Capitalism finds unlikely defenders

Published on Saturday, 3 August 2013 21:14 - Written by

Capitalism doesn’t seem to have many friends lately; the Obama administration is obliquely blaming it for rising “income inequality,” and many commentators and public officials are saying “unbridled” capitalism is to blame for the bankruptcy of Detroit.

But someone is singing its praises — one of the wealthiest, and arguably the most publicly compassionate rock star in the world. Bono, lead singer of U2, defended capitalism in a recent speech at Georgetown University.

“Aid is just a stop-gap,” says the musician, who has made a second career of winning foreign aid for impoverished nations. “Commerce — entrepreneurial capitalism — takes more people out of poverty than aid … In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure.”

How refreshing. That’s a stark contrast to those now blaming capitalism for a host of ills, from obesity and the financial crisis to Detroit’s squalid downfall.

Vice, for example, is a news outlet aimed at the same audience that Bono sells his music to. It began as a magazine and has now evolved to a regular news program on HBO. It’s take on capitalism is a little different from Bono’s.

“Detroit’s bankruptcy highlights the cruelty of American capitalism,” the magazine claims. “Detroit makes for a vivid tableau of urban decline: revived prairie, burnt-out homes, and empty high rises. Detroit, more than a mere metaphor, is a striking and large-scale instance of something that has become pervasively wrong in America.”

In unashamed Marxist tones, the magazine pits the proletariat against the bourgeoisie.

“Detroit’s working class built automobiles, the weapons that defeated fascist Axis armies, and created relatively broad-based affluence,” Vice says. “The banks created opaque and highly risky financial instruments that brought the American economy to its knees. Go figure.”

But the story is more complicated than that, as it always is. The fact is that capitalism is in short supply in Detroit; the city operates (badly) as a planned economy with central powers pledged to the welfare of special interest groups.

It’s not accurate to say unions crippled Detroit. But it’s true to say that unions opposed efficiencies and wage structures that would have kept American automakers competitive with the Japanese throughout the 1970s and ‘80s.

And socialistic make-work policies are also in evidence. The city of Detroit has a staff horseshoer in the Water and Sewer Department — though it has no horses. Centrally planned jobs, particularly in the public sector, aren’t responsive to the real workforce needs of the community. They may provide paychecks, but they don’t increase cumulative wealth.

Predictably, Vice is calling for a federal bailout of Detroit, like the bailout of the banks: “Detroit and its people have received no bailout. Unlike Wall Street, they have earned one.”

But a bailout is aid, and as Bono says, aid has limits. Certainly, we must care about and for the poor in Detroit’s inner city. But we mustn’t artificially enable failed policies. We must look for answers that increase entrepreneurship.

Because as Bono notes, “Entrepreneurship is the most sure way of development.”