"Capitalism made America great – free markets, innovation, hard work – the building blocks of the American Dream. But in the wrong hands some of those dreams can turn into nightmares."
‘When Mitt Romney Came to Town’
Promoted by Winning Our Future, a pro-Gingrich super PAC, ‘When Mitt Romney Came to Town‘ features a series of poignant interviews with workers who lost their jobs, houses and health insurance coverage when the businesses they worked for were restructured or went under.
This misleading video illustrates what’s wrong with American conservatism today — an unwillingness to talk honestly about how free markets drive technological change and generate wealth. The economist Joseph Schumpeter called it ‘creative destruction’. Economies grow as new technologies replace older ones and industries and jobs move to where work can be done most efficiently. As W. Michael Cox and Richard Alm write:
A society cannot reap the rewards of creative destruction without accepting that some individuals might be worse off, not just in the short term, but perhaps forever. At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress.
Too many conservatives shy away from this reality. Videos like this encourage the idea that business failures and the unemployment are the result of unethical business practices rather than part of the normal functioning of a capitalist economy. And when joblessness and the misery it causes can’t be blamed on people like Romney, conservatives pretend that this is the result of some personal vice like laziness.
For these conservatives, there’s no need for a national, government supported health insurance system. No need for more investment in education and training, and no need for income support programs to for people who can’t find jobs. All that’s needed is personal responsibility and the promotion of virtue.
In reality people who’ve worked hard and done everything that was expected of them can find themselves on the trash heap. If the factory you work for produces something consumers are no longer willing to pay for, you’re probably going to lose your job. Managers can’t use shareholder’s money to run the business as a charity or a private welfare state if it doesn’t help the business turn a profit.
All of the misery this video blames on Mitt Romney is a normal part of how free markets work. But that doesn’t mean there’s nothing Americans can do about it. Instead of using tax payers’ money to prop up failing businesses, governments can let uncompetitive businesses fail. Instead of trying to generate jobs by picking winners, governments can leave the selection process to the market. Freeing markets will accelerate the process of creative destruction and create wealth. But that only solves half the problem.
To deal with the fallout of destruction, governments can protect individuals rather than corporations. In the US today, one of the reason’s workers and their families fear job loss is because they risk losing their health insurance. If you have a chronically ill child, this can be devastating. The lack of a national system of health insurance in the US isn’t just bad for workers. In some cases it’s been bad for corporations as well. One of the reasons America’s big car makers struggled with the global financial crisis was their enormous health insurance and pension obligations.
These obligations are often blamed on unions. But as Malcolm Gladwell explains, employer funded insurance wasn’t the unions’ first choice. According to Gladwell union leaders like Walter Reuther understood:
… that in the free-market system it makes little sense for the burdens of insurance to be borne by one company. If the risks of providing for health care and old-age pensions are shared by all of us, then companies can succeed or fail based on what they do and not on the number of their retirees.
If conservatives would confront the reality of markets honestly, then Americans could have a serious debate about how to protect individuals and families while allowing markets to operate as efficiently as possible. It’s a debate that might include issues like health insurance, education, social security and social assistance. And it would mean giving up the pretense that tax cuts and deregulation are the solution to everything.