The Virtue of Capitalism

CNBC commentator and host Larry Kudlow has done what I have yet to do—argued capitalism’s moral worth:

Capitalism in this country has been under assault ever since FDR's New Deal 1930s, a time when a number of alphabet agencies attempted to control America's industrial and farming sectors. The experiment soon proved a dismal failure, with unemployment running 20 to 25 percent up until WWII. It was only when Roosevelt started unleashing businesses to produce wartime goods that the economy ultimately resurrected.

Still, the American welfare state would grow. In the 1960s and 1970s, the murderer's row of economic morons -- LBJ, Nixon, Ford, and Carter -- in allegiance with their liberal Keynesian advisors, concocted a socialist policy mix that ultimately led to wealth-destroying big-government stagflation.

Providentially, Ronald Reagan changed all that in the 1980s. The Gipper slashed tax rates, deregulated industries, and rescued the dollar, unleashing the forces of entrepreneurial capitalism. As a result, for the first time since the post-Civil War period (but for the brief Coolidge-Mellon period in the 1920s), the American economic system became the envy of the world. Since the early 1980s, more than 46 million new jobs have been created, with inflation-adjusted GDP increasing $6.2 trillion, or 120 percent.

As deregulated stock markets democratized the American financial system, a great new investor class grew up. Roughly 20 million investors evolved into over 100 million share buyers, and they got rich in the process. Since 1982, according to the Federal Reserve, stock market wealth owned by family households appreciated by over $9 trillion, or nearly 900 percent. During this period, the Wilshire 5000 index appreciated nearly 800 percent.

This investor class has also become the nation's most powerful voting block. In recent elections, nearly two out of every three voters has been a stockowner. And yes, they are voting for capitalism -- meaning lower tax rates, limited government, and greater opportunities for entrepreneurship.

George W. Bush, a lineal descendant of Reagan, calls this the "ownership class”. . . and entrepreneurial activity goes hand in hand with the cultural characteristics of hard work, thrift, personal responsibility, and law-abiding behavior.

Indeed, ownership is a self-help virtue, and it is held in much higher cultural esteem than . . . government-dependant welfarism.