https://www.wsj.com/articles/capitalism-still-working-1542308386
So far so good with the ongoing U.S. experiment in expanded economic liberty. Americans are confident about their financial prospects and enjoying a strong jobs market. And it shows. The Journal’s Harriet Torry reports today:
Retail spending by American households rose in October, a sign outlays started on a strong footing headed into the holiday shopping season.
Sales at retail stores and restaurants rose 0.8% from the prior month, the Commerce Department said Thursday. That exceeded the 0.5% increase economists surveyed by The Wall Street Journal had expected.
The Journal’s Justin Lahart adds that “while there were some special factors that helped boost the overall number—higher gasoline prices increased service-station sales and hurricane-related sales helped hardware stores—business was generally good all over. Clothing stores and sporting goods stores both registered sales growth of 0.5% on the month, for example, and department store sales were up 1.3%.”
Despite a weakening global economy and concerns about how President Trump’s trade stare-down with Chinese dictator Xi Jinping is going to end, the U.S. economy appears to be logging another solid quarter.
Yet polls find that young adults in the U.S., perhaps scarred by a decade of financial crisis and then sluggish growth, are disturbingly open to socialist central planning of the economy. Vermont’s socialist Sen. Bernie Sanders is the most influential policy maker in the Democratic party, though he’s still not a member. Now, having succeeded in centrally planning Amazon’s warehouse wages, Mr. Sanders wants to do the same to Walmart . Yet history counsels deep skepticism regarding claims that such government coercion will lead to higher living standards.
Modern readers may naturally think of contemporary economists like Paul Krugman when they think of botched economic forecasts. But Mr. Krugman’s errors look rather small compared to those made by the inventor of socialism. Columbia University b-school professor Charles Calomiris writes:
It is worth remembering that Karl Marx regarded socialism as an economic necessity that would emerge out of the ashes of capitalism precisely because capitalism would fail to sustain wealth creation. Marx made many specific, and erroneous, predictions about capitalism, including its declining profitability and rising unemployment. His analysis did not consider permanent economic growth in a capitalist system to be a possibility. And his “historical materialist” view of political choice claimed the rich and powerful would never share power voluntarily with their economic lessers, or create social safety nets. Writing in the mid-19th century, Marx fundamentally failed to understand the huge changes in technology, political suffrage, or social safety net policies that were occurring around him.
Only 135 years after the death of Marx, profits are surging in the world’s largest economy. Lindsey Bell of CFRA Research notes that third-quarter earnings growth of 28.3% for S+P 500 companies is among the best in decades. Ms. Bell adds that “the overall sales growth rate of 9.3% for the S&P 500 in the quarter was impressive as top-line momentum continued for the fourth quarter in a row. In the second quarter, sales were 10.3% higher year-over-year, up from about 9% in the prior two quarters and significantly higher than the average growth rate of 4.0% since the emergence from the Great Recession.”
Marx doesn’t just own the biggest blown earnings call in the history of markets. Prof. Calomiris notes that many of Marx’s other predictions also turned out be catastrophically off target:
Not only has socialist theory been wrong about the economic and political fruits of capitalism, it failed to see the problems that arise in socialist governments. Socialism’s record has been pain, not gain, especially for the poor. Socialism produced mass starvation in eastern Europe and China, as it undermined the ability of farmers to grow and market their crops. In less extreme incarnations, such as the UK in the decades after World War II and before Margaret Thatcher, it stunted growth. In most cases, socialism’s monopoly on economic control also fomented corruption by government officials, as was especially apparent in Latin American and African socialist regimes. The adverse economic consequences of socialism led the Scandinavian countries to dial back their versions of socialism in the past decades. CONTINUE AT SITE
