75 years of established labor law on its head by proposing — a modest proposal! — to allow businesses to eliminate overtime pay and replace it with comp time off.
Get it? It gives workers “flexibility.” The flexibility not to get paid! Nice.
Said comp time would be largely at the discretion of the employer (they do have to pony up overtime pay if they wait too long to grant the comp time).
So, if you’re dependent on a little bit of overtime pay, end up having to take comp time instead, and a family member gets sick during the busy season, guess what? Possibly you ain’t really got comp time either. You ain’t got jack.
(Speaking of jack, Savannah Congressman Jack Kingston, now running for U.S. Senate, voted in favor of the Working Families Flexibility Act.)
Now, before we get too amped up about this, keep in mind it only passed the House. The Act is unlikely to pass the Senate, and even if it did it would almost certainly would be vetoed by President Obama. The watchdog site govtrack.us estimates a 15 percent chance that the bill will become law.
Me, I don’t put a lot of stock in that number in the long term. In the long term, the folks with power and money just keep coming back to the well until they eventually get what they want (inside, see Jessica Leigh Lebos’s postscript of sorts to the 61st Street apartment project, a local cautionary tale along those lines).
When you’ve got both time and money on your side, you tend to get what you want regardless. And remember: What capitalism wants is less competition and lower labor cost. Always.
Another thing I’ve learned the hard way: It pays to always be vigilant. Never assume that 75 years of the Fair Labor Standards Act mightn’t be overturned. Never assume that the powers that be have your best interest at heart.
And never, ever judge a bill by its name.
We hope you enjoy Jenny Dunn’s remarkable cover profile this week of a remarkable person, Ed “Duke Bootee” Fletcher, a true American original and musical pioneer who has chosen to make his home in Savannah. And as always we’re thankful to Geoff L. Johnson for his accompanying photographic mastery.
Not to be out-Dunn — hah! — our Bill DeYoung contributes a delightful chat this week with the great Darius Rucker.
Clarifications & Corrections
We mentioned the clothing line Stone Morris in last week’s issue. To be clear, the designer’s name is Rosalie Morris, and her company is Stone Morris. Rosalie and the Stone Morris line were among the winners in the annual Southern Designer’s Showcase sponsored by Belk.
In an addendum to Tina Brown’s recent story “Fighting Recidivism,” we’d like to point out that Mr. Borish Jenkins was in the process of completing his bachelor’s degree from Ashford University when we interviewed him for the piece, and hadn’t actually completed it at the moment. (He subsequently has. Congratulations!) We didn’t want to give the false impression that he ever claimed otherwise. Jenkins also started a Master’s in Organizational Management on April 30, 2013, and received an Associate’s degree in Business Management from Savannah Tech in May 2000.
This article appears in May 15-21, 2013.
Allow me to begin by saying that I am a capitalist. You and the majority of your readers are thus free to take this with as many grains of salt as they each see fit
I must take issue with some of your points. In your de-bunking of “Pernicious myths about capitalism,” you actually perpetuated other myths, not the least among which being that consumers are not capitalists. By participating in the system with the same motivation — that being gaining the maximum return on investments of all forms, monetary, temporal, and otherwise. As the consumer shops, he/she seeks the products and services from which the maximum benefit will be derived. As he/she seeks employment, the desire is for maximum possible gain at the lowest possible opportunity cost.
By that same token, a business owner seeks the greatest return on his/her capital, money, human, or otherwise. This seems, to this observer, to be the most logical course of action. It is the rational business owner that seeks increase in productivity for the same cost. However, even Adam Smith admits that, over the longer term, it would yield a greater return to moderate this productivity.
This brings up the second of your exploded myths; that capitalists, as you define them, want to create jobs. You are correct in saying that they do not have a strong desire to do so. However, the real myth, is that any single sentient entity can “create” a job. What creates a job is demand for the products of labor. As this demand increases, the business leader is forced into a decision. If this is only a brief surge in demand, it may be the better course of action to increase productivity, rather than go through the expense of hiring, processing, and training new personnel. The investment would be lost, otherwise, once demand subsided back to normal levels.
Another myth often cited by anti-capitalists, is that business executives are unanswerable, unassailable tyrants. Under true capitalism, the public, both as consumers and investors (check your retirement plan), can offer or deny any power that these corporations enjoy. We vote them in or out with our patronage and our investments. When we buy product A from store X we are implicitly supporting both companies’ aims and policies. When we select mutual fund F from brokerage firm G, which invests in companies J-P we offer implicit support to all companies involved and the products they offer.
The problem lies, “not in our stars, but in ourselves.” We as a society have happily assumed the role of hapless victims, for the sake of mental ease. In doing so, we have allowed increasing intertwining between business and government. This has led to the corporate abominations that you so fervently bemoan. We have resigned ourselves to these conditions, rather than educating ourselves to, and acting on, the fact that we , the public, still have sufficient power to change these things we cannot accept. Yes, business leaders want monopoly (Who wouldn’t, really?), but it is solely at our discretion as consumers, investors, and voters to allow them to have it. We are the powers that be; we simply choose to ignore that.
I love capitalism; I love the market economy. Of all the systems I have studied, it is far and away the most logical and natural – in line with our evolutionary development – in existence. What we have now is not capitalism; it is cronyism. plain and simple. It is private business enmeshed with government through tax breaks, subsidies, and nonsensical administrative laws, all because of mass intellectual laziness.
You want to make corporate America lose sleep? Educate yourself to make rational, ethical decisions. Reject their “bread and circuses” approach to appeasement. They fear a free market because it would refuse to allow them a permanent toehold on civilization. What sends them into frenzies of repressive and suppressive action are genuine, self-aware capitalists.