Health care: privilege or right?

When John Locke and Thomas Jefferson wrote that human beings possess God-given rights, including the right to life, and when they said that governments exist to protect those rights, they were not suggesting that governments ought to provide every citizen with food, clothing, shelter, health care, and all the other things needed to sustain and prolong their lives. Instead, they were saying that governments should deprive no one of life without due process; furthermore, that governments are obliged to protect the lives of citizens from dangers posed by foreign attackers and domestic criminals.

Locke and Jefferson envisioned a world in which people provided food, clothing, shelter, and other necessities of life for themselves and their dependents through their individual wealth and through wages for their labor. Individuals facing extreme need found help from extended family, neighbors, worship communities, and charitable organizations. Ebenezer Scrooge might sneer that workhouses and prisons sufficed to meet the needs of the poor, but in many cases compassion and charity filled the gaps where hard work and diligence did not suffice. Had God’s Law been obeyed by all the Israelites, there would have been no poverty in Israel. In his Judgment Day parable, Jesus commended those who have the hungry something to eat and gave the thirsty something to drink; he said nothing about lobbying the government to provide resources for those who are hungry, thirsty, naked, homeless, and ill.

In the “good old days,” doctors made house calls. Sometimes they accepted vegetables or baked goods as payment for their services; sometimes they waived payment out of the kindness of their hearts. But in those “good old days,” doctors did not remove cataracts, provide knee and hip replacements, or use CAT scans to diagnose problems. Health care and medicine have come a long way since the “good old days,” which is why they are so expensive. People expect more from their doctors, hospitals, pharmacies, and therapy centers than ever before. Every year, research and development provide new benefits to conquer disease and to prolong life and health. Some research and development is funded by government grants, and some raises money through donations, but much is done by for-profit companies. They have the combined goals of making life better for all people and offering a return on the investment of their sponsors.

Health insurance was invented as a way to spread the cost of health care move evenly over time and throughout the population. Buyers of insurance gamble that they are going to get sick and need expensive care; providers of insurance gamble that most people are not going to get sick and need expensive care. Insurance is necessarily inflationary—an insurance company must pay workers, maintain offices, and return a profit to their investors, while still keeping their promises to pay the medical expenses of their customers. A complicated system of fees, deductibles, negotiated settlements, and other financial arrangements has developed out of these needs. Otto von Bismarck of Germany was one of the first government leaders to ask employers to contribute to the health insurance of their workers. Today a person struggling to pay medical bills may also be benefiting from the health care industry through investments that are adding to that same person’s retirement fund. Life is complicated that way.

In the free market, health care and health insurance may not always be fair. People with more money can afford more helpful health insurance, while those with less money have insurance that does less for them. Wealthy people can afford care that is unavailable to others. Within the free market, governments intervene to make sure that essential care is available to all. Doctors, hospitals, and clinics cannot deny certain kinds of care to people in need, even when those people cannot afford to pay. Defining “essential care” is a challenge faced by members of the government, who must negotiate with each other to write a law that meets that need.

Under pure socialism, the government would gain control of all hospitals, clinics, pharmacies, medical offices, rehabilitation centers, and therapy providers. The government would pay the salaries of all health care workers as well as all other costs of maintaining these facilities. Citizens could receive health care at no cost; although, to reduce the burden on taxpayers, the government might require fees for certain services that are not defined as “essential care.”

The Affordable Health Care Act of 2010 (known as Obamacare) stopped far short of socializing all health care in the United States. Much of the legislation in that package focused its attention on health insurance rather than on reducing the cost of health care. More innovation in the latter regard might solve some of the current problems in American health care without threatening greater government control or a trend toward socialism.

Education of health care workers is expensive. Many professional health care workers begin their careers with enormous debts. Government loans that are part of that debt could be reduced or forgiven when these professionals participate in health care benefits to the poor and deprived—providing health care through urban centers for the poor, homeless shelters, and the like. Medical facilities and equipment are also expensive. Government grants could make them available in low-income communities at less cost than it takes to promise free health care to all the poor in those communities. Research and development need to continue in the health care industry. Government grants and charitable organizations contribute to the costs of research and development, but private funding with a hope for a profitable return should never be excluded from the equation.

The world contains sufficient food that no one should be hungry. Food is not distributed fairly. Inviting the government to collect all the food and distribute it evenly would be wasteful and unfair. Charitable giving, with some government participation, solves the problem far better than would total government control.

Sufficient housing exists in the United States for all the people who live here. Problems of homelessness are complicated by mental illness, addictions, personal choice (in a few cases), and other factors. Forcing every American to live in government-provided housing would be wasteful and unfair. The free market—with some charitable help and some government participation—solves the problem far better than would total government control.

