I thought it was a bit rich for Jacinda Ardern managing to buy her third house over the last year (the most recent one costing $1.7 million) when she said before and after her election that “homelessness proves capitalism was a blatant failure.”
In his bestselling book Eat the Rich witty American author P.J. O’Rourke endeavors to answer the question: “What is wealth and how do you get it?” He wanted to know why some countries prosper and thrive while other countries remain mired in poverty and despair.
Starting with Wall Street, where what he calls “good capitalism” thrives, he journeys to Albania, a land of “bad capitalism” where the free market had collapsed; to Sweden to study “good socialism” to see if it was indeed a socialist paradise as many believed, then to Cuba to observe “bad socialism” where Fidel Castro presided over a crumbling economy. He traveled to Russia, Tanzania, Hong Kong and Shanghai and discovered how reform can be difficult for countries in financial distress or undergoing political change. He found that behind the economic theories are real people struggling to acquire and maintain adequate living environments, as well as entire countries wrestling with poverty, unstable currencies and political corruption.
He concluded that in spite of its inherent faults, the surest way out of poverty was the free market. Wealth, he said, is the result of economic liberty, while poverty comes from economic repression. Free market capitalism may not be prefect, and at times not fair to everyone, but it does work. O’Rourke wrote the book in 1998. I’m not sure to what extent he might alter his conclusions in today’s economic climate though I doubt he will have much sympathy for Ms Ardern.
Capitalism was best explained in Adam Smith’s tome The Wealth of Nations first published in 1776. He wrote about a system of markets, prices, profit and private property ownership that created a natural order of how people could live in relative comfort and prosperity.
The system would be advanced by energetic and ambitious men and women whose actions could benefit the whole of society though that may not have been their noble intentions in the first place. His famous quote was: “It is not from the benevolence of the butcher, the brewer or the baker that we expect our evening meal, but rather from their regard for their own self interest.”
Capitalism has been portrayed as the worst economic system apart from all the alternatives, but it does have has a tendency to implode from time to time. The 1930’s depression being the worst example, but also in 1973 when oil prices skyrocketed due to wars in the Middle East, again in 1987 when floating currencies caused the sharemarket to shed millions of investor dollars and of then course the global financial crisis in 2008.
However there has always been another option.
Four thousand years ago in the Old Testament when God gave Moses the law that the Hebrews were to live under, God created a cycle of seven years. Every seventh year the land was to lie fallow. Then after seven groups of these seven years – a total of 49 years – the land was to lie fallow two years in a row. In this fiftieth year, which was called the year of Jubilee, not only was the land to lie fallow, but all debts were to be cancelled, all indentured servants set free and all the land reverted back to the original owner.
So there was a natural flushing out of the economy. At the beginning of the fifty year cycle long-term borrowing would be common, but as the cycle began to draw to a close money would only be available for a few years and then in the forty-ninth year people would only loan money for one year because on the fiftieth year those debts would be cancelled.
This also created a real estate cycle. If you bought some land at the very beginning of the cycle then you could use it for fifty years so it had a high value. However if you bought it forty years into the cycle, the land would be worth much less because you could only use it for ten years before the title went back to the original owner. So of course real estate prices would drop rapidly as the fiftieth year approached.
That economic system kept the Hebrew nation going for over 2000 years. Humans have tried to improve on this, but it seems with little success.
Perhaps it’s as well for the Pakeha that the missionaries who came to New Zealand from the other side of the world expounded from the New Testament. Had they preached from the Old, the Maoris might still own all the land.
0 comments :
Post a Comment