Wednesday, Nov 26, 2014
Columns

Reiniers: Capitalism under fire


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President Obama is playing a dangerous game as he continues to use class warfare as a campaign strategy. This is the worst possible time in our history for our president to promote ill-will or resentment. If job creation continues to be flat, this could precipitate social unrest. If there ever was the time for a leader who could pull America together - this is such a time.

Obama could take a cue from FDR who, during the darkest days of the Great Depression, reminded us "We have nothing to fear" in his 1932 inaugural address: "The American spirit of the pioneer" is "the way to recovery" (not the culture of dependency). And rather than polarizing the country with the now weary tactic of identity and hate politics, FDR observed: "We face the arduous days that lie before us in the warm courage of the national unity" (not two Americas).

Income disparity is growing and it has been exacerbated by the Great Recession. Ironically, it has become worse under President Obama's five-year stewardship because his policies have put a damper on economic growth. It is a serious issue - not one for political gamesmanship.

Using the term "wealth" interchangeably with "income" compounds the problem. Wealth is visible and makes for eye-catching news. While the top one percent own 34.5 percent of the nation's wealth, they earn 19 percent of the income.

The president's "fat cats" invective is used as a litmus test to judge capitalism - used as a pejorative term by progressives. In modern America "free enterprise" is the term preferred by Republicans to avoid the negativity of the word capitalism. Capitalism is clearly understood by Republicans to be a mixed economic system - just not government centered - in which the private sector accumulates the capital necessary to invest in all aspects of a market economy and then uses its profits to plow into further investment.

Warts and all, history teaches us that capitalism - the private sector - has created more prosperity than any other economic system. The president needs to start from there and build a consensus for a return to an entrepreneurial culture which will eventually come about because of successful parenting in tandem with a 21st century education that teaches marketable skills, and that "can do" attitude which Roosevelt described as, "The American spirit of the pioneer" - the granddaddy of all capitalists who created their own "fairness."

Prosperous modern China, which now practices state capitalism - responsible for lifting 600 million out of poverty - is rapidly becoming the world's most dominant economy. Nevertheless, history also has shown that income and wealth disparity exist in all economic systems. (China again, where 500 million people - far more than the entire population of the United States - live on less than $2 a day.)

The preferred role model for President Obama has probably been France's President Francois Hollande. a democratically elected socialist in a country where all but one province are governed by socialists the people elected. This is something Americans need to think about. The French overwhelmingly elected a socialist who said publicly that he "hates capitalism" - as do many Democrats, the majority of whom prefer socialism - yet France's deficit is the highest in the European Union, its unemployment is at a 16-year high - 11 percent. Its government refuses to address its overburdened entitlement costs - the highest of any first-world country and Hollande's polls have tanked to the lowest level of any president in modern France.

Yet in the U.S. and France, it is capitalism that gets the bum rap. And in France its average unemployment rate since 1980 is an appalling 9.69 percent. Is this what we want? Every young French person can't hope to get a government job. Neither can every American.

In 2011, an Irish government official spoke to the graduating class at Trinity College in Dublin, and asked for a show of hands of those students who planned to leave Ireland to look for work. Everyone in the class raised their hands! Sooner or later young French students, who are globally connected on social media, will have to answer the same question and reevaluate whether they should be looking for careers in France's government controlled economy.

Prime Minister Winston Churchill observed that "Democracy is the worst form of government - except all the others that have been tried." It would be fair to say the same about capitalism as an economic system. The continued success of the ongoing industrial revolution is an exercise in creative destruction. There are winners and losers, and to a large extent a person's success depends upon personal choices made early in life, which in turn are largely dependent upon parental guidance and education.

The most accurate analysis recently offered was by Thomas L. Friedman, who voted for Obama and supports national health care: "America is the greatest engine of innovation that has ever existed.a product of a multitude of factors: extreme freedom of thought, an emphasis on independent thinking, a steady immigration of new minds, a risk-taking culture . and financial markets and a venture capital system that are unrivaled at taking new ideas and turning them into global products."

That doesn't sound at all like a socialist government-centered culture, or what Obama's state of the union address will be. Remember this on the evening of Jan. 28th. Rather than applauding "the warm courage of national unity," Obama will deliver yet another divisive diatribe with the focus on wealth and income inequality and the "fat cat" top 10 percent of wage earners who pay 71 percent of the federal incomes taxes, rather than a positive speech of encouragement about America being "the greatest engine of innovation that ever existed," and give encouragement to all those who make the right choices "with the spirit of the American pioneer."

John Reiniers is a retired lawyer and regular columnist who lives in Spring Hill.

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