Andrus: Capitalism is not the enemy

John Andrus

I went to the #OccupyISU event last Thursday at noon, and as an unaffiliated member of the crowd, I came away from it a little depressed.

There were definitely legitimate problems in the United States brought up by the Occupiers. Income inequality is at near unprecedented levels and, in hindsight, the Wall Street bailouts were almost certainly a bad idea (especially with how little we held the bailout receivers accountable for their use of the funds). However, the disregard of reality by some protesters really watered down any goodwill they could have achieved.

As an example, one sign I saw, held by what looked like one of the college students in attendance, said, “Last year, I paid more in taxes than U.S. Bank.” Sure, the point of protest signs is to make a statement that will hit home, but we know right away that this claim is wrong as a flat dollar amount and extremely unlikely even as a percentage.

As compared to individual college students, the tax burden on corporations is heavy. According to the OECD, the U.S. has the second highest combined corporate tax rate in the world at 39.25 percent. The Occupiers are correct that the effective federal “corporate” tax that corporations pay is often much lower or even zero, due to deductions (losses), but people don’t understand how many taxes are paid in addition to the combined tax rate.

Corporations still pay customs duties, state and local property taxes, gross receipts taxes, state tax, sales tax on purchases, payroll taxes like Social Security taxes, Medicare taxes, federal unemployment taxes, state unemployment taxes, FICA, and many other taxes to the tune of millions of dollars a quarter … especially a corporation as large as U.S. Bank.

Let’s momentarily ignore the fact that most of the protesters are employed by corporations, and some were even in school, in hopes of one day being employed by our corporate overlords. A main agenda point of the protests seemed to be how evil and immoral corporations were throughout the world, but especially in this country. If you knew nothing of the current economic climate and listened to the Occupy crowd, you would think that 99 percent of the country was being repressed far worse than Dennis the Peasant in “Monty Python and The Holy Grail,” even though none would want to trade lives with Dennis.

Some Occupiers also used logical fallacies in their arguments, saying, “If CEO pay is something I deem too high, THEN it is immoral AND corporations are evil and not generous.” Obviously this is false, without even broaching who gets to decide what “too high” means.

At one point before his death in the early ’90s, Sam Walton, the founder of Wal-Mart Stores Inc., was making something like $60 per second. Does this immediately mean he wasn’t generous?

Walton provided jobs, and continues to provide jobs even after his death, to more than 2 million people worldwide. Wal-Mart also has been one of the most generous corporations in America for decades. From 2007-2009, it donated almost a billion dollars to charity, with much of it going to help minorities and poor neighborhoods. This is in addition to the financial help that having a store with low prices does to help poor people that live around it, many of whom live without access to online prices.

In spite of all this, even hearing the word Wal-Mart would have caused an immediate seething rage at the Occupy protest last Thursday. I’m fairly certain that some of these people literally believe that the heart of Satan was manufactured by corporations. 

Public corporations are not individuals.  They are not owned by one or two people, but are instead owned by millions of people through stocks, 401(k) plans, and pensions, no doubt many people that the Occupiers call friends and family. 

I, like everyone I know, dream of a time gone by, when every town had a square filled with shops and small businesses where everyone could sit and chat and where we could buy all that we needed with the money we got from our crops. But the reality of the situation is that the world has changed. You can’t start manufacturing vacuum tubes and stagecoaches again, or pay a group of people to dig ditches and another group to fill them in.

You also can’t force the world to return to a time where a king-on-high makes all the right decisions for everyone in the land and where there is a complete absence of greed.

Do you know why we can’t go back to that?

Because such a place has never and will never exist. All it takes to see that is a look at history. Socialism (which is basically what the Occupiers were pushing last Thursday, some wearing Mao hats or Che shirts) has been a historical failure. Take a gander at people’s lives in communist Russia or under Mao’s reign in China, when his benevolent decisions cost 30,000,000 people their lives.

China has been growing economically since the early ’80s, but their growth has been exploding since they made the purposeful decision to embrace free-markets and limited property rights in the early ’90s. Inevitably China’s communism will fall. It’s not a matter of if; it’s a matter of when. And that is because power is shifting away from the elites to the people. They will demand stronger property rights, more freedom of information and elections. They are already moving in this direction, as China is starting to lose manufacturing to even less developed countries, like Vietnam.

People are greedy. The system of government we choose is simply a controlling mechanism of that greed. Capitalism’s goal is to direct that greed to produce economic gain for the society as a whole. Socialism gives that greed to the ruling class, which is the whole objection of the Occupy protests in the first place.

If you are not part of the ruling elite, then there is no incentive to work harder, and the sad conclusion is less innovation and less progress. The primary goal of the constitution was to limit, divide and even fragment power. Consolidation of power is the enemy of freedom. This is true with business as well. The number one enemy of capitalism is monopoly. People often error in thinking that socialism fixes this, when in reality, it is the ultimate monopoly.