Quis custodiet ipsos custodes?
"Capitalism without failure is like religion without sin. Bankruptcies and losses concentrate the mind on prudent behavior," opined economist Allan Meltzer. Market competition, just as in sports, produces winners and losers. Innovation eliminates the need for certain skills, making us more productive, but it also causes temporary structural unemployment. It is painful to lose your business or your job, but while it is the duty of a Christian to help a neighbor in distress, we need not fear free market enterprise for its social Darwinism.
It is good for everyone when the only survivors in the long run are companies that are fit to serve our diverse needs and wants. The system contains an intrinsic mechanism for self-improvement and waste-reduction. It is that freedom to fail and relocate productive resources to better uses that has turned America into the most prosperous nation in the world. Capitalism's "creative destruction" has given our middle class, and even many so-called poor among us, living standards that have no analogue in human history.
No politico-economic system will ever eliminate poverty, absolute or relative. Capitalism has its rainy days but it is constantly changing and adapting, very much like an intricate ecosystem evolves with the shifts in climate. These changes can be painful for some individuals---that is where we need private charity. The problems of deep recessions and high-cyclical unemployment only plague us when benevolent busybodies take over the economy, spreading soft pillows around in case someone fails and hurts themselves. We forget a fundamental law in parenting and economics---the more you bail out failure, the more failure you produce.
These days it looks like justice may be served against Bernie Madoff for running a private Ponzi scheme. The courts have done their job of protecting us against one case of fraudulent behavior. At the same time we witness a sharp increase in mob pressure on our elected servants to save us from our greed through tighter regulation of our economic lives. But in an environment where secular government plays the roles of both God and Church we need to ask ourselves: Who watches the watchmen? Who will protect us against the abuses of our bureaucratic regulators who are running the current multi-trillion financial pyramid?
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