Health care can be provided for all Americans. Putting the government in control of all health care—or even in control of all health insurance—would be wasteful and unfair. People need to be allowed to choose among various options regarding both health care and health insurance. Charitable help, with some government participation (such as Medicare) solves the problem far better than would total government control.

Protecting each citizen’s right to life is not the same as meeting each citizen’s needs in every way. The free market always innovates and creates better answers than would total government control. Through further study, negotiation, and compromise, more help can be found for the needy. Socialism does not offer answer that would improve upon the current system. J.

Regulation

In a free market economy, governments regulate certain aspects of the economy for the good of consumers, of workers, and even of business owners. Although the motto of pure capitalism is laissez-faire—“leave it alone!”—even Adam Smith (the foremost proponent of capitalism) recognized that government regulation was needed for capitalism to succeed among imperfect people.

How do governments acquire the authority to regulate the economy—or, for that matter, to make any laws telling people how to live their lives? The many theories about government and the source of its authority can be sorted into three general categories: strong people seize authority and use their strength to tell others what to do, people give authority to the government to ensure safe and productive lives, or governmental authority comes from God and is given by God to those who rule.

These three theories can be combined. For example, some might believe that strong people seize authority and become rulers (“caudillos”) but that people allow that to happen and have the power to prevent a strong leader from arising or to transfer power from one strong leader to another. Likewise, some people (this author included) agree that government authority comes from God (as described in Romans 13:1-7) but that it is bestowed through the people; therefore, the people have a God-given right to overthrow one government and replace it with another when the first government is no longer using divine authority in a God-pleasing manner.

Under some theories, government must be strong so it can accomplish its purposes. Under other theories, government should be limited by the people so it does not rob them of their rights. One approach says that some problems are too big to be handled by anyone other than the government; another approach says that too much government is the biggest problem. Thomas Hobbes described government as a necessary evil, a monster that must be fed and maintained, but that also must be watched constantly and controlled to keep the monster from causing too much trouble and destruction.

So, governments make rules on behalf of their citizens. They inspect food and other products to be sure that they are safe and uncontaminated. They ensure that workplaces are safe and that workers are being treated fairly. They prohibit monopolies, trusts, and cartels, breaking apart businesses that otherwise could take advantage of customers and workers. They protect the air and land and water from pollution. They zone some areas for industry, some for sales, some for homes and neighborhoods, and some for parks and natural preserves.

All these regulations are part of the social contract, an agreement between the people and the government. The government claims strips of land from landowners, develops them as roads, demands that travelers move from place to place only on those roads, restricts the speed and other behavior of travelers (fining lawbreakers when they are caught), and charges for the use of the roads with taxes, licenses, and tolls. Most citizens accept the government’s right to do these things because we need roads; many kinds of trouble would follow if each citizen traveled from place to place as he or she wished, without government roads and without traffic laws.

Within that social contract, disagreements arise and compromises much be reached about the level of government regulation and the details of that regulation. Which pollution standards are beneficial, and which are excessive? Excessive regulations are costly to businesses and consumers. They can rob the economy of jobs and businesses. Yet insufficient regulation leaves people in danger of being poisoned by pollution. Likewise, minimum wage laws are controversial. Some people insist they are needed to reduce or prevent poverty; others say they increase poverty by raising prices and by persuading businesses to hire fewer workers, replacing them with affordable machines. Lawmakers must consider all sides of such a debate. They must decide for themselves which regulations help the people and which are excessive. They must vote according to those decisions, and they must explain their votes to the voters who will decide if those lawmakers keep their jobs or will be replaced.

Some regulation is needed. Some regulation is beneficial. When the government assumes the job of controlling the economy, the people suffer. When the government uses its power to make decisions that are better made by the business owners, the people suffer. A free market, regulated but not controlled by governmental laws, historically works better than a socialist system in which the government manages the economy. J.

Taxes

Governments require taxes. Governments need money raised through taxes to pay their elected and appointed leaders and the many other servants who fill out the departments of these leaders. They need money to build and maintain government buildings, to provide roads and schools and other services wanted by citizens, to train and equip and maintain armed forces, police departments, fire departments, courts, prisons, and other needed facilities. The Bible requires Christians to pay taxes: “Give to Caesar what is Caesar’s” (Matthew 22:21); “pay taxes when taxes are due” (Romans 13:6).

A dictatorship can set tax rates, demand taxes, and punish those who fail to pay. A democratically chosen government must listen to its citizens. On the one hand, many of them want lower taxes; on the other hand, many of them want more government services for themselves or for others. Leaders in a democracy must strike a balance—when the louder demand is for services, they must provide those services and raise taxes to pay for them; when the louder demand is for lower taxes, they must decide which services to reduce or eliminate.

