Capitalism, Economics, the free market, Why do these words seem to go right over our heads? We (the teenagers reading this) have been trained by the adults that we are not ready yet for these big thoughts and that it’s ok to just act like oversized kids. It’s high time we start thinking about money, jobs, family, government, and the economy otherwise when we do leave the house it will be like diving from the high dive when you don’t know how to swim.
So without further ado, I present to you (hey that rhymed) The basics of Capitalism.
Capitalism is defined by the New Oxford American Dictionary as:“An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.”
Some people would have you think that in the market the government has to step in to “protect the customers” from the big bad corporations but that simply not the case. Let’s think about it for a moment. Would a company be able to survive if it was scamming people left and right? Of course not, people would just not use their services or buy their products. So if anything, businesses have an incentive to be high quality otherwise they would go bankrupt.
If you’re like me you probably know someone who supported Bernie Sanders (I say supported because hardly any of many friends can vote yet). Aren’t you at least a little worried about how many people supported him? A self-described democratic socialist? Thirty years ago absolutely no one would have supported him because they knew that socialism does not work. I’m not even going to mention the Soviet Union. (see what I did there?)
So let’s look at an example, let’s say that there is a corn shortage in the U.S. well, in the U.S. the people would basically vote with their dollars about where to use the corn remaining. If the people spent more on corn cereal then the businesses that sold corn cereal would buy more corn and make more cereal and if let’s say corn on the cob sales went down then the businesses that sold corn on the cob would make less. Are you with me?
But if there was a corn shortage in a communist or socialist country the central planners could not possibly know whether or not people would like more corn on the cob or more corn cereal. At best they would divide the corn evenly among the different industries and at worst they might even think that the people would like more corn on the cob than corn cereal. Both of which would result in shortages of corn cereal and surpluses of corn on the cob.
I hope you enjoyed this blog post as much as I enjoyed writing it. If you have any questions or even pushback I would love to talk with you. Just put a comment down below or subscribe to my email list.