THE 5 BIG LIES ABOUT AMERICAN BUSINESS: COMBATING SMEARS AGAINST THE FREE-MARKET
By Michael Medved, Crown Forum, $26.99, 262 pages
REVIEWED BY DOUG BANDOW
Last fall’s financial crisis led to more than the usual talk about the end of capitalism — but what tottered dangerously last year was America’s mixed economy, not a true market economy.
With capitalism under attack and statism on the march, Michael Medved has written a defense of both capitalists and capitalism. “The 5 Big Lies About American Business” is sometimes uneven, mixing popular polemic and considered analysis, but most of Mr. Medveds thrusts are well-aimed.
Mr. Medved opens with an anecdote about his father, “the unacknowledged entrepreneur.” Despite the latter’s many years in business, Mr. Medved thought of his father as a scientist or academic rather than an entrepreneur. He writes: “Like many other children in countless families across the country, we unresistingly imbibed the antibusiness bias that’s pervaded American culture since the Great Depression.”
In fact, though the United States is viewed as the epitome of capitalism, Americans are surprisingly uncomfortable with the actual operation of the market. Indeed, observes Mr. Medved, many people who are only too happy to possess money have “an odd discomfort in admitting the means by which those resources were acquired.”
Much of the culture is hostile to economic freedom. For instance, the educational system exalts almost every form of service other than commerce.
Literature and television tend to reinforce the same themes. So does Hollywood. Notes Mr. Medved, “For more than a generation, the Hollywood dream factory has continued to churn out similar nightmares that emphasize the ugliest, most unpleasant elements of the commercial, competitive system - the same system exemplified, in a particularly ferocious form, by the entertainment industry itself.” The signature movie in this genre, of course, is “Wall Street,” with Michael Douglas as Gordon Gekko.
Mr. Medved challenges these stereotypes, going beyond purely economic arguments. Markets involve human cooperation, which benefits all parties. Mr. Medved explains: “Far from the heart-hardening and spirit-killing processes cited by poets or movie producers who loudly lament the central role of business in our society, the capitalist system actually opens us to a greater sense of connection, community, and even creativity.”
The bulk of the book is devoted to rebutting five “big lies.” The first is that last year’s financial debacle meant the death of capitalism. In fact, politicians were at least as responsible as businessmen. Mr. Medved, however, focuses on a larger point: “For the better part of five generations, the enemies of capitalism have been singing lustily to celebrate its imminent demise.”
Yet the fall of the Berlin Wall dramatically showed that it is collectivism that is intellectually and morally kaput. While history did not end, democratic capitalism clearly triumphed. Nothing over the past year has changed that. Observes Mr. Medved: “The crisis of 2008-2009 may have stalled this progress but in no sense erased it, or discredited the system that produced it.”
The second big lie is that as the rich get richer, the poor get poorer. Mr. Medved recognizes that wealth is created. The much-touted income gap is to some degree a statistical artifact, and income mobility is constant. Moreover, any gap is meaningless because it “actually reflects increased wealth for the most prosperous rather than falling living standards for the poor.” We are all benefiting.
Lie No. 3 is that businessmen are overpaid and corrupt. The excesses are real. However, companies are not unique in this regard.
Moreover, many complaints in this area suggest that corporate critics assume salaries reflect moral virtue. They do not. Rather, the market purports to reward market participants for market value, and, as Mr. Medved puts it, “you do get what you pay for.”