I'm not much of a basketball fan, but I did notice that the Dallas Mavericks won the NBA title this year, and since they are from Texas, I was pulling for them. Actually, their victory is not what I want to comment on, but rather the fact that their owner, Mark Cuban, spent over $100,000 in a celebration party. Some people would no doubt call that obscene, I call it the free market at work and a blessing for countless people.
The rich people of a country are the ones who provide the jobs for most of the rest of us, of course, by hiring people. But the rich also provide jobs by spending money. Think about some multi-millionaire who buys a yacht. What goes into that yacht? Well, I don't know, exactly, I've never owned a yacht, but I know there is probably wood, steel, other metals, glass and fiberglass--and what else? Nearly all of those things start as raw materials, out of the ground, and they have to be dug up by human beings--providing jobs--sent to production factories--providing jobs for the transport industry and production factories--then to the yacht-making plant--providing jobs for yacht makers--then to the yacht-selling store--providing jobs for yacht sellers. And then the yacht runs on fuel--providing jobs for fuel producers--the yacht owner probably frequently hires some caterers and waiters and...well, I won't mention prostitutes...but hopefully, the reader gets the point. How many jobs are created and sustained by rich people who buy yachts? And how many people would be out of a job if they didn't? Enjoy yourself, Mr. Cuban.
Many years ago a man named named Leonard Read, of the Foundation of Economic Education, wrote an article entitled "I, Pencil" in which he described the process of one pencil getting into the hands of one user. Think about it a moment. What's in a pencil? Wood, graphite, a rubber eraser, that little metal thing at the top that holds the eraser. How do those four things come together so that you can write with a pencil? It's mind-boggling. The wood has to come from the ground and transported, as does the metal, the rubber, (I don't know where graphite comes from). How many HUNDREDS (thousands?) of people are employed to construct one pencil? And then there are subsidiary industries, like pencil sharpeners, paper to write on, trash pickup when the pencil has been used up and thrown away...what else? Ponder it, reader, I'm not going to do all your work for you (I'm trying to keep this article relatively short). And all of this is done by free-market capitalism, not socialistic government planning. We saw what happened in the 20th century when government tried to run an economy--shortages, famine, death. A government does not--CANnot know--how many pencils its people are going to want and need in a given year. Only the free market can do that. And if the market overproduces pencils, its resources can be shifted to products that the consumers are demanding. It's worked for almost 200 years now and given us material blessings that the world had never seen before (not that I am a slave to materialism, but I do enjoy the good things--like food--that the market produces in abundance).
Yet, capitalism is the most hated economic system in existence--but only by the liberal elite who don't like anything to do with "freedom"--except their own. They complain that "all businesses care about is profit," which is totally unfair and untrue. Yes, businesses do want a profit; they won't stay in business if they don't make a profit. But those profits come by selling goods or services that consumers are willing to buy at prices consumers can afford! A business must, first and foremost, consider the wants and needs of consumers. And the businesses that do the best job at that WILL make the most profits--and be able to hire more people. That process is interrupted only by government, with its countless regulations, high taxes, support of labor unions, demands for extra benefits from business. All of those raise the costs of doing business--and thus the price consumers must pay. Americans bemoan the fact that so many of our goods come from China, or some foreign country, today. The main reason those jobs are "outsourced" by American companies is that the labor is cheaper. And quite frankly, that's a benefit to the American consumer. Think about the costs of the basic items you buy at Wal-Mart if they were produced by the high wage labor of American workers and the costs imposed on U.S. businesses by government. China says to an American company "come do business over here. Our labor is cheaper and you won't have all the high cost regulation and taxes." The American government says "You've got to pay your workers at least a certain minimum wage, conform to all these costly regulations, and pay outlandish taxes." You're the CEO of a company. Where are YOU going to go and produce your goods? And who benefits as much as the company? The consumer does, by paying lower prices for goods. Folks, government is the cause of high prices, not corporate profits. Indeed, it would be the tendency of the free market to lower prices due to competition (e.g., the computer and IT industries). But "inflation" is our bugaboo, and inflation is caused--you guessed it--mostly by government intervention into the economy.
Now, I will NOT say that everything every business is does is fair and equitable. Of course not. Every one of us could come up with examples of an improper action by some business. Given the nature of humanity, that's going to happen in the hundreds of millions (billions?) of transactions daily between business and consumer. Nor is every government action superfluous and injurious; occasionally they get something right (give me a few days and I'll think of something...maybe). But I will say that the more government intrudes into the free market system, the more harm will be done, and mostly to those people who make an economy run--the people who buy the goods and the "little man" who works for the industry that produces...yachts for the rich...and pencils for the rest of us. Mr. Obama, if you want to concentrate on producing jobs, as you recently announced, shut your mouth, eliminate 90% of the useless regulations on businesses, get rid of the capital gains tax, and substantially lower taxes in general. Oh, you could also cut government spending by about 75% and abolish the Federal Reserve. Those things would be a good start.
Enjoy your championship, Mr. Cuban, and spend as much money as you want to.