We The People

“We want capitalism and market forces to be the slave of democracy rather than the opposite.” – Thomas Piketty

The essential underlying elements of supply, demand, scarcity, and prosperity described in our first article in this series, The Forgotten Path to Prosperity, are keys to gaining a better understanding of what constitutes a well-functioning economy. In this article, we further consider those dynamics and within that context begin to evaluate why current economic growth is stagnating. Our view necessarily advocates for a focus on supply-side economics. In other words, the talent, skills, and work that people do to acquire resources and how the resulting productivity growth from those endeavors most effectively relieves scarcity and poverty.

In his best-selling book Capitalism in the 21st Century, Thomas Piketty advocates for a mandated redistribution of wealth through a progressive global tax. His perspective of economics centers on the allocation of resources and making sure that it is fair and just. What is made very clear in Piketty’s arguments is that he and a few other intellectual elites, so-called “Davos-men,” ultimately know better than the collective decision-making of the citizens of a nation about how resources should be allocated and what should be mandated as “fair and just.” Piketty and many other economists elect to ignore the fact that the world runs most fairly and efficiently when individuals are free to pursue their separate interests. Said differently, free-market capitalism, although imperfect, remains the single best means of relieving people from the ubiquity of scarcity. As we have repeatedly seen throughout history, nations that relinquish their liberties to oligarchs crumble from the inside-out.

Importantly, Piketty’s idea runs perfectly counter to the central precepts laid out in the United States Constitution, the Declaration of Independence, the Pledge of Allegiance, and scores of other important documents that foster the basic tenets of life, liberty and the pursuit of happiness in this country.  The challenges capitalism and free markets face are not due to a lack of government imposition of laws and regulation to ensure fairness and justice, they are due to the failure of the United States government to do the primary thing incumbent upon it – defend the rights of liberty as laid out in the founding documents of our country. What Piketty suggests implies a massive expansion of government power in ways that would at a minimum erode and at worst destroy the vitality and dynamism of a capitalistic and free market society. What is most worrisome is that these concepts are not just the ruminations of the latest economic “rock star,” they are fully in play in every developed nation and go a long way toward explaining the accumulation of sovereign debt and the deterioration of economic growth in those countries.