David Brooks wrote an interesting piece a few days ago
entitled The Age of Innocence, in which he discusses the changing public
attitudes about democracy and democratic processes. The piece is well worth
reading, but this post is really about the comments that followed it.
I was struck by how few people among the comment writers really
understand the capitalist system. There
is a prevalent view that the job of companies in a capitalist system is to
create jobs for people. Much of the current Obama criticism of Mitt Romney’s
days at Bain Capital is that his company didn’t create jobs. WRONG WRONG WRONG !!!! In a capitalist
system, the purpose of companies is to deliver returns to sharholders – that is
their only purpose. They need to produce
products or services that people are willing to pay for at a price somewhat higher
than their cost of production, so that they can deliver the difference in new product
development (to stay competitive in the market) and/or in dividends to the people
who put up the money to start the company – the shareholders.
Nowhere do companies have an “obligation” to produce more
jobs. They only have the obligation to survive and prosper, if they can. If automation and/or outsourcing increases
their competitiveness and their returns, they would be remiss in their
obligation to their shareholders not to implement those steps. If they can do the job with less people, and hence
at a lower cost of production, more power to them.
Related to this is the current misconception that people are
somehow “owed” a job by companies or by the government. Again, WRONG WRONG WRONG !!!! People can either (a) become entrepreneurs
and create their own jobs (and perhaps jobs for others as well), or (b) develop
useful skills that other people and companies are willing to hire . The obligation is on the individual to make
themselves employable, NOT on companies to employ them.
This passive entitlement mindset is pernicious – America
was built by people who hustled, cleared forests, created farms out of
wildernesses, set up their own mills and stores, etc. etc. How did we get from there to this current “entitlement”
mindset?
Of course, natural selection will eventually correct the
situation. When the hard times come, as they always do eventually, the realists,
who understand the need to hustle and make their own way in the world, will survive
and the “entitlement” folks will find themselves in a world of hurt.
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