Showing posts with label supply and demand. Show all posts
Showing posts with label supply and demand. Show all posts

Tuesday, October 6, 2015

Free market capitalism makes us all rich.

The United States is the richest country in the world.  Our poor live better than the middle class in most places.  Our store shelves bulge with products, fresh vegetables, fruits, meat.  TV sets, computers, automobiles, refrigerators, electric power, clean running water, flush toilets, oil heat, and telephone are commonplace.  We can buy fresh produce any time of year. 
    Private enterprise capitalism brings all these benefits to us.  For instance, all the zillions of different things we need, from food clothing and shelter, to repair parts for every automobile manufactured since Henry Ford's time, to semiconductors of a million different types, light bulbs, hand tools, appliances, furniture, there must be a billion different things  for sale in the US.  And somehow, our factories produce just the right quantity of of each and every thing we need.  You can always find what ever it is you need or want.  The stores have enough stuff on the shelves but not too much.  This miracle of organization and planning happens automatically, and the answers come out right every time.  Supply and demand takes care of it.  When something runs short, the price rises, which encourages producers to produce more of it.  Or new producers to enter the market.  Likewise when demand falls, the price falls, and producers make less of it, or switch to other lines of product.
   The Soviets tried to operate without supply and demand.  The communists fixed the prices of everything and set up a giant bureaucracy in Moscow to issue production quotas to every producer in the Soviet Union.  Somehow they never got it right, and the Russians bounced from shortage to shortage.   Just recently Russian coal miners went out on strike because they couldn't get soap to wash up with coming off shift. I mean soap is a very simple commodity, it's been in production since Roman times.  And coming off shift in a coal mine, you need soap to get the coal dirt off your body.

    One of the things that makes the US dollar so strong, and so valued world wide, is US abundance.  An overseas holder of dollars knows that the Americans have plenty of every thing to sell.  And they sell it happily.  Show the money, and the product gets shipped.  Whereas a holder of Russian rubles is mostly out of luck The Russians don't have much to sell, and much of what they produce is so shoddy that no one really wants it.  They can do crude oil, vodka, and weapons, but that's about it. 
    So let's stop bashing capitalism, and stop talking up communism (aka socialism).  Capitalism makes us all rich.  Communism makes us all miserable.