A World of Wealth: How Capitalism Turns Profits Into Progress
By Thomas G. Donlan
(FT Press, 215 pages, $24.99)
This summer’s declining dollar and spiraling gas are driving cost-cautious Americans seeking an international vacation to find it at Disney’s Epcot. The fact that this abroad is at home makes it no more unreal than its basic premise. Epcot distills ten foreign “countries” into a cavalcade of Kodak moments. Of course, no country looks, let alone functions, like this. What makes a working and thriving society is not so picturesque. But it is productive and by altering that variable raises or lowers the standards of living for its citizens — regardless of its appearance to visitors.
It is appropriate as many Americans turn to Epcot that we stop and consider how America itself is turning into Epcot. As we give greater license to our ever more sensitive sensibilities, we continue to strip away the working parts that produced America’s prosperity. And by relegating them to other nations, we make them more competitive and ourselves less so.
These concerns are provoked by A World of Wealth, a recent book by Tom Donlan, editorial page editor of Barron’s. The book’s thesis is straightforward: capitalism is the most direct route to prosperity. An accessible exercise of applied economics, the book reminds that capitalism remains the pinnacle of economic creativity. The more fully it is permitted, the better off the economy functions and the nation and its citizens live. Instead of something for which even many of its practitioners feel compelled to apologize, Donlan prods us to applaud.
Going through an Epcot-array of national problems, ranging from the environment to health care, he convincingly argues they result from market failure — i.e., a failure to allow markets where they could, or could better, exist. In each case it is to America’s detriment they do not. And in each case higher prices, lower supply, and diminished quality result.
TAKE ENERGY PRODUCTION, particularly energy extraction. America has hamstrung itself by rejecting its own resources. What is a natural resource under the ground is perceived by some to be a natural disaster above it. So while we partake, we won’t produce — leaving others to sully hands and conscience. Similarly, nuclear power’s potential as a nonpolluting energy source is undercut by the U.S.’s decision to prohibit the reprocessing of spent fuel rods. “The quantity of dangerous waste would be substantially reduced, and the amount of energy extracted from a given quantity of uranium ore would be substantially increased.” In both cases, self-imposed limitations equal less energy and higher prices.
The same problem applies more broadly to manufacturing. Blue-collar jobs, much lamented in theory, are disdained in practice. Seen as too polluting, too unsophisticated, too low tech, too unskilled, and producing too low a wage, we have created a regulatory environment that forces these jobs abroad. Their exportation is blithely rationalized as due to less developed countries’ lower wages. However, we fail to examine our role in raising America’s labor costs. The fact remains, every U.S. job sent overseas was competitive…right until it left.
Indicative of this problem is the “living wage” phenomenon so beloved by the Left. Claiming to be in low skill workers’ best interests, it actually denies them the opportunity to enter the work force at wage rates that make their skills competitive and then acquire skills that could make their labor more valuable. These jobs are liberally swept away and the low skilled into unemployment.
ALL OF THESE ELEMENTS are the price of the increasing preciousness of political correctness. Activities deemed offensive by our liberal elite are farmed out to less developed nations, which are allowed to engage in these “unsavory” endeavors in a sort of global caste system. The NIMBY (not-in-my-backyard) irony is that by relegating these jobs abroad, they go to countries with laxer environmental and labor standards. The net effect is increased costs at home and lower overall environmental and labor outcomes.
What would be environmentally unthinkable today is routinely pursued economically. While impact on the environment is an escalating concern, we do not look twice at interference in the economy. By altering forces that make markets work efficiently, America runs the risk of making itself a sterile economic environment.
Fortunately, capitalism works. It is amazingly resilient. It works better than any previous economic system and it works better than any system that has sought to supplant it. Its laws still exert themselves even in the face of the most unfavorable circumstances. As Donlan’s book explains, and as the current economic circumstances underscore, we need to seek ways to make sure capitalism is allowed to do what it does best and with the least interference possible.