Guest AuthorDo people truly understand the power of the middle class? I think they’re starting to overseas. We may not have invented the concept of a middle class, but we perfected it and everyone wants to emulate it.
Since the fall of the Soviet Union, countries around the world have been reconfiguring their economic policies to remain competitive in the global economy. New middle classes have emerged in China, Belarus, Brazil, Russia, Vietnam, and among South African blacks. People in those countries now have spending power that’s creating demand for products and services, not to mention construction of new houses and businesses.
The rise of global middle classes is a recognition that capitalism works, as opposed to socialism or communism. A sizable middle class represents a county’s economic engine. Capitalism encourages people to work and to invest and spend their money and allows a country to collectively compete. The average person wants little more than to earn a respectable livelihood, so they can enjoy life and raise a family unencumbered by overbearing government regulations.
As President Calvin Coolidge observed, “After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world. I am strongly of the opinion that the great majority of people will always find these the moving impulses of our life.”
In order for capitalism to work, you need to be allowed to have certain freedoms, such as the freedom of expression, the freedom to innovate and invent, the freedom to choose your own path, the freedom to conduct legitimate business, etc. That’s why it’s ironic how some of our former communist foes are now embracing capitalism.
In the absence of a middle class, they have just rich and the poor (the have’s and the have nots), a feudal state controlled by dictators or monarchs. Such states don’t operate harmoniously, corruption is rampant, and unrest is common. The have nots, usually a sizable majority, have little to earn and spend. Consequently, the economy sputters and stagnates, which our communist friends discovered.
As mentioned, for capitalism to work certain freedoms must be permitted for a person to work, earn, and save money, not to have it redistributed to others by government decree. That illustrates an explicit relationship between freedom and capitalism. Implicitly, it means capitalism requires a certain amount of democracy to allow citizens to participate in how the government runs, which means capitalism cannot work under a dictatorship. Just look at Cuba, Iran, North Korea, et al.
As an aside, it is the middle class that elects government officials, not the upper or lower classes. The upper class may support politicians economically, but it is the middle class that casts the votes.
Capitalism is our greatest export. It represents the seeds of freedom and economic prosperity. If it spreads, it could lead to world stability and peace which, of course, certain tyrants and crackpots openly reject. For example, Iraq will be an interesting experiment in capitalism. If Iraq succeeds, freedom and democracy will succeed, which is why the Middle East’s terrorists desperately want to see it fail as it represents a challenge to their authority. It’s not so much about religion as it is about control. Capitalism is a genuine threat to feudalism, a system that has no regard for human right or respect for the human spirit.
Make no mistake, feudalism is barbaric.
Any attempt to change capitalism is a threat to freedom, democracy, and the middle class.
Government-sponsored bailouts, stimulus packages and the creation of artificial jobs do a disservice to capitalism and are unnatural. It’s not government’s role to tamper with capitalism, only to establish the environment for capitalism to flourish, namely assuring freedom and democracy, serving its constituents, and providing incentives to encourage new avenues of business.
Tim Bryce is a writer and managing director of M&JB Investment Co. of Palm Harbor, Fla. He has more than 30 years of experience in the management consulting field. He can be reached at [email protected]. Column courtesy of Context Florida.