The simplest tax is a head tax—everyone pays the same amount. Income taxes can require the same percentage from every worker, or they can be graduated, demanding a higher percentage of the earnings of higher-paid workers. Taxes are levied on property. Taxes are assessed and collected when things are bought and sold. Taxes appear as fees: vehicle license plates, drivers’ licenses, hunting and fishing licenses, marriage licenses, and so forth. Businesses are assessed taxes on their productivity and on their property; an increase in business taxes means that consumers will be paying higher prices.

A second purpose for taxes is the encourage some behavior and discourage other behavior. Do you want to persuade people not to smoke? Tax tobacco. Do you want to persuade them not to drink? Tax alcohol. Do you want to persuade them not to waste gasoline with inefficient cars? Tax gasoline. At the same time, offer tax incentives for efficient cars and for electric cars. Offer tax incentives for using alternate sources of energy. Use the tax structure to encourage people to enroll in higher education, to save money for their retirement, and to contribute money to charitable organizations.

In a pure socialist state, the government provides people with everything they need: food, clothing, shelter, medical care, education, legal services, even entertainment. The same government demands much from its people, both in taxes and in limitations upon freedom. Without competition of the free market, people accept the food and clothing and shoes and medical care that is provided. They have no choices. Their jobs are provided by the government, but most of their income returns to the government through taxes. Those who complain might be ignored, if they are lucky; often, those who complain are punished for resisting the will of the government. History shows that people tend to migrate away from such societies and to try to find homes in free market societies. The Berlin Wall eloquently illustrated the difference between socialism and the free market.

In pure capitalism, people buy what they can afford and do without the things they cannot afford—including food, clothing, shelter, medical care, and all the rest. In a free market, the government intervenes to provide some care to its poorer citizens. Food programs, government housing, Medicare, and other programs have been devised to assist people. Free education is provided through the twelfth grade, but not without competition from private schools and home schooling. Some citizens desire more government participation in health care—more care available for all people, treating health care as a human right rather than a privilege. Others want the free market to govern costs and expenses of health care, fearing that government control leads to higher costs and lower quality care. Unfortunately, the Affordable Health Care Act of 2010 focused more attention on medical insurance than on actual health care (although its many provisions did include some health care regulation beyond insurance coverage). In a future post, I will offer some alternate suggestions regarding affordable health care, measures that allow the free market to work but still ensure that needy citizens are not excluded from necessary care.

Taxation sometimes has unintended consequences. Wanting to discourage wasteful use of gasoline, state and local governments raised the tax on gasoline. They also offered tax incentives for more efficient vehicles. Their program was successful—drivers bought more efficient vehicles, and gas consumption fell. But the gasoline tax funded highway repair in those localities. Reduced gasoline usage meant less revenue from the tax that maintained the highways, to the point that some government officials proposed taxing electric cars and fuel-efficient vehicles to recover the missing income.

One of the most famous unintended consequences of taxation happened in 1990. The United States Congress approved a ten percent tax on the sale of luxury boats, any boat costing more than $100,000. The idea behind this tax was that wealthy people who could afford yachts could also afford to pay more money in taxes—money that could be used to help the poor, the needy, and the unemployed. Under the new tax, yacht sales fell from 7,500 in 1990 to 3,500 in 1992. Thirty thousand jobs were lost in the boatmaking industry. Instead of gaining additional tax revenue to help the poor and unemployed, the government increased the number of unemployed who needed help. Wiser minds prevailed, and the tax was eliminated. Lawmakers who try to reverse economic inequity through taxation of the rich must beware of such unintended consequences. J.

Freedom, government encroachment, and compromise

The range of options between pure socialism and pure capitalism is a spectrum which includes free market capitalism and the welfare state. Sometimes advocates of capitalism accuse their opponents of promoting socialism when those opponents only want more restrictions for the benefit of workers and consumers without desiring socialism. Sometimes people even call for socialism without realizing that what they truly want is not socialism but merely a more comprehensive welfare state. Labels can be slippery tools in our hands, especially when we exist on a spectrum of options.

One of the clearest guides to distinguishing capitalism and socialism is intent. Those who want a few more regulations to protect workers and consumers are still working within the free market system. Those who want to spread the wealth—to take money away from the rich and give it to the working classes, or to give away for free what was formerly bought or earned—by taxing and penalizing wealth are clearly working for socialism and against capitalism.

Here is one example I have seen online: imagine a society where the wealthiest people are earning $50,000 a year and the poor are earning only $25,000 a year. Imagine a change that brings the wealthiest people up to $100,000 a year and lifts the poor to $50,000 a year. Someone inclined to support capitalism will rejoice that all the people in the society have seen improvement. Someone inclined to socialism will complain that the disparity—the difference between the wealthy and the poor—has doubled because of the change, and that disparity is not fair.

