Listening to some politicians recently, you’d think capitalism benefits only those on Wall Street, not Main Street. Yet the benefits of capitalism have proven over history to benefit all of society.
The heart of capitalism is the private ownership of property. Without free enterprise, individuals would not be able to have the opportunity to own economic resources and compete in the marketplace. Capitalism provides valuable goods and services, rewards hardworking people and initiatives, creates a higher standard of living for all, narrows the gap between the common person and wealthy, and provides opportunity to realize dreams and desires.
These basic components express the built-in wealth transfer system of capitalism. In some ways, job creation, as well, is ultimately one big wealth transfer — employers hiring workers who spend and invest their earnings, thus becoming wealthier.
TFAS poses the question, “How much would someone have to pay you to give up the Internet for the rest of your life?” Not surprisingly, most respondents could not put a price on the value of the Internet. More than 77 percent of Americans use the Internet, and with Internet access costing just pennies a day, usage is only expected to rise.
The video features Professor Michael Cox, director of the O’Neil Center for Global Markets and Freedom at Southern Methodist University’s Cox School of Business. He observes that, “The market has created a tremendous gap between worth (how much you pay) and cost.”
“When a new product comes out we all get in line for it,” says Cox. “The wealthiest people are in the front of the line and they pay the highest price for the worst version of a product.” Take cell phones, for example. In the 1980s they cost $4,000 and were basically a brick with buttons. Today, the going rate for an iPhone 3G is about $40.
If everyone waited for the product, it would die, so real-life Gordon Gekkos buy the products when they’re expensive. That lets the rest of us enjoy the cheaper, better versions. Innovations like these are a product of the private sector, and exemplify capitalism’s built-in wealth transfer system.
Our great country was founded on capitalism, where people have the privilege to create wealth for themselves and others through creative enterprise. It is the antithesis of socialism, where government controls and stifles economic growth through unwieldy legislation and taxes.
Free enterprise has produced in the United States an extraordinary lifestyle. Even in this poor economy, we all enjoy privileges that weren’t available to the world’s wealthiest just a few decades ago. With access to something like the Internet, something that’s worth more than a dollar figure, we just might be richer than we realize.
Abigail White is in the Young Leaders Program at The Heritage Foundation. Click here for more information on interning at Heritage.