The Benefits of Capitalism

It started with a simple question.  How much  money would you take to give up the internet for life?  Wow, think about it.  Most of our lives revolves around the internet – we pay our bills, manage our finances, tweet, keep up with friends/family on Facebook, get college degrees, Blog, start revolutions, etc.  This is a technology that has become a necessity for modern life and we can’t think about what life was like without it.  It would take millions, if not billions, of dollars to consider it.  It is one of those products that is truly ‘priceless’ but that product costs pennies a day for us to use it.  If companies started charging $100/month for internet access we’d pay that.  I will argue that it is more important than oil which is another product that we pay higher prices for because it essential to our lives.  How can the Internet, something that is essentially priceless, cost so little?

It took a combination of Government and Private investment to get things going and then allowing the Market to set the price of the internet products to allow those early companies to recoup their high R&D investing.  Early adopters (the ‘rich’) paid incredibly high prices for computers, cell phones and Blackberries and those high profits allowed companies to reinvest in technologies that produced products that the rest of us could afford.  The profit motive was alive with companies in the 90’s and motivated them to develop their products at a rapid pace because early adopters were willing to fork over major dollars to get them.  Without the profit motive, a company would have no motivation to take the risk, secure loans, hire people and lay it all on the line to bring a product to market. 

The idiots who are protesting Wall Street do not understand this and think that greed is bad and they want to lash out at ‘rich’ corporations.  Socialism doesn’t produce innovation and it certainly doesn’t provide goods at a low price.  Throughout history we have seen countries adopt socialism and collapse under their own weight because the system can’t provide the basic goods and services that the people need because there is no motivation.  Capitalist economies don’t need a ‘bread czar’ to make sure bakeries provide the appropriate amount of product to meet consumer demands.  In Capitalistic economies, the invisible hand guides companies to procure capital, develop products, market then and bring them to market to meet customer demand and produce a profit for the company.   

Socialism fails because it is not consistent with Human behavior.  We evolved and prospered because we have a survival instinct imbedded in our DNA.  Humans have a desire to exceed expectations, rise above and overcome our rivals.  It is the product of billions of years of evolution and we can’t ignore that fact.  Nature is not socialistic.  The strong survive and the genes that allowed one generation to excel are passed down to future generations.  When we have tried to tinker with Nature and allow the weak to survive and thrive we see that future offspring suffer and we are only prolonging the inevitable.  Farmers know this axiom and will not allow the ‘runts’ to survive because they should not pass their inferior traits to the rest of the herd.  We know this as humans and Socialism just stifles that creativity and demoralizes the people.  People know they are capable of more but the system doesn’t reward the extra effort. 

Economics always comes down to motivations.  If someone is getting paid a wage to perform in a sub standard way, There is no motivation to work long hours, invest personal finances and take a risk on a new product  Without entrepreneurs taking risks, we’d never have cheap internet access, iPhones, iPads and laptops.

The Internet was born in America and not Russia, Cuba, Greece or Spain.  It was a product of Capitalism, Greed and companies that were driven by the profit motive.  And we are better off because of it.   

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