Kurt Vonnegut, in one of his novels, imagined a society that tried, by law, to make life fair for everyone. People stronger than average were forced to carry weights. People smarter than average were forced to wear earpieces that distracted them with random noises. People more attractive than average were forced to wear clothes and makeup that made them ugly. Such efforts to make us more equal in every way clearly cause more harm than good. Bringing the higher-level people down to average does not necessarily help lift the lower-level people up to average. In fact, every attempt to reduce the wealth of the richest people through taxes and other legislation only causes them to move their wealth away from the places where it is vulnerable. It discourages them from making more wealth by selling improved products, hiring more workers, and performing other tasks that increase the wealth of the rich and also add benefits to the working classes and the poor.

Government’s job is to protect the rights of all people and to defend citizens from those who would harm them. A right to life includes protection from invasion and from crime; reasonable people still differ and debate whether that right to life also includes guaranteed food, clothing, and shelter for all citizens. In a democracy, the government is chosen by the people to do the will of the people; however, doing the will of the people means more than following and obeying the latest opinion polls. Those elected to govern are expected to learn and understand what is best for the people. Elected officials and their appointed staffs consider proposals, research them, and ultimately vote whether to enact them. Opinion polls might show that more than half the population wants college to be free for all students. Elected officials must still study and learn whether free college would be a benefit to most citizens or whether the cost of free college, assumed by the government, would become a burden to most citizens. Those who govern balance benefits and burdens. They speak to each other about these benefits and burdens. Their votes represent, not only the opinions of the people they represent, but also the best interests of those they represent. As a result, their votes often disagree with the opinions of the majority of the population.

Moreover, a representative government cannot condone injustice, even if the majority wants to be unfair to the minority. In protecting human rights, the government considers all the people, not most of the people. Even though the government has fallen short of it duty in the past, permitting oppression and abuse of some of its citizens, the solution is not to be unfair to a different group. (Two wrongs do not make a right.) We cannot change the past; we can only start with the current situation and move forward, seeking to make things better for all people.

Every person running for office states positions to attract like-minded voters. Different candidates have different priorities among the number of issues that matter. Elected officials work together for the common good. Each official holds some positions that cannot be compromised and others that can be compromised. Negotiation and compromise are part of the art of politics; they are necessary skills for anyone who seeks and gains elective office.

When a government gives each benefit that some citizens wants and then forces all the citizens to pay for all the benefits, that government cannot last long. The value and cost of various benefits must be considered; agreements and compromises must be reached. The more a government encroaches upon the freedom of its citizens—even with the encouragement of many or most of those citizens—the more that government fails to govern wisely and successfully. Sooner or later, the government that offers too much and promises too much and charges too much will collapse. The social contract is canceled when government demands too much of its citizens, because they still retain their basic rights to life, to liberty, and to property. Government does not give these rights to people, and it cannot take them away. J.

The welfare state

Already the free market economy reflects a compromise between pure capitalism and pure socialism, although the free market preserves the benefits of capitalism and permits only necessary legislation to moderate the economy. Governments limit pollution of the air and land and water. They make sure that the products sold to consumers are safe. They also regulate work areas for the safety of the workers. Governments even place limits upon who can work—setting minimum working ages to keep children out of the work force—and they limit the number of hours per week required of workers and demand rest times and meal times for workers.

A further compromise between pure capitalism and pure socialism is called the welfare state. Although some kinds of government welfare can be detected in ancient times—the Roman government subsidized bread and circuses for the people—the real welfare state began in the late nineteenth century as a result of the conflict between the ideas of capitalism and socialism. Otto von Bismarck introduced the welfare state to the newly-formed country of Germany in the 1880s. Fifty years later, Franklin Roosevelt introduced aspects of the welfare state to the United States as part of his New Deal, an attempt to overcome the troubles of the Great Depression.

Behind the welfare state lies the concept that all people have rights and that governments exist to protect those rights. In the original definition of human rights (life, liberty, property), the work of the government was largely negative. The government was not to deprive people of their rights without due process (a declaration of war or a criminal trial, for example). The government was to protect the rights of some citizens from enemies and criminals that would violate those rights. But, at first, no one said that the government should guarantee life by positive efforts to support the lives of all citizens.

People have basic needs. We need food and drink, clothing and shelter, and other physical supplies. When John Locke and Thomas Jefferson wrote about a right to life, they did not intend for the government to feed and clothe and house all citizens. People who work are given money, and they use that money to purchase what they need. People who do not work receive care from their families—children, the elderly, and the ill generally expect their families to feed and clothe and shelter them. Churches, community groups, and other charitable organizations care for those who are lacking the support of a family and those whose needs surpass the capacity of their family to meet. The government, therefore, had no role in supporting and protecting the poor beyond its essential task to keep enemies and criminals from taking advantage of those who were poor.

