How to explain capitalism to an Occupy Wall Street protester

David Cohen Former Deputy Assistant Sec. of the Interior
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After making its return with this month’s May Day demonstrations, the Occupy Wall Street movement will be out in force this weekend to protest the NATO summit in Chicago. Although the OWSers are not very good at articulating what they’re for, it’s clear what they’re against: capitalism. Many idealistic young people are seduced by the message that government, in the name of “fairness,” must “correct” the income disparity between the super-wealthy 1% and the other 99%. Is there a way to get these young idealists to appreciate the superior morality of capitalism? I believe that there is.

I have the advantage (at least for this purpose) of being a former liberal. I vividly remember how I used to think, and I vividly remember which conservative arguments were eventually successful in penetrating my liberal mind. I have distilled this knowledge in my new book, Left-Hearted, Right-Minded: Why Conservative Policies Are The Best Way To Achieve Liberal Ideals. This is the third in a series of pieces derived from the book.

The book has two protagonists: Liberal Dave, the person I was in my youth, and ConservaDave, the person I eventually became. One chapter imagines Liberal Dave and ConservaDave having a wide-ranging debate as Liberal Dave prepares to join the OWS protests. ConservaDave tries to explain capitalism in a way that might get through not only to Liberal Dave, but to at least some of the young idealists of OWS.

ConservaDave’s first step is getting Liberal Dave to understand the folly of having government try to reduce income inequality. “Here’s the thing about government,” said ConservaDave to Liberal Dave. “It’s made up of two kinds of people. First you have the Bureaucrats — the career civil servants. Some of them are really smart and capable, but some of them are worthless and it’s almost impossible to fire them. But even the smartest Bureaucrats can’t possibly be smart enough to micromanage an economy. That’s why the Soviet Union collapsed.”

“The Bureaucrats are overseen by the Politicos,” continued ConservaDave. “These are the ones who come and go with whatever administration gets elected. Like the Bureaucrats, some of the Politicos are smart and capable — but many of them are highly partisan and are mostly focused on rewarding their friends and punishing their enemies. Both the Politicos and the Bureaucrats are obsessed with keeping their own jobs. That’s why Politicos put a positive spin on everything their administration does, no matter how lousy. And hell hath no fury like a Bureaucrat who’s been told that his job may no longer be necessary. So I kind of jumble the Politicos and the Bureaucrats together and call them all Politicrats. If I ever need a reminder that government is not the solution to every problem, I just think about all of the Politicrats running the government.”

Liberal Dave explains to ConseraDave that OWS has no love for these so-called Politicrats. “This is the start of a Worldwide Wiki Revolution where people are going to take back the power from the special interests — and yes, from the Politicrats as well,” said Liberal Dave.

“Wiki is actually software that allows people from anywhere to collaborate with one another,” said Liberal Dave, explaining that it was named after the Wiki Wiki (“quick quick”) Shuttle in Hawaii. “But the ‘Wiki’ concept has grown way beyond the software. It’s come to mean a continuous, real-time, ongoing collaboration among millions of people around the world who don’t even know each other. That’s how these protests are springing up everywhere. That’s how strangers from all over the world have built Wikipedia into something that people find more useful than encyclopedias written by professional experts. Wiki is all about direct, real-time democracy and empowerment. It’s a brand new model for building communities and society.”

“I don’t think it’s new at all,” replied ConservaDave. “It sounds like capitalism to me.”

“Oh, bite your tongue,” said Liberal Dave.

“I’m serious,” said ConservaDave. “A free market economy is the greatest Wiki collaboration of all. Every day, millions of people who don’t know each other send billions of signals about what they want and need — and how much they’re willing to pay to satisfy each of their wants and needs. And the businesses that do the best job of providing people with what they want and need are rewarded the most. Businesses respond to these signals sent out by the people by directing resources to the uses that are likely to provide the highest reward. So capitalism causes resources to be allocated in a way that is most responsive to what people want and need. How’s that for direct, real-time democracy and empowerment? It’s all based on what the people want and need. Power to the people!”

“Where’s the flag?” Liberal Dave asked sarcastically. “I need to salute something right away!”

But ConservaDave was still on a roll: “And how do we set prices under capitalism? Do we let the Politicrats do it? No! We crowd-source it to the Wiki wisdom of the masses. And do we let the Politicrats decide how much everyone gets paid? No! The Politicrats are no match for the Wiki Wisdom of the Market. The Wiki Wisdom processes billions of signals, billions of data points, in a way that even the most brilliant Politicrat could never hope to replicate.”

Later in the conversation, Liberal Dave tried to draw a distinction between “good” capitalists like Steve Jobs and Wall Street vultures who just move money around. Steve Jobs was OK, according to Liberal Dave, because he actually made things that made our lives better.

“How do you think people like Steve Jobs are able to bring us all those wonderful products that make our lives better?” retorted ConservaDave. “Those ‘vultures’ who ‘just move money around’ are the ones that enable those visionary entrepreneurs to raise the funds to develop their products. And you’re right, a lot of those products do make our lives better — and not just fun things like iPods. Think of all the medical devices and drugs that save people’s lives, the software that helps poor kids learn, the agricultural innovations that help people in the Third World feed themselves — the list goes on and on. Millions of important inventions would never see the light of day if we didn’t have super-smart investment bankers who work 100 hours a week raising money for entrepreneurs, if we didn’t have commercial bankers working with them to provide loans, if we didn’t have investors willing to risk their money. If some of these people get rewarded handsomely for their special skills, energy and daring, so be it. A lot of middle class jobs depend on these folks, both in the financial services industry and in the multitude of industries they raise money for. And do you think New York could afford its generous welfare state without the wealth generated by these folks?”

The conversation went on to cover a broad range of other topics, including the 2008 financial crisis, the stimulus, taxing the rich, and how those societies with government-enforced “equality” actually have the most entrenched ruling elite. Did any of ConservaDave’s arguments get through to Liberal Dave? I’m living proof that they eventually did.

David B. Cohen served in the administration of President George W. Bush as U.S. Representative to the Pacific Community, as Deputy Assistant Secretary of the Interior, and as a member of the President’s Advisory Commission on Asian Americans and Pacific Islanders. He hosted the debate show “Beer Summit” for PBS Guam.