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Friday, 13 July 2018

Unfettered capitalism is suboptimal

I find people who stick to a rigid party line tiresome. People on the left are mostly gung-ho about redistribution of wealth through taxation and welfare. People on the right are mostly gung-ho about the wisdom of free markets. But I think there is a third way. In fact, most successful countries use this third way to run their operations.

The title of this blogpost should remind people of the sermon given by Bishop Michael Curry at Prince Harry’s wedding to Meghan Markle, that took place back in May.

In my family, there are the seeds of both free-market and redistributive traditions close to the surface. My mum’s dad, Harry Dean, was a card-carrying Communist. He would say if asked that Communism was “living Christianity” and spent his life giving things to people, including the love he gave to his daughter, who adored him. She married a man who would vote Liberal all his life and who said that his family was his “favourite charity”. I’ve written about my father on this blog on a number of occasions. I’m a bit of a chameleon when it comes to ideas about economics and inequality. I prefer to take the best words from the lexicons used by people on both sides of the political fence. My background means that I am more flexible than many other commentators who participate in debates in public.

Capitalism is good at distributing resources for the purpose of feeding the community but unfettered capitalism is suboptimal. A rational quantity of government intervention enables the community to find the coherence it needs for all members to thrive. We all benefit from living in healthy communities that are free of crime and pollution, so regulation of behaviour, either by corporations or individuals, is necessary to ensure the wellbeing of all people who live in them. None of us can survive alone, so quarantining all wealth in the hands of a few at the expense of the many is dangerous because it is not only unfair, it incites people to break the law.

We all need clean water, clean air, and safe streets to be able to enjoy the freedoms that the earth and human ingenuity embodied in technology and democracy have bequeathed to us over generations. These things can only be provided through government and taxation. But we know from experience that centrally-planned production systems absent private enterprise cannot compete with free markets. Texas has a population about the same size as Australia’s, but its economy is measurably larger. But to what purpose? We need the best of both worlds in order to live good lives.

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