God gave his Law to his chosen people, the Israelites. He said that poverty would not exist if his Law was obeyed, but God acknowledged the reality of sin when he said, “You will always have the poor with you.” Jesus calls his people to be loving and generous, caring for those in need. If every Christian obeyed those commands to their fullest extent, poverty would not exist. Today’s Christians must confess that we have not perfectly followed the commands of Jesus. The poor, the needy, the homeless, and the oppressed among us reveal our shortcomings, our sins, our need for forgiveness. Christians are forgiven. Jesus paid the debt of all sinners in full on the cross. Being forgiven, Christians are being transformed into the image of Christ, doing what Jesus would do. Because the transformation is not complete, the poor and needy and homeless and oppressed are still among us.

Socialists point to the poor and oppressed and blame capitalism for their plight. Rather than acknowledging the sinful nature of all people, they focus their accusations upon the wealthy, the business owners, the people who benefit most from capitalism. Bismarck and Roosevelt did not want to renounce capitalism and endorse socialism. Instead, they used the authority of the government to require more help for the needy from those who could afford to offer help. Businesses are required to give their workers health insurance, disability insurance, and retirement plans. Under Social Security (part of the New Deal), workers are taxed to provide the government money; that money pays other people—chiefly the elderly and the disabled—not to work.

Does its defense of the right to life require the government to guarantee food, clothing, shelter, education, and health care to every citizen? This question defines the debate between conservatives and liberals in Europe, North America, and much of the rest of the world. The more services the government undertakes to feed the hungry, shelter the homeless, and provide medical care for the ill and injured, the more money it must collect from all its citizens. Government programs tend to be less efficient and more expensive than comparable programs under private ownership. Wealthy capitalists and their foundations often provide help for the poor that addresses their needs more specifically and more completely than government programs. On the other hand, when citizens begin trusting the government to solve the problems of the poor, those citizens often become detached from the problems of the poor, losing their compassion and their willingness to help their neighbors one person at a time.

Many Americans who say that they support socialism are actually longing for a more complete welfare state. They do not necessarily want their government to run all the factories, all the farms, all the hospitals and clinics, and all the means of production. They merely want a guarantee that all the hungry will be fed, all the homeless will be sheltered, and all the sick will receive the care they need. Calling for socialism, they blame the wealthy for creating and perpetuating the needs of their neighbors, and they accept no personal responsibility for causing or for solving those needs. The welfare state is not as bad an answer to human problems as is pure socialism; but it falls short of being the best answer available. J.

Ethics, government, and the economy

Should a human government follow the ethical principles described by Jesus in the Sermon on the Mount? The answer, in a word, is, no.

Jesus calls his followers to love their enemies, to turn the other cheek and to go the extra mile, to forgive those who sin against them and do good to those who persecute them. But the government is established by God to protect its citizens, to punish those who do wrong, to uphold the law. Instead of forgiving the sinner, the government must punish the wrongdoer, “eye for eye and tooth for tooth,” rendering justice on behalf of all its people.

During the Baroque Era (or Enlightenment), European philosophers described human rights and said that governments exist to protect those rights. John Locke wrote about rights to life, liberty, and property. (Thomas Jefferson, writing the Declaration of Independence, would fudge the third right to “pursuit of happiness.”) Governments protect the rights of their citizens—they take life only from enemies who attack the country or from the worst of criminals who threaten the lives of others. Governments protect the liberty of their citizens, only depriving criminals of freedom, and then only for a term that fits the crime. Governments protect the property of their citizens. They may claim some property as fines for misdemeanors, other property as fees for services, other property as taxes, and still other property to provide services such as roads. In general, though, governments take no more than they must take from their citizens. When they become overbearing, when they stop respecting the rights of their citizens, the citizens are entitled to change their government, to find new leaders who will respect and protect their rights.

Philosophers spoke of a social contract between citizens and their government. Citizens agree among themselves what they want the government to do, and they use their property and their energy to help the government accomplish these goals. If citizens want public schools, they agree to pay taxes to support those schools, and they agree to send their children to those schools. For protection from foreign enemies and domestic criminals, citizens are willing to limit some of their own freedoms and property. For other services from the government, some citizens are willing to accept further limits. Among any group of citizens, a range of opinions will be found: some want the government to do more, and they are willing to pay more for those government services; others want to cede less to the government, and in return they are happy to receive fewer government services.

