Why Capitalism Works

This month, I’d like to share why over the last 245 years, how the free market, private property, and democratic capitalism have always been what makes America great. They are part of the freedoms and individual liberties that the Founding Fathers sought to protect when they wrote our Bill of Rights. Because of these freedoms, Americans created some of the greatest inventions in history and started some of the most successful businesses in the world. This benefits all Americans by providing jobs and great products. Our country’s high standard of living is one of the reasons America is a great place to call home.

In capitalism, people, not the government, own property. Consumers earn money by working and can spend their money on goods they need or want. They can also put their money to work by making investments in businesses, and starting their own business to compete in the free market. If their business is successful, they will be rewarded when consumers buy their product.

By supporting competition and allowing anyone to participate, the free market system encourages innovation and ingenuity, which sets America apart. Every person has an opportunity to be rewarded for their hard work and innovative ideas.

Companies invest significant capital to develop their ideas into products because if they work, those companies will grow and earn more money. Without the chance to make a handsome profit, they wouldn’t take the risk of investing all that money on something that might not work.

The best part of capitalism is that “you” make the decisions. The government doesn’t decide for you. In other systems like Marxist socialism, the government controls everything and makes every decision. Capitalism is all about freedom! What you do with that freedom is up to you.

My daughter, Laurie Ann, gave me a wonderful illustration of the difference between capitalism and socialism. For example, let’s take a high school class of 25 students. They took a final exam and instead of so many A’s, B’s, C’s, D’s, and E’s, the teacher said, “I’m going to give everyone a C, so everyone can feel good about their mark.” This is exactly what a socialist government does. You can see and understand the incentive to try harder is stifled.

Competition creates great ideas because it rewards work with wealth, and gives everyone the opportunity to compete. The free market system encourages innovation and hard work like no other system. Thanks to the free market, technology has advanced more over the past two hundred years than throughout all the rest of human history put together! Customers demand better products, so companies need to deliver them.

For example, because consumers wanted improved aviation safety, airplanes went from dangerous, unreliable experiments to being a safe and reliable mode of mass transportation.

Grandchildren, I believe it’s important for all of us to understand why America has been so fortunate over the past 245 years. And it’s very important to teach and train your children the real facts of why Marxist socialism is dangerous for our country.

Grandma and I wish you a happy New Year and a wonderful 2022!

Remember how much I love you,

Grandpa


Featured Image by Wynn Pointaux from Pixabay