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The Case for Capitalism

Heather Bone
Year 1: University of Waterloo (Class of 2018)
Honours Arts and Business (Joint Major: Political Science and Economics)
533 Elizabeth Street, Brussels, ON, N0G 1H0

saying that. This belief was commonplace following the 2008 financial crisis.In today's political climate. and Telus will be challenged. Taxpayers. one of the most widely believed lies is that capitalism and corporatism are synonymous. 2014. when there are no barriers to entry. if there exists above-normal profits). “Most lobbying is pro-business. p. Chrystia Freeland correctly distinguished between true capitalism and corporatism. it does so at a cost. However. It limits competition in two ways. cheese. the prices of goods and services are forced upward. By allowing more competition to enter the market. the supply of goods and services will increase and their relative price will fall. In her book Plutocrats. Proponents argued that the free market encouraged large financial institutions to make subprime loans. thus raising the price of the commodities by . 262). not pro-market in the sense of fostering truly free and open competition” (2014. causing a downward spiral to recession. firms can freely enter the market (and will. consumers. 3). in France. It is clear why Canada's telecommunications sector was outspokenly opposed to the new changes: It was bad for their bottom line. Crony capitalism can be defined as using one's position of power to secure government provided benefits in an industrial context. other industries. telecommunications services will be less expensive for Canadians because the oligopoly composed of Bell. in the sense that it promotes the interests of existing business. they could not be further apart. Supply management is another manifestation of crony capitalism. Today. para. Rogers. government-backed monopolies and corporate welfare are both forms of corporatism known as crony capitalism. The laws of supply and demand show that when demand exceeds supply. While crony capitalism may stimulate growth in particular industries or companies. In fact. As this happens. eggs and poultry) through means of tariffs and it requires farmers to limit production to a quota (purchased by the farmers). to which a lack of government regulation was often provided as a causal factor. and future generations carry the burden.3% in direct response to a new competitor entering the market because of liberalization (Brygger. It heavily restricts foreign imports (of milk. The Government of Canada has recently adjusted its policy on telecommunications. In reality. telecommunications prices fell 21.

15). Corporations are then forced to fight for the taxpayer's dollar. “While certain public policies would in the long run benefit everybody. In Economics in One Lesson. barriers to entry should be reduced as crony capitalism diverts purchasing power away from the consumer and into the hands of big business. 2). Proponents claim that redistribution is justified. the average Canadian family spends $276 more on dairy products than consumers in other countries (Dowdall.limiting supply. para. While on a surface level. For believers in big government. other policies would benefit one group only at the expense of all other groups” (1979. Corporate welfare is a form of crony capitalism that demonstrates this quite clearly. while ignoring its implications for others. as in our current system. Instead of implementing redistributive programs to tackle income inequality. these bailouts were seen as necessary to save automotive jobs. governments overlooked the negative implications for the taxpayer and the tax burden on the future generations that will be paying the bill (with interest). Perhaps the best known example of corporate welfare is the 85-million dollar handout that was given by the United States and Canadian governments to Ford. Specifically. This would be an ethical and an effective way to address income inequality from a capitalist perspective. For every dollar taken out . 2014. instead of making profits at their expense. Henry Hazlitt argued that one of the largest economic mistakes is for policy to focus on one group of people. p. The capitalist solution encourages competition which causes prices to fall. equating capitalism with corporatism has facilitated lobbying for the redistribution of wealth. he said that. if supply management were abolished. For example. and Chrysler at the height of the 2008 financial crisis. In addition. the prices of dairy and poultry would fall and the wealth would be distributed from the hands of farmers into the hands of the consumer. it also prevents middle-class Canadians from entering the agricultural industry because they cannot afford to purchase quota. General Motors. when crony capitalism is truly to blame. These people make free markets their enemy. the rich get wealthy at the expense of the poor. According to Micheal Bloom of The Conference Board of Canada.

2009. Our “capitalist” system has been blamed for a lot of economic turmoil today. and correctly define what capitalism is. and profit from protectionist barriers. para. not true capitalists.of the taxpayer's pocket. The market therefore. and the market correctly discriminates against unproductive industries rather than allowing them to thrive (Hazlitt. they have one less dollar to spend (or save in a bank). A false definition of capitalism has truly been engrained in the minds of Canadians today. Conversely. . many do not acknowledge that the corporatist elements of our economy that are rightfully detested come from economic planners. While capitalism certainly allows for the pursuit of profit. Filmmaker Michael Moore described it as such: Capitalism is an organized system to guarantee greed becomes the primary force of our economic system and allows the few at the top to get very wealthy and has the rest of us riding around thinking that we can be that way. Indeed. too – if we just work hard enough. is to stand up against corporatism. provides jobs just as well. 4). the rich actually benefit when private property is disregarded. The crucial action for liberty-lovers today. However. (Kaufman. it is built around the opportunity for all to pursue it. Canada will take one large step towards economic freedom. However. It does so without a costly bureaucracy to facilitate the process. sell enough Tupperware and Amway products. which would stimulate investment and provide jobs nonetheless. without any disrespect for the taxpayer. attacks have been spewed at proponents of economic liberty for “looking out for the old boys club” or “only caring about the rich”. There appears to be much confusion about what capitalism truly is. By doing so. The difference between these jobs and jobs saved through bailouts is that they are harder to see as they are spread out over many industries. when the money is left in the taxpayer's pocket. and the free-market solution is best for our nation's future economic stability. 102). 1979. therefore. they are given the freedom to buy goods that they want. p. we can get a pink Cadillac.

aspx Freeland. Goldman Sachs in “Capitalism: A Love Story”. Michael Moore takes on Citibank.com/speakeasy/2009/09/14/michael-moore-takes-oncitibank-goldman-sachsin-capitalism-a-love-story/ . 2014. R. from http://studentsforliberty. Hazlitt. 2014. C. New York: Arlington House Publishers. 2014. (1979). Canada: Anchor Canada.wsj. (2014. September 14).conferenceboard. H. Economics in one lesson.org/blog/2014/05/07/facts. Kaufman. Dairy supply management costs consumers and farmers. (2014). (2014. Plutocrats: The rise of the new global super-rich and the fall of everyone else.for-liberty-french-phonecarrier-prices-drop-following-competition/ Dowdall. from http://blogs. Retrieved May 27.Works Cited Brygger. May 7). from http://www. B. Facts for liberty: French phone carrier prices drop following competition. (2009. A.ca/press/newsrelease/14-0227/dairy_supply_management_costs_consumers_and_farmers. February 27). Retrieved May 27. Retrieved May 27.