To some Americans (including Franklin Roosevelt and Bill Clinton), some problems are so big that only the government can address them. To other Americans (including Ronald Reagan), the government is the biggest problem and life improves when government is reduced and limited. Pure capitalism demands that the government not involve itself in the economy—capitalists say laissez-faire, leave it alone. Even Adam Smith in Wealth of Nations acknowledged that some government regulation is necessary for the good of all citizens. Under socialism, the government controls more aspects of its citizens’ lives; in return, it demands more property and restricts more freedom of those citizens. In a free market economy, the government regulates what must be regulated but leaves more freedom and more property in the hands of its citizens.

The question remains: which economic system is better for all the citizens of a nation: socialism, or a free market economy? J.

The richest Americans

A frequent complaint against capitalism is that it permits the rich to get richer, even at the expense of the poor. Capitalists reply that the success of rich business leaders helps all people, providing jobs for workers and products for customers. Over the years, who have been the richest American citizens, and how did they make their money? For this study, I chose to take a snapshot of the country’s wealthiest citizens every fifty years, beginning in 1820.

Stephen Girard was one of the richest citizens of the United States in 1820. He made his first profits from shipping, and then increased his wealth through banking. John Jacob Astor is another wealthy American alive in 1820. His initial wealth came from the fur trade, but he then increased his fortune through buying and selling real estate. Banker Thomas Willing and real estate mavin Stephen Van Rensselaer were also among the richest men in the country two hundred years ago.

In 1870, Cornelius Vanderbilt was one of the richest people in the United States. His money came from railroads, as did that of another wealthy American, Jay Gould. Alexander Turney Stewart became wealthy from selling textiles and dry goods. In 1870 Frederick Weyerhauser was beginning to build his fortune from the timber industry.

One hundred years ago, John D. Rockefeller had become one of the wealthiest citizens of the United States through his profits from Standard Oil and the petroleum industry. Henry Ford was one of the richest Americans due to the automobile industry. Brothers Richard Mellon and Andrew Mellon began as bankers but increased their fortunes through steel, oil, and railroads. Andrew Carnegie barely misses the cutoff of 1920, having died the previous year, but his fortune came from railroads and the steel industry.

H. L. Hunt and J. Paul Getty both gained wealth through oil. But by 1970 the richest American was Howard Hughes, whose wealth came from air travel and the movie industry. Another wealthy American in 1970 was Sam Walton, the founder of Walmart.

And in 2020, the wealthiest Americans include Bill Gates (Microsoft), Elon Musk (Tesla and SpaceX), and Jeff Bezos (Amazon). Another wealthy American is Warren Buffett, whose fortune came from the clothing and retail business.

Of course, all these wealthy Americans are white and male. Their opportunities for success were probably greater than potential competitors who were female or non-white. Looking beyond that impression, though, all of these men became rich by giving what consumers what consumers wanted. Railroads, cars, gasoline, steel, computer technology, and innovations in shopping mark the majority of these highly successful individuals.

Beyond that, most of them are known for philanthropy, for using their wealth for the benefit of others. Carnegie, Rockefeller, Walton, and other men on this list devoted much of their wealth to projects that helped others—combating disease and malnutrition, establishing opportunities for future entrepreneurs, and making libraries, concert halls, and museums available to the public. Most of these wealthy men and their families created foundations to continue their work beyond their lifetimes. Meanwhile, as they made their wealth by giving consumers what consumers wanted, they also created bountiful jobs for American workers.

Would railroads or automobile travel have been as affordable under government ownership and control? Would they have opened as many jobs as quickly as private investment made possible? If Walmart and Amazon were operated by the federal government, would they benefit as many shoppers? It is hard to imagine a scenario in which government control of these businesses would have been nearly as successful as they became under private ownership and control. J.

Capitalism or socialism–you make the choice

In 1980, a few Cuban citizens sought refuge in embassies, seeking to leave Cuba. After Fidel Castro announced that anyone who wished was welcome to leave, the number of emigrants swelled to more than 125,000. Cubans living in south Florida arranged boats to transport emigrants to the United States. Many of the migrants had to be housed on military bases in the United States until sponsors were found for them all—many of whom were relatives of the migrants, while others were charitable organizations offering help.

One young man from Cuba was taken in by his uncle and aunt in Miami. After a few days, he startled them at the breakfast table by announcing that he was ready to go pick up his Nikes. Further conversation clarified what he expected. The government of Cuba gave one pair of shoes to each Cuban citizen once a year. Now that he was in the United States, a much more prosperous country, this young man thought that he would receive a pair of expensive sports shoes from the government rather than the less luxurious shoes offered by his former government.

His uncle and aunt explained to him that the United States government does not pass out Nikes, or any other shoes. In the United States one works, saves one’s money, and then buys the shoes one wants and can afford. Those who want to save up for a pair of Nikes can do so; those who want to buy more affordable shoes sooner may do so. People in the United States can buy as many shoes as often as they want, provided they have the income to pay for their shoes. This is part of the difference between capitalism and socialism.

