Capitalism vs. Statism: World Peace; Natural Disasters
#11 in a series of Think Right or Wrong, Not Left or Right: A 21st Century Citizen Guide (2nd Expanded Edition)
Note to readers: The audiobook is at ACX (Amazon’s audiobook publishing arm) for review. I all goes well, it should be available in the next couple of weeks. In the meantime, here’s the serial with another couple of chapters from the book about world peace and natural disasters. Read on if you’d like some ideas about what a rational foreign policy would look like, and how pandemics should be handled. Enjoy, like and comment!
5.14 Capitalism Promotes World Peace
As we’ve seen, one of government’s few proper functions is to protect our individual rights from being violated by other nations or military forces. In addition to a military to defend us against and deter foreign aggressors, we need a foreign policy that guides our relationships with other countries.
Most of us are busy living our lives and would rather not have to think too much about what’s going on with governments and military operations in foreign lands. Yet, it is crucial that our government has a rational foreign policy because, even though we’d rather be left alone, others may take an unfriendly interest in us.
Capitalism inherently promotes peace. Given the prosperity unleashed by capitalism, people busily pursue their careers and their personal relationships and interests and generally give no thought to initiating war with others. And a capitalist government, constitutionally restrained to the sole function of protecting individual rights, is tightly checked against initiating force against foreigners.
This is not the case under statism. If not checked or counteracted, statism always gets progressively worse, because, for collectivists, the answer to any problem created by statism is more statism. As we’ve seen, collectivism holds that the alleged “rights” of the group trump individual rights, so the collectivist mindset fosters ever-expanding encroachments on individual rights. As a welfare statist country becomes more autocratic and slides toward authoritarianism and eventually totalitarianism, its inhabitants grow ever less free and less prosperous. If the country is militarily powerful, chances are its leaders—oligarchs, theocrats, socialists, fascist or communist dictators—for both ideological and economic reasons, set their eyes on militarily weaker, but often freer and more prosperous, neighbors. Eventually, the temptation of a cheap geo-political lunch gets too strong and aggression ensues. This is the leading source of war. Examples from today’s world include China bringing Hong Kong under its boot (and threatening to do the same with Taiwan), North Korea’s aggression against South Korea checked only by a strong U.S. military presence, Russia’s ambitions to turn Ukraine and other former Soviet republics into vassal states, Iran’s ambitions to spread theocratic statism by supporting terrorism in the Middle East and elsewhere, and Cuba’s infiltration of South and Central American countries.
Under capitalism, the main building block of a proper foreign policy does not involve interacting with other countries but leading by example at home. Capitalism bearing fruit at home in the form of unprecedented progress sends a very strong signal to the rest of the world. As we’ve discussed, the absence of taxes and regulations unleashes growth and leads to ever-expanding wealth. Other countries take notice and start to copy us. We saw it when the American Revolution inspired people in other countries to emulate us throughout the better part of the 19th century (with mixed success). And, following the fall of the Soviet Union in the 1990s, many communist and socialist countries looked to the U.S. and other less statist countries for inspiration and guidance. Imagine how much stronger the example of unbridled capitalism would be.
A statist country may initially be reluctant to adopt aspects of capitalism, but the power of our example will not go unnoticed among its people. Over time, the pressure will build on the country’s politicians to follow our example as people there increasingly realize what they are missing and what more they could achieve.
Obviously, we will still need our military to protect us against foreign threats. With the economic growth unleashed in a capitalist social system, military expenditures can increase if needed even as military spending as a fraction of the economy drops over time. A drastic increase in military spending likely will not be needed, because the countries copying our policies, whether reluctantly or not, will tend to move toward a less statist, more capitalist social system. Over time, as our trade increases and social values converge, other countries become more prosperous, and the peoples of the world have more and more to peacefully gain from each other. People elsewhere start to see us as friends and allies, and this drastically reduces the potential threat of military aggression.
As part of leading by example at home, we unilaterally remove trade barriers such as tariffs and subsidies. This is the only approach that is consistent with protecting our individual rights to freely trade with whomever we want (with the possible rare exception of countries that temporarily pose an imminent threat to us). Other countries may erect barriers against trade, but such policies are self-defeating as they violate the individual rights of their inhabitants and rob them of the full benefits of capitalism.
Given our military strength, other countries will be interested in entering defense alliances with us. As a condition for admission, we require each country to get on a path to capitalism: strengthen the protection of individual rights by reducing taxes and government spending, roll back regulations, and eliminate tariffs and subsidies. And as we don’t want to foot the bill for defending other countries, each country pays its share of the costs to maintain the defense alliance.
Smaller countries feeling threatened by larger neighbors will probably transition to (if already having some level of defense agreement with the U.S) or join the new alliance early. As their “leading by example at home” policies start to bear fruit—think a number of Singapore or Baltic states like economies emerging around the world—others will become interested. And someday even countries like Russia, Cuba, Iran and China may join. By that time, with a little stretch of the imagination, there may not be anybody left to defend ourselves against militarily.
The members of our current defense alliances (NATO, etc.) are mostly welfare states with a mix of free market and government controlled areas of society. As we launch the new explicitly capitalism-inspired alliance, some are likely to join early while others are less inclined to get on a path towards less welfare-statism. Being mostly longtime allies, we allow them significant time to decide whether to join, and if the decision is “no,” a transition period to take on their own defense.
Defense agreements are in our self-interest. Thanks to economies of scale, the cost of defending ourselves is reduced, as our military together with that of our allies can protect more territory without proportionally increased costs. And as more countries become friends and allies, real defense expenditures start to go down as well. And, most importantly, with more and more countries moving toward capitalism, the world becomes a more prosperous place. And the more prosperous the rest of the world, the more prosperous we become.
