Good Capitalist Ideas:

I spend a lot of time criticizing capitalism, but capitalists/libertarians are right about some things.  It's important not to throw the baby out with the bathwater.  The formula is simple, the greatest good for the greatest number.  This can't be supported by capitalism, which gives the rich all the money, but it can't be supported by bad economic policy either, which deters economic growth and efficiency.  One must walk a fine line.

This is why it might be useful to list the capitalist tenets that shouldn't be messed with.

#1:  No matter what you do, don't resort to price controls.  Price controls kill the economy and make the very products we most need investment in, to be the least invested in products.  This is because businesses won't bother providing a good or service if they can't make a profit at it, and price controls constantly attempt to make businesses sell their business at a loss.  This is just absurd.  Price controls are an attempt at defying the law of supply and demand, which is about as sane as defying the law of gravity.  If demand outstrips supply, prices will rise, in order to lower demand until the two curves intersect once more.  This is just natural -- supply can't supply more than there is in supply, therefore prices have to rise until demand meets supply again.  The only other way to lower demand is forceful rationing.

Rationing is a terrible idea compared to raising the price of the good or service in demand, however, because it provides no motive for business investment.  If you raise the price of a certain good or service, eventually businesses will notice the enormous profits to be made if they managed to sell said good or service themselves.  All sorts of businesses will start making factories that churn out said good, or all sorts of workers will retrain to provide said service, and all of them will swoop in to secure the massive profits.  This, in turn, will increase supply, which will more nearly match the high demand, and thus lower the price.  Soon enough the supply will match the demand again, prices will reach a new, lower equilibrium, and everyone will be happy.  Both the consumers will win because there is more of the good available, at lower prices, and the businesses will be happy because they made big profits in the beginning and have a steady source of employment from there on.  Rationing will always mean, alternatively, that there isn't enough to meet what people really want, and that no one can ever make a profit off providing the good or gain employment by making more of it.

#2:  Subsidies are less disastrous but just as stupid.  If you subsidize a product, you artificially increase demand and supply for a good or service that the market is saying it doesn't want or need.  No matter what you subsidize, even something essential like food, energy, or housing, you end up distorting the market and making people buy more of it than they really wanted, simply because it was subsidized and thus cheaper than it should have been to the end consumer.  Of course, it isn't economically any cheaper -- in fact it is likely that the business being subsidized will raise its prices accordingly, because it knows the buyer has to buy from them at the higher price and that the buyer doesn't care since it isn't their money they are spending, but taxpayers' dollars. 

Let's give an example.  The government decides to subsidize red sweaters tomorrow.  It will pay 200 dollars out of the total price of any red sweaters for sale.  Consumers didn't especially want red sweaters, but since the government is offering to cover $200 of the price, they figure they may as well buy the red ones.  Meanwhile, red sweater salesmen come up with a great idea -- even if they raise the price of their red sweaters by $190, people would still save $10 personally by buying the red sweater, even though it just put the government $190 in the hole.  Without having to make any better product, they could suddenly double their profits, and all because the government is playing the sucker.  The business and the consumer cooperate to rip off the government, but the real victim of the ripoff is the economy.  Now $200 that could have gone into something useful has been frittered away by inflation, or collected as taxes, or at least lost as an opportunity cost that could have gone to something more reasonable.  Subsidies not only waste huge amounts of money, they don't pass much if any savings on to the consumer, so in the end they don't even fulfill their imagined role of helping the poor buy necessary goods.

There is a much better way to help the poor -- give them money, and let them decide how to spend it.  Since the money is real, all businesses have to compete for it honestly and efficiently, they have no monopoly on the customer's business.  They can't randomly jack up the prices of their houses, college tuition, health care, or whatever scheme they've come up with that gains them massive profits without having to lift a finger.  Anything the government subsidizes rises in price far above inflation, making the subsidies moot and simply enriching the businesses that provide said goods.  Cut all subsidies, and suddenly these businesses would have to compete with the world at large for the money they receive, and poor people could just walk away and buy themselves a pogo stick instead.  All of a sudden, businesses remember they are businesses, not monopolies, and have to go about slashing prices and improving efficiency again to regain customers.  Whatever goods and services poor people really do feel is necessary, they will purchase with the money they were given -- all surpluses will be spent elsewhere, and instead of distorting the market, will help improve it.

Subsidies also come in the form of tax breaks.  The mortgage tax break, health care tax break, and all such tax breaks are just subsidies by another name.  All subsidies must be abolished, whether positive or negative, so that no one gains an artificial, non-market-driven advantage in providing a service that the market really says it doesn't want or need.  If this makes taxes too high, just cut the overall tax rate -- these social engineering related tax breaks are pure mischief to the economy and continuously send us down economic cul de sacs.

All subsidies must be replaced by a citizen's dividend, a truly capitalist answer to the plight of the poor.

#3:  Protectionism is a terrible mistake.  Free trade is one of the most important advances in world civilization.  Free trade is the simplest logic in the world.  Why do people trade in the first place?  Because both parties benefit by it and consent to it.  Therefore, why interfere?