Discussion question: Which do you prefer: one free pair of shoes a year, provided by the government, or the opportunity to buy the shoes you want when you want them, provided you have the money? Explain your answer.

In the movie Moscow on the Hudson (1984), Robin Williams plays a Russian musician who defects to the United States. Shortly after his defection, the musician offers to stand in line to buy coffee for his American host family. He finds himself instead in a grocery store aisle surrounded by dozens of different brands and styles of coffee, which results in an emotional breakdown.

Discussion question: Which do you prefer: one style of coffee, chosen and distributed by the government, or the opportunity to buy the kind of coffee you want when you want it, provided you have the money? Explain your answer.

These two examples are not cherry-picked from an array of comparisons between free market capitalism and socialism. Both of them portray the real differences between life in the American free market economy and life under a socialist government. Once again, which do you prefer? J.

What’s wrong with capitalism?

Two principle complaints about capitalism are that it perpetuates inequity of wealth and that it both causes and worsens poverty. While these might seem to be two sides of the same coin, they are not the same complaint at all. In fact, when advocates of socialism combine these two complaints into one argument, they are working to undermine the very strength of capitalism, its reason for existence.

People once believed that wealth is stagnant, that if one person gains wealth, another person must lose wealth. Adam Smith demonstrated that labor adds value, and that wealth is not stagnant. When capitalism works as intended, everyone benefits. Competition between the wealthy business owners helps their customers to have more choices and also provides their workers with more opportunities to earn wages and improve their lives and those of their families.

God in his creation (or Nature, if you prefer) did not make all people the same. Some people are stronger than others. Some are more physically attractive than others. Some are smarter than others—and there are various kinds of intelligence, so that one person may excel in one kind of thinking while the next is better in a different intellectual field. To hold that all people are created equal is not to hold that everyone must have the same advantages and the same benefits. The fact that some people are born into wealthy families and others are born into poor families is neither the fault of capitalism nor a reason to abandon capitalism. We are all different in several ways; but still we maintain that we all are created equal.

Deuteronomy 15 teaches that, if all people followed God’s commands, there would be no poverty. The same chapter warns us that the poor will always be with us. Capitalism might seem contrary to Christian and humanist principles of loving one’s neighbor, helping those who need help, and caring for the needy and the oppressed. A wealthy capitalist seeks to increase his or her wealth. As selfish as that sounds, the capitalist actually is a servant to his or her neighbors. To increase wealth, the capitalist seeks to provide a product that consumers want or need. The capitalist seeks to make that product more desirable—higher quality, more affordable, or in some other way better. At the same time, the capitalist creates jobs, paying workers to create the product and so providing for those workers and their families.

As the Industrial Revolution emerged, wealthy capitalists found an excess of labor on their doorsteps. More and better food from overseas expanded the population, and enclosure of agricultural lands drove more poor families off the land and into the cities. Craftsworkers were overwhelmed with new competition. At the same time, business owners were using steam and steel to become more efficient, offering products that were both better quality than before and more affordable. Work moved from homes into factories. Only wealthy people could afford to maintain factories and to purchase the new machinery of steam and steel. Often they combined their wealth, creating corporations. The rich became richer, but it was not inevitable that the poor had to become poorer.

I tell my history students that, for every Jane Austen novel they read, they must also read a Charles Dickens novel. Dickens captured the problems of the Industrial Revolution vividly in his fiction. Women and children worked in factories, because they would accept less money for their labor and would cause fewer problems for their managers. A large underclass of unemployed men frequently turned to crime, both out of need and out of boredom. Cities were dirty, overcrowded, and dangerous. Disease ran rampart through the population. For these reasons, nineteenth century socialists predicted the overthrow of capitalism. They expected working people to rise up and demand their rights, including a larger share of the wealth to which their labor was contributing.

Before the Industrial Revolution, families worked together, whether raising food on the land or producing crafts such as shoes, clothing, and candles. Women often were members of guilds, equal to men active in the same crafts. Factories tore apart families. They separated adults from children and women from men. Over time, the dream of the Victorian family developed: the family in which the man was the sole worker and breadwinner, the children went to school and played at home, and the women stayed home to raise a family. This idyllic picture never represented reality for most of the population. But, over time, society and government began to work in that direction. Labor laws took children out of the factories and put them in schools. Other laws began to clean the cities, reducing industrial pollution and untreated sewage. The free market found means of regulating itself so that capitalism did not imply poverty for the working class. More about this will be said in a future post. J.

