Feature Article of Friday, 17 July 2015
Columnist: Baidoo, Philip Kobina
There is an Akan proverb, which literally states that wisdom is not the monopoly of any single man. Since human beings are fallible we do make mistakes all the time, and it happens a lot in the private sector. However, when it happens it is the private business man and, perhaps, his customers who suffer. On the other hand, if the controller of a planned economy makes a mistake the whole economy suffers, and that is what leads to very painful recessions and capitalism takes the blame for the stupidity of government officials who have different interest to that of the general population.
Capitalism is not perfect. Some of the imperfection is what sometimes gets trimmed away through recession. To some degree, recession is good for the capitalist system especially when it binges on unwanted investments. In every business cycle lots of investors gravitates towards sectors where prodigious profits can be made, and sometimes off load their capital in already saturated parts of the economy. When these happens those sectors of the economy that experience the unwise investments, including the investors pay the price. However, those childish leftist intellectuals think that there should be perpetual boom in an economy. Therefore, a way should be found to do that hence the command planned economy. They reasoned that the occasional contraction in money supply which triggers, in the past, mini recessions was bad. As a result, finding a way to ensure that money flows all the time will cure the mischief of recession hence the Federal Reserve System in America, the British treasury, the Bundesbank and all the central banks in most countries. Strangely, it was after the Federal Reserve System came on stream that America experienced its worst recession and depression. Think about it.
I now come to one of Mr Kwarteng’s throw away questions. ‘(Where is Mr. Baidoo, Jr.’s take on Obama’s state capitalism and the revival of the American economy?)’ This is similar to the question he asked about Cuba. Well, if the state caused the failure of the capitalist system, as I alluded to in the last piece, why shouldn’t the state sort out the cadaver filled with worms. Is it strange that he saved them and he was rewarded with a second term? It is even possible that Obama is not even a socialist, but has come to the realisation that that is where the votes congregate. Because there are more poor people than rich people, and will forever remain so. It is just a matter of having a demagogue who is smooth with words like Obama, and you are in for a fixed deck. Roughly, 2,000 years ago Jesus told Judas Iscariot that the poor shall always be with you. It is insane and I find it incredibly stupid that some people think that they can remove poverty. Some people want to be poor and they love to be poor. No amount of social engineering can change that.
Currently, ‘the help to buy’ scheme, which is one of the flagships of the conservative party here in Britain, as far as I am concerned, shouldn’t have happened, because it distorts the market. For example, if there are five people who could normally afford to buy a property on their own while there are let’s say six properties on the market. Now, due to the help to buy, ten people are able to purchase while the supply side still remains at six. There is no dispute about this; it takes time for property developers to make properties available on the market. With this dislocation of supply and demand the price of properties will be forced up, at least, in the interim before sufficient supply of property comes to the market to put breaks on the upward price movement. And when this happens it creates distortion in the economy. The reason is that developers are given the wrong signals that there is unusual demand, which is basically artificial. They, therefore, take huge loans, which under normal circumstances they wouldn’t. The capital investment they make locks up. Since other related businesses such as carpet, furniture, wood flooring etc. see upsurge in activities they also increase their stock levels sucking in lots of investment, which shouldn’t go into that sector of the economy. In the end, other equally important areas of the economy are starved due to lack of investment. I submit that the help to buy is a form of Ponzi scheme. Those who are the first beneficiaries laugh all the way to the bank. However, those who come at the latter part when the bubble has been created pick up the pieces when it burst. So, ‘the help to buy’ is the first seed of the next recession, at least, in Britain. It is important to note that it was planted by the government and not the capitalist. The capitalist only react to the control freak government officials who change the goal post to suit their electoral needs.
Mr Kwartent wrote about the fact that capitalist American banks aiding and abetting drug money laundering. He speaks as if I have written that capitalism is perfect. I have stated over and over again that the capitalist system is not perfect, but it is the best of all the available options. Yet, he keeps throwing these cheap innuendos around, I don’t know whether to impress his readers or not. And since it is the gutters he knows how to fight, I wouldn’t hesitate to join him. In his model socialist world of Cuba that socialism is supposed to remove all the vices of humanity eight persons were arrested over illicit sale of university entrance exams papers. It was reported in the official Granma News Paper that five employees of the Cuban ministry of education were among those arrested. It was alleged that the transaction cost $60 dollars for the Maths, Language and History part of the exams. My question is if even a doctor with multiple skills takes home $67 dollars a month how are the parent of these kids able to afford these expensive overlays. The answer is clear; the Cuban society is riddled with corruption. Again, he accused Yeltsin of being corrupt and kleptomaniac when I quoted his words in one of my articles. This is what he got to rationalise. Yeltsin was born and bred under the clutches of communism, yet he turns out to be such a rogue criminal. This is the catch; it is a system meant to provide the best of all possible worlds. So what does it say about Karl Marx’s communism.