A capitalist social system with a foreign policy based on leading by example at home is the only way to achieve that elusive goal strived for by so many—world peace.
5.15 Capitalism Reduces the Impact of Natural Disasters, Including Pandemics
Most societies around the world were wholly unprepared for the COVID-19 coronavirus pandemic despite decades of evidence and warnings from infectious disease experts that it was only a question of when, not if, a severe pandemic would strike. The response in most places was panicky and draconian, almost medieval, resulting in massive wealth destruction, mass unemployment, and mental scarring. Many governments around the world instituted new rights-violating regulations, decrees, and lockdowns, and implemented new government programs moving us even further in the statist, morally Wrong direction.
A main reason for the unpreparedness was short-range thinking. With few exceptions, welfare state politicians mostly think in terms of election cycles, not in terms of long-range societal improvements. What’s beyond their 2-, 4- or 6-year term is of relatively little interest while they’re in or running for office. Hence, preparations for a pandemic that will most likely not strike on their watch has low priority, and they kick the can down the road from congress to congress and administration to administration. This behavior is systemic under statism both on the political right and left.
Under capitalism, the problem is not left in the hands of politicians and their habit to kick the can down the road. With politics playing a marginal role in society under capitalism, as we discussed in the chapter on political inequality, pandemic preparedness is mostly left to the marketplace. As a result, corporations, other organizations and individuals are much less vulnerable to natural disasters, be they pandemics or any other kind; we are not falsely lulled into thinking that there will be a major government disaster response, or any kind of bailout.
In a capitalist social system, long-range thinking is critical. Corporations in all industries pay attention to the “what ifs” in life, as do individuals. They plan for natural disasters of all kinds, be they earthquakes, volcanic eruptions, tsunamis, floods, droughts, or pandemics. Mitigating and, over time, avoiding catastrophic events is essential.
For example, pandemics are real threats to health-insurance companies and hospital organizations. Under capitalism, they face huge losses or bankruptcy and irreparable damage to their reputation if they are not able to adequately serve their customers—the policy holders and patients—in the event of a pandemic. Consequently, they invest in pandemic preparedness. They have plans in place to quickly increase hospital capacity and staffing in an emergency and, if need be, to temporarily delay elective procedures. They stock excess critical medical supplies and devices and make sure their suppliers have plans in place to quickly ramp up production should the need arise. And as part of providing health insurance, they ask you up front to agree to terms related to managing a pandemic, such as wearing masks, socially distancing, and getting vaccinated (and if you don’t like the terms, you look for health insurance elsewhere).
Even more importantly, they invest in pandemic prevention. In a capitalist social system this becomes the norm. Free of government regulation, health-insurance and healthcare companies work closely with the biotech, diagnostic, pharmaceutical, and medical device industries on long-range strategies. They constantly scan the globe for new infectious disease threats to not be caught off guard. They work with local communities on modifying cultural habits: “How can we help remove bat and pangolin from your diet?” They invest in both faster vaccine development, manufacturing and distribution, and in more efficient vaccines. And along the way, they develop rational safety standards without government involvement, because lack thereof is another threat to their reputation and survival.
Even in today’s semi-capitalist world do we see important signs of emergency preparedness. We don’t hear about it very often, but most medium-size and large companies have preparedness plans in place that they act on when natural disasters strike. And as they learn from new events—hurricanes, earthquakes, blizzards, floods, and pandemics—they update and refine the plans to become even better at mitigating the effects of the next one. One example from the initial phase of the COVID-19 pandemic was the dramatic shift and increase in internet use when working, educating, and socializing from home. Technology companies didn’t know exactly the form and scale of the next natural disaster. But they were prepared for unexpected surges in internet traffic because that was a scenario they knew could play out. They knew that lack of preparedness would be a potentially mortal threat to their profits, reputation, and long-term survival. As COVID-19 struck, they implemented the plans such that you and I could continue to rely on the internet for work, teaching our kids, home deliveries, and connecting with our loved ones. It is not a coincidence that this level of preparedness was in place in information and digital technology, the most capitalist, least regulated, sector of the economy.
When capitalism flourishes, it is entirely probable that in a not too distant future a new virus with pandemic potential would be detected and gene-sequenced, and a vaccine developed, tested, mass-produced, and mass-distributed, in a matter of weeks, not months or years. This may sound like science fiction, but it is just another example of capitalism unleashing the unimagined that we discussed earlier—the technologies we enjoy today were the stuff of science fiction only decades ago. We saw glimpses during the pandemic of what progress is possible in areas where capitalism is allowed to function in relative freedom: biotech companies identifying the genome of COVID-19, diagnostic companies ramping up the production of tests, and pharmaceutical companies creating early batches of synthetic vaccine in record time and subsequently ramping up production and distribution so that all who wanted could get vaccinated. The problems we saw with delays were either directly related to federal, state and local government interference and incompetence, or a result of lack of preparedness on behalf of the industry due to the expectation that the government would shoulder those responsibilities.
Under capitalism, there is a small role for government to play. It enforces quarantine (isolation) of verified infectious individuals, as allowing them to move around freely poses a threat to the individual rights of others, and it prosecutes and punishes offenders.9 And, if needed, as part of its role in maintaining a foreign policy, our government negotiates or demands access for U.S. companies and researchers to areas where pandemics may break out in the future. But with the continuous progress made towards stopping pandemics in their tracks, the government’s role gets even smaller over time.
If the health insurance, healthcare, biotechnology, diagnostic, pharmaceutical, and medical device industries had been allowed to flourish in a less welfare statist and more capitalist social system, pandemics would have received a lot more attention over the past 50 years. Yet-to-be-experienced advances would already be a reality, and it is highly likely that the COVID-19 pandemic would have been largely avoided. The fact that it wasn’t is but one price we pay for living in a welfare statist society.