Most of the time countries trade with each other due to comparative advantage.  This is a well thought out economic theory that proves that if something is cheaper to make in one place than another, it makes more sense to grow it there and then sell it elsewhere, than for everyone to grow just enough for themselves at all sorts of prices, ranging from high to low.  The more trade, the lower the price of all our goods, which enriches everyone.  Free trade would mean that every product we buy will come from the cheapest possible place it was to make, which will naturally benefit consumers.

I know the standard arguments of the protectionists.  Some even have merit.  But the solution to these objections lies elsewhere than preventing free trade, like they imagine.  Let's put this out front and center -- free trade doesn't mean immoral trade.  If the nation we are trading with manages to lower the price of its goods through environmental or humanitarian abuses, it is morally wrong and unfair to buy from such a country.  Perhaps it is cheaper to buy from countries using child labor, or slave labor, or countries that belch sulfuric acid into the atmosphere and poison their water supplies, but no one should encourage such behavior, and boycotting said countries makes perfect sense.  It also isn't fair to workers in moral, environmentally conscious countries to have to abide by all sorts of laws and regulations, while trying to compete on price with other countries who can disregard them all.  A level playing field requires all countries abide by the same standards of decency when it comes to workplace safety, labor laws, environmental laws, and so on.  This way no worker has an artificial advantage over any other.

Even if poorer countries followed all the proper humanitarian and environmental laws, they could still out-compete our workers on price.  This is because, A) they are used to a lower standard of living, B) purchasing power parity varies by nation.  This is an insurmountable barrier and will, assuredly, force whole industries into unemployment.  Even if Americans agreed to work for a dollar an hour, they couldn't buy as much as their competitors bought with it overseas, which means they'd actually have to accept something like 1/4 the pay as the poorest Indian or Cambodian is willing to offer for the task.  It's just impossible, that isn't a pay level that can keep a human alive even if they work their hearts out.  The result of free trade will be massive unemployment -- as globalism expands into more and more goods and services, so too will unemployment.  Part of this unemployment will be solved through new hiring in other fields.  For instance, maybe all those Cambodians who earned some money with their new job will want to splurge on an American car, or phone, or game, or weapon system.  The companies that build these things in America would then hire some of the newly unemployed to help them ramp up their production to serve the larger world market, and everyone will prosper.  A larger pool of workers, however, won't have the necessary skills or price point, and really will just be out of luck.  The solution isn't protectionism, and the resulting make-work, but a citizen's dividend.  Just give them the money directly and stop worrying about trying to find them a job.  The resulting economic efficiency will more than pay off the loss of higher unemployment.  With everything selling at lower prices, people's money will go further, and a citizen's dividend for the unemployed will cover all their needs in this new, lower cost of living world.

What right do American companies, or workers, have to hold us all hostage to their crappy overpriced goods?  If I want a Toyota car that sells for half that of a GM, I shouldn't have to buy the GM anyway just so that some GM worker can get paid his ill-gotten gains.  If you can't make your money legitimately, it should be given as charity, not as theft.  I'm fine with paying taxes to support our nation's poor, I'm not fine with living in a continuously overpriced, inefficient, phony world where people pretend to work but actually are just parasites forcing us to buy their products instead of the objects we really want overseas.  Ultimately, the economy would sink under the cost of these inefficiencies if extended everywhere -- the cost of isolationism and lack of trade is apparent in countries like North Korea.  It's about the worst economic mistake possible.

As for the standard objection that self-sufficiency will aid us in war, I have a simple reply -- I don't want to be better at war.  I want to be better at peace.  I want world peace, not world war.  One of the biggest causes of war is when a country feels that their access to a vital resource is threatened -- our oil embargo on Japan for instance.  Just think about it -- what if your country has only, say, one tenth the water it daily consumes, and all of a sudden, the whole world decides to become protectionist and stop selling water-related products (IE, food) to the outside world.  Your water-starved country is doomed, 9/10's of your people will soon starve to death.  All of a sudden, you are forced to go to war with all of your neighbors in the hopes of securing more access to water, so that you can start trading for it again.  All attempts at Empire in the past were in fact attempts at free trade zones.  A free trade zone is just as good as an Empire, but it's like overlapping empires -- the whole world belongs to Belgium, but it also belongs to France, and to Colombia, and to South Korea too -- this is because all the nations of the world can buy and sell resources located anywhere else on Earth equally.  It belongs to everyone.  The most victorious war possible could only result in as good a situation as a current, free trade peace.  Lack of free trade, alternatively, immediately leads to war, as people suddenly discover the only way to get at the coveted resources in your region is to conquer you and take them by force.  By freely proffering our own vital resources to the outside world, we can gain access to the vital resources we don't have overseas.  It is a fair deal that helps all of mankind alike.  Any other system will ultimately end in war, and war is something we simply cannot afford to wage anymore.  Not with the destructive power of today's weapon systems.  We simply must not ever travel down that path again.