What Works

A lot of people are not going to like this. And a lot of them are family and friends whom I respect. But so be it.

This country works. The system works. The economy works. Mirabile dictu, it functions. Not perfectly. And not in ways that you can always explain. But stuff gets done. People get fed and cared for and served with what they want and need—for the most part.¹

And we’re rich. Our gross domestic product, by any measure, is the envy of the world. We are rich enough that our best and brightest can look at the fraction of our population that is doing less well than the rest of us and believe that makes us a broken and foundering society. We are rich enough to deceive ourselves into thinking we are poor.

What makes this all work? Money. Other people can make money by feeding you, clothing you, building a house for you, and entertaining you. And that’s not to just some minimal standard that will keep you sheltered from the elements and stop you from starving but maintain you to whatever standard you aspire. You have your choice of neighborhood, clothing styles, types of foods. You can eat so well that you grow fat—or you can get special foods, tailored nutrition, and now medications—although expensive ones—that will help you become thin again.

Our medical services are the envy of the world, even for the developed world of Europe and Eastern Asia. Again money. Other people can make money by taking care of you. They can get rich by thinking up, developing, and testing new drugs to treat your illnesses, by providing new services to help in your old age or if you become disabled, and by finding new ways to treat traditionally degenerative and previously incurable conditions. The money doesn’t always come from your own pocket—or not directly—because you usually pay for insurance that covers the costs. And yes, there are some medical conditions that may not be covered, or not right away. But by and large you can get coverage for a wide range of life’s illnesses by pooling your monthly payments and deductibles with others.

Our education choices are the envy of the world, too. We provide schooling to any child who will sit down and learn. Yes, it’s usually paid for by a local tax on property—on your house or your landlord’s building, on your nearby shops and businesses—but it’s still money from your community, for the most part.² And it works because there are people who are willing to teach your child if we will offer them a living wage. At the higher levels, and with more direct contributions from the families of those who would learn, a good education in a variety of subjects—from the traditional, valuable enrichment courses that offer a good life, to the scientific and professional studies that offer a good career, along with some of the more frivolous courses that used to be just for fun—is widely available. And if you don’t mind missing out on name-brand scholars in the ivy league institutions, you can get a pretty good grounding in whatever subjects you want at local, community colleges that are almost tuition-free.

All it takes is money.

Oh, no! The profit motive! Grubbing for money! Other people getting rich! Aren’t we beyond all that? In a spiritually pure and stainless world, full of rational people, aren’t we better than that?

No, not at all. Money and its motivations—the chance of getting paid for what you do, of getting ahead by providing a good or a service that other people will buy, and maybe of becoming rich by thinking up a new good or service that will attract, inspire, or delight other people to give you some of their income—money and its exchange are the secret to a healthy economy.³ If you make it worthwhile for other people—actually, strangers—to feed, clothe, house, and entertain you, then voilà! You get choice foods, stylish clothes, and comfortable accommodations. When you are a customer, a free-to-choose consumer, a profit center in other people’s business model, then they will bend over backwards trying to figure out what you need or might want and find ways to give it to you. That is the free-market, free-enterprise, capitalist system that a lot of people today would like to change.

It's messy, of course. Not everyone gets everything that they might want or need. And sometimes things get made, services are offered, and prices are asked for which people have no interest and are not willing to pay. On the surface, that looks like waste. That looks foolish. But for the people making and offering those goods and services, if they think wrong, make bad decisions, don’t or can’t “read the market” correctly, then they lose customers, their investors lose money, they go out of business, and the waste stream gets cut off. Problem seen, problem solved.

On the other hand, if a company comes up with a new product, a new customer want or need that it can service, then its business will grow, investors will flock, and perhaps the dynamics of the marketplace will change. Think back to the—what? the mid-1980s—when the government was concerned with the regulated monopoly of the phone lines, AT&T, “Ma Bell.” One big company ran the country’s whole communications system. The government and the courts sought ways to break it up and promoted competitors to take over the regional markets. That worked. But what really took down the monopoly was challenging and ending the phone company’s single requirement that any equipment connected to its system—the telephone sitting in your office or home—be provided by Western Electric, the AT&T subsidiary. And you couldn’t buy that telephone but had to rent it for a monthly charge on your AT&T bill. Ending that restriction opened the telecommunications world to competition from third-party instrument makers, to innovation, and to a better overall communications experience. And then came the cell phones—the first one was the Motorola DynaTAC 8000X, marketed in 1983—and digital packets in place of continuous analog signaling, which really broke up the landline and long-distance empire.⁴

And what’s the alternative to competition? What is the choice toward which a lot of people today would like to move our country? Blandly, it’s some form of socialism, a command-and-control economy run by the supposedly smartest people. They would like a system where blind faith in the freedom and intelligence of individuals, in the ghostly hand of a marketplace that gropes towards satisfying customers and making money while doing so, where all of that supposedly magical thinking doesn’t exist. Instead, they want a rational society where the best and brightest minds work out exactly what other people will need and try to provide it for them. Not more than they need, nothing sloppy or extravagant, just the 2,000 calories a day for nutrition, one-size-fits-most clothing to cover their nakedness, and 320 square feet of clean, well-ordered living space. That’s all anyone really needs. That’s all that everyone will eventually get.⁵

And of course, this well-ordered society will pay for all this—this needful amount for each and every one of us—by taking a large fraction of everyone’s wages, the portion that would go to their nondiscretionary spending in the first place, and leaving just a bit for some art, a Sunday amusement, or alcohol and drugs. Your choice there.