Capitalism provides opportunity for everyone who pulls his weight – not lazy bastards who want handouts. The recent fight between Mayweather and Manny Pacquiao gripped Britain, and I am not sure about United States where it took place. It is only in a capitalist system that can make this happen. Did any of my readers ever hear during the height of the communist era about that system providing such opportunity to the ordinary person to command such enormous wealth? It is only capitalism that is able to democratise the opportunity for people with unique extra talent to achieve high. It is the same way a writer, a computer genius, scientist etc. can come up with innovations that are able to improve human life and command huge profits. This is the basis of human advancement and not trying to make everyone equal.
Lastly, on his question of money laundering, libor fixing, capitalist banks aiding and abetting drug money laundering I am not going to bother wasting my time on it, because they are silly. Kwarteng writes this nonsense as if his perfect Nordic societies are free of crimes and most importantly corporate crimes. If we go back in time I will ask the question what did the statist Nazi Germany that he loves, do with the murderous dentistry gold. We live in imperfect society, though we try as much as possible to perfect it, therefore there is bound to be such criminal behaviour, and there is nothing we can do about it. He should just take a look at the recent ongoing FIFA scandal, and he will understand what it is to deal with a human institutions. I referred to it because FIFA is neither a capitalist or socialist institution; it is a nongovernmental institution. Besides, they are rewarded handsomely, therefore, where is their alibi for this uncanny greed. We are by nature acquisitive; and nobody should get me wrong some can be selfless, but they are very rare kind of human species. If Mr Kwarteng can remove our genetic predisposition to greed, which manifest in so many way in our lives he can do away with all these problems. And since he cannot do that he should stop writing his junk.
The tax evasion he wrote about is one of the childish of his rants. He should have known the history of the Americans; they don’t like paying taxes. That is the main reason why they fought for their independence. And immediately you try to tax people to the hill they will evade it. The first lessons in taxation teach that it has to be fair and affordable. It has been proven that when you reduce taxes tax revenue contrary to what the left believe shoots up because it becomes affordable and the tax payer do not scheme to avoid payment. Both Democratic and Republican presidents have proved that it works. In the sixties when JFK reduced taxes tax revenue shot up while at the same time it gave a shot in the arm of the U.S. economy. Reagan repeated the same thing in the 80s and the same result was repeated. It therefore beggars imagination that politicians do not learn from what worked in the past. There was a case in Alaska where the authorities wanted to increase their tax revenues through increases on cigarette taxes. Because the citizens of Alaska were not prepared to pay the extra taxes cigarette smoker bought cigarettes in the cartons to avoid the taxes before the law took effect. And, of course, the authorities learned in short order as their projections went up in flames. People don’t like paying taxes, and when you make it to dear they will avoid it.
The worst environmental damage occurs where there are no private property rights, and worse when the silly hybrid option is adopted. For example, the Bhopal Union Carbide disaster if government supervision had been stellar it wouldn’t have happened. And, of course, it was part owned by the Indian government. That is mixed economy for you. Even in America the worse safety records occur in TVA nuclear plants, which is government owned. The deadliest nuclear plant disaster did not occur in a capitalist country but in communist Russia where there was absolute lack of private property rights. The Aral Sea dried under Soviet control, because the managers did not have private interest in its long term economic exploitation. I can go on endlessly, but I am mindful of my reader’s time.
Government meddling is what promote corruption. Has anyone had the opportunity of reading about the American prohibition? When those sacrilegious silly laws were enacted against free enterprise, instantaneously, America was turned into a nation of criminals. Those were the times when the American mafia underworld flexed their muscle and acquired so much power they became literally untouchable. It is even believed that a respectable person like JFK’s father acquired his wealth during the period of prohibition through bootlegging.
It is not the redistribution of income which makes a nation rich. Productivity is what increases the wealth of a nation. Bigger productivity means bigger pie for all to share, although some may get a bigger share be it through corruption or superior ability. Thank you for your patience.
Philip Kobina Baidoo Jnr