Kim contributed this piece to a Center of the American Experiment Symposium entitled “How Can We Better Encourage and Reinforce the Most Entrepreneurial and Talented Among Us?” To put it succintly, Kim thinks we should just get out of the way.
“In 1942, Joseph Schumpeter agreed with Karl Marx that capitalism would collapse from within and be replaced by socialism, but not in the revolutionary way old Karl predicted (and not quite the way Schumpeter predicted either, but his insight is still compelling). Schumpeter described a great irony that is playing out now: Capitalism contains the seeds of its own destruction.
The great, private wealth generated by a free marketplace is now used by the state to support a progressive, socialist vision. Simply put, capitalism is funding socialism and it is capitalism—not the state—that is withering on the vine. The power of the state to tax and regulate, combined with its insatiable appetite for cash and authority, is discouraging our entrepreneurial spirit and creating great uncertainty. The intellectual elite, so hostile to democratic capitalism yet dependent on its wealth and liberal spirit, campaign relentlessly against business through their domination of the media, academia, and the arts. Our dear fellow citizens, with a growing, sometimes militant, sense of entitlement, vote for candidates who promise to take the risk out of life at someone else’s expense.
Private enterprise and taxpayers (a much smaller group than citizens, many of whom do not pay federal taxes) are laboring to support a massive, corrupt bureaucracy, which directly or indirectly employs a significant percentage of the population and thus grows unchecked by the democratic process. Public employees now enjoy greater salaries and benefits than their counterparts in the private sector. Government, currently our leading growth industry, has run up deficits both annual and structural that stagger the imagination. The modern corporation, though nimble and innovative, often joins the government and its political enemies at the table in order to avoid being on the menu.
We are talking about encouraging entrepreneurs in this symposium because most everyone is looking to them and economic growth to get us out of this mess, which, while daunting, would be no match for American private enterprise, if the state would just get out of the way and stay there. Right now, the entrepreneur is like Gulliver on the beach, trying to get up but unable to do so because he is tied down by the Lilliputians.
The financial crisis and ensuing recession were caused largely by government-created obscenities like Fannie Mae and Freddie Mac. Yet President Obama and Congress pile on bailouts and stimulus spending, new regulatory schemes, and massive legislation based on faulty premises and bad science (e.g., ObamaCare, Cap and Trade). All of this only further distorts markets and adds to the cost of business. An arrogant and guilty Congress dragoons executives with its subpoena power to deflect attention from its central role in our economy’s collapse. Senators Barney Frank and Chris Dodd should be tarred, feathered, and run out of town on a rail. Instead, they are still calling the shots, though Dodd’s impending retirement (and other political shake-ups) may be a sign that all is not lost.
Will we prove Schumpeter wrong and at least extend the greatest experiment in freedom and prosperity for the next generation? This Congress is hostile to free markets, and the courts abandoned economic rights long ago. President Obama would like the economy to recover, but only so he can fund an enlarged welfare state.
Therefore, to whom can we turn to defend American enterprise and free the entrepreneur? The people, We the People.
Liberals and conservatives alike must familiarize themselves with the concept of a limited federal government of enumerated powers. We must elect representatives who understand that means rolling back the state. We must reinvent core services, including K-12 education, while shifting social services back to an already vibrant charitable sector. Public pensions, the big daddy of icebergs for the ship of state, must be reformed. We the People must get our hands out of each other’s pockets so our children do not have to work like mules for the state while dwelling in the mediocrity of socialism. We have tipped, but we have not yet fallen.”