In a modern, industrialized, technologically driven society, you are either a customer and potential profit center, or you are a cost and a potential liability.

Go to the countries that have ventured down the socialist path. Not all the way, of course, because those are dead places full of people too broken to even try to leave. But those countries where the bite hasn’t cut to the bone. There the food is either rationed or randomly available, the clothing is drab and in limited supply,⁶ and the housing is falling apart. When the government first takes in taxes what it thinks it will be required to feed, clothe, and house people, take care of their medical needs, and provide for their non-productive old age, and gets all that money in one big pot—then doling it out becomes an exercise in cheese paring. Command-and-control economies are cost-conscious, risk-avoidant, and allergic to change.

People are human. Even the best and brightest among us, dedicated civil servants, pledging their lives to the benefit of humanity, still aren’t smart enough or selfless enough to understand and provide for everyone’s personal needs. Decisions must be made. Costs must always be cut. But some scraps and wastage will always get left on the floor, regardless of controls. And some populations are too old, too sick, or too far away from the eye and interest of the central government to be properly served. And then, of course, there are the carpetbaggers—who are always with us—peddling their influence and stuffing their valises with the public silverware.

And even the best and brightest among the entrepreneurs and capitalists are still human. Most are trying to serve their customers honestly and still make a profit. Most know that if they produce shoddy goods and give poor service, they will be spurned and eventually go bankrupt. But they are not all geniuses, and they will sometimes cut corners just bit too deeply or skimp on quality control in the name of cost savings. And, of course, there are still the crooks—always with us—who will try to sell junk with marketing hype, produce miracle cures that are just chalk pills, and promote massive investment scams. That’s why I favor a mixed system rather than an unfettered capitalism or, yech, full-blown socialism. Let the innovators and entrepreneurs operate in a free market, but watch them through government regulation and litigation in the public interest.

But if you favor something more obvious and stringent, remember: You are either a customer and a potential profit center or a cost and a potential liability. Choose wisely.

1. Oh? What about the homeless? What about the poor? Well, what about them? The class of people we consider “poor” in this country live like middle class in many other parts of the world: usually decent housing, their own cars, television sets, cable connections, cell phones, and readily available food. These may not always be the best and most desirable versions of a good life’s artifacts, but they are generally serviceable. And our poor people have education made available to them and many paths to a better life. We are a rich and generous country.
    And the people living in tents on the street? They can get meals and other services that are generously provided for them. If they’re suffering, it’s because they have intractable addictions to alcohol or drugs, or a mental illness for which they decline to seek treatment, or they just can’t cope with the complexities of modern life within the system. The money is there to treat them—we are a rich and generous country—but they just won’t take advantage. We throw billions of dollars at them—an estimated $24 billion just here in California alone—which go into multiple service organizations to support the homeless, and still they live outside of what most of us would consider a stable situation. They have the personal freedom to reject the help being offered to them.

2. There’s a thought going around—based, I think, on a speech President Obama once gave concluding with “you didn’t build that”—which says that if you like paying taxes, sending your children to public schools, or driving on streets and roads paid for with state and federal funds, then you’re a socialist. Well, with the same logic, I could say that if you work for a private company, have your retirement account invested in the stock market, or buy your groceries at Safeway, then you’re a capitalist. Your personal situation in a large, developed country is never simplistic. Knee-jerk political positions are for morons.

3. See for comparison It Isn’t a Pie from way back in October 2010. One of my earliest blogs and still, I think, true today.

4. If the communications system had been a government monopoly—as under socialism, which is always conservative, seeks to control costs, and avoids risks—you would still be dialing a rotary phone with mechanical switching and paying extra for peak long-distance service.

5. This is Bernie Sanders’ world where you don’t need twenty-three brands of deodorant—just, I suppose, the one he prefers. This reminds me of Westerners who journeyed to Stalin’s Russia in the 1930s and found public places redolent of “Soviet scent.” One size, one smell fits all.

6. At the height of the Soviet experience, people used to shop with lists of their family’s and friends’ sizes in clothing, shoes, gloves, etc. Whenever something became available in the stores, you wanted to be able to buy it, even if not for yourself.