Commentary: Capitalism in the Crosshairs
By Carl D. Rafoth
CANFIELD, Ohio — Defending an essentially free market economy is not, but should be an easier task. It can be said that “it is heartless and it is cruel, it’ll make a fool of you” but business fools fail in a free market economy, as they should, replaced by others who succeed and prosper to carry many others in an upward mobile trend.
Taxpayer funded “fixes” to environmental issues such as solar and wind power tend to discourage private investment and do very little to “power” the engines of an economy. Where appropriate, sunshine and wind power have their places in limited areas, but much more efficient traditional private funded energy sources are more reliable and greatly more cost effective.
Henry Ford and Bill Gates showed us through personal and private funding of assembly line production and innovation that personal transportation and communication fulfilled a need. They met those needs and supplied the product. If a product or service is provided by a business without a need, the business fails; if provided by the government it never seems to die – the “agencies” keep it going.
Dozens of automobile manufacturers that followed Ford shrunk to a tiny few and were allowed to fail – until recently. The government exercised its “to big to fail” funding power and necessarily saved General Motors. Mismanagement cratered GM and carelessness is doing likewise to Boeing that qualifies for assistance at least as much as GM. Boeing is a critical defense contractor as well as the only significant domestic commercial aircraft producer. The GM and Boeing examples are unique but the bail out of the former was largely politically motivated; the latter arguably more required.
Contrast above with U.S. Steel Co. in an earlier generation. A bloated U.S. Steel, unable to any longer compete in the marketplace shrunk to a size unrecognizable in its heyday. Competitors produced steel products at a lower price that benefit the economy without huge government bailouts. Where quality is an issue many steel users are only too willing to pay the required price. The consistently poor quality producer necessarily fails.
Some say, look at the Chinese model. Under authoritarian dictatorship it has become the second largest global economy. But with brute and coercive force it has become so. Capitalists such as Apple Co. executives have played into it as have pharmaceutical companies, but the new virus – COV-19 may change it for the better. iphone, computer and prescription drug innovation and production belong here where a free market e.g. capitalistic culture will farther advance science, medicine, and benefit the world.
We must discontinue over reliance upon not only China but also other Asian unfriendly countries for reliance upon crucially important things such as communication and pharmaceuticals. Israel as an ally is a country to count upon. The largest generic drug manufacturer is Isarel-based TEVA.
In most instances to establish a Chinese company, its government requires majority control of the business. This assures both economic as well as political control of its pronouncements.
Here, if the huge stimulus laws recently enacted results in our government giving a lot of money to private companies without conditional release of any equity position the U.S. Treasury requires, we become more “Chinese like” than before.
Return to private capital ownership or capitalism will and should pull us back to normal.
The author, Carl D. Rafoth, is an attorney with Friedman & Rummell Co. L.P.A., based in Canfield.
Published by The Business Journal, Youngstown, Ohio.