Stepping back to see the big picture (socialism, continued)

The idea of socialism arose as a response to the Industrial Revolution and to some of the problems within that Revolution. In turn, the Industrial Revolution was a consequence of several large historical movements that came together in a particular time and place to shape human history.

When historians seek to understand and explain an event or a movement, they must take a step back and look at the broader picture. Often this requires further steps back, sometimes to view the entire panorama of history. Analyzing the causes of the Industrial Revolution includes such steps and such a view.

The Persian Empire, Mauryan Empire, Han Empire, and Roman Empire each constructed roads to facilitate government communication across their stretches of land and to accommodate the travel of armies. As a result of those roads (and associated waterways), merchants and merchandise began to flow through and beyond these empires. Imperial governments favored the exchange of merchandise, since it could be taxed every time it changed hands. Two thousand years ago, Italian glass could be bought in China, and Chinese silk could be bought in Italy. Anything that could be moved, bought, and sold traveled along these roads and waterways: fabrics, spices, precious metals and gems, artwork, food, livestock, and slaves. Over the centuries, travel and trade ebbed and flowed because of other political and economic conditions. Along the same routes traveled ideas—religious ideas, political and economic ideas, and technology—and disease also spread from culture to culture along the same roads.

Genghis Khan’s Mongolian Empire sparked additional travel and trade along these routes. Asian produce and technology traveled into Europe. Bubonic plague (the Black Death) began somewhere in inland China but spread to the cities of China and to Mediterranean cities, and from there to all the populated areas of Europe. This disease had a devastating consequence upon commerce and economic activity, both because of the high death rate of the disease and because of the fear of disease that spread throughout the population.

Disruption of trade, caused by disease and by political developments in the eastern Mediterranean, caused western European governments to seek a shortcut to African and Asian goods, eliminating some of the middlemen. Using Asian technology, including the Chinese compass and the Arabian astrolabe, Portuguese mariners set sail down the coast of Africa and into the western ocean. Spain, England, and the Netherlands eventually followed. Early results of the Portuguese expeditions included expansion of the sugar industry and development of the African slave trade. But Columbus’ abortive attempts to cross the ocean between Spain and east Asia revealed an expanse of islands and continents in the western hemisphere. Soon commerce between the Old World and the New World brought new foods to Europe; those new foods helped to support a growing population, recovering from the plague.

As the population grew, though, landowners found that they could enclose their land for more specific use, such as the grazing of sheep to produce wool. This removed peasants from the land and from their agricultural activities, sending them into the towns and cities. The growing urban population disrupted the guilds and other work that the tradespeople had developed over centuries. More new technology met this change in population dispersion to ignite the Industrial Revolution in England.

A Chinese inventor had learned how to harness the power of a flowing river with a wheel, channeling that energy to other uses. Europeans improved the water wheel by installing it vertically instead of horizontally, effectively letting the power of gravity increase the power generated by the moving water of the river. Later, the same idea was converted to generation of power from steam, which no longer needed the immediate presence of a river.

Around the same time, a Chinese chemist found a new recipe for steel. Iron technology had begun in Anatolia (the location of modern Turkey) about three thousand years ago. Pure iron is a powder, but iron combined with carbon makes cast iron, which produced tools stronger and more durable than the stone and bronze tools used previously. (Ironworking was discovered independently in central Africa around the same time.) About a thousand years ago, a new recipe for iron and carbon produced steel, a great improvement over cast iron. The new recipe used coal instead of burnt wood as a carbon source. Coal and iron deposits both exist in China, but not near each other. In England, iron and coal and running water are found in close proximity. Deforestation of England also provided greater interest in coal, both as fuel and as an ingredient for making steel. The Industrial Revolution was ready to emerge.

As the urban population grew, new businesses began to exploit the work force to get around the guild economy of Europe. Shepherds and shearers would sell the raw wool from their sheep to moneyed peasants. These peasants would then hire some families to card the wool in their homes. The carded wool was then returned to the business owners, who hired other people to spin the wool into thread. The spinners returned the thread, which the business owners then sent to weavers, who used looms to change the thread into cloth. The cloth was chemically treated by fullers, and the improved cloth was sent to tailors, who cut the cloth into pieces and sewed it into garments. Shepherds, Shearers, Carders, Spinners, Weavers, Fullers, and Tailors were each paid for their labor, and afterward they all bought clothing from the businesses that had paid them for their work. Today many family names reflect the role of their ancestors in this industry.

Steel tools and steam power made factories possible. No longer did the work have to be sent into homes and brought back to the businesses: the businesses could own the buildings and machines where the work was done. These machines could produce far more clothing from far fewer laborers. The Industrial Revolution began in England, spread into other European countries and then to North America, and eventually filled the world. The impact of this revolution changed the lives of many people, from wealthy business owners to impoverished workers. J.