Capitalism Under Attack

Socialists are of the opinion that their ideology will create a society that is "kinder" and "gentler" than that of the "ruthless" capitalist whose only goal is to "exploit" the little guy. Socialists in a democratic political system would like to "sell" their philosophy as the best answer to all human problems in this world by touching the undeveloped maturity of adults. They will use rhetoric that preaches salvation through social justice. It will take from the rich and distribute it to the poor and needy. They would like to imply that they represent those people who believe they are being utilized to advance the rich only. It is the unfortunate misunderstandings of capitalism combined with the traits of envious and immature personalities in adults, that leads to assumptions and statements that have no relation to the factual catastrophes their style of governing creates.

Germany’s Social Democratic Party (SPD) Chairman, Franz Müntefering, has recently compared foreign investors with locusts that take advantages of German companies. Mr. Müntefering charges Germany’s private equity firms and foreign investors with buying businesses with privately funded capital which are later sold for a high profit. This started a big debate about capitalism and its evils using the image of the locust as its symbol. The practice is ruining employees and their living standards, he said.

A black list of 12 "locust companies" was leaked to the press which Mr. Müntefering blackballed as having the worst capitalist traits. The list included Deutsche Bank and Goldman Sachs. Deutsche Bank announced in February that it would lay off 2,000 employees although its books showed a considerable profit last year.

The recent hedge fund controversy at the Frankfurt stock exchange last week created more mistrust in the German population of which 75% agree with Mr. Müntefering’s statement. This was evident by a May 1 demonstration where 530,000 people marched under the banner of DGB (German Labor Union) crying out for "dignity" and not being a "cost factor" as if this can be determined by companies alone.

Although greed is a quality supposedly unknown to exist in the life of a socialist who only looks out for the common good of all, it was the current Schröder administration which passed a law early in 2004 allowing the funds to operate in Germany. However, the SPD Chairman would like to blame capitalism for its current stock market debacle that involved TCI and Atticus Capital.

It was the German government who sold its banknote printers to a private equity firm called Apax Partners in November 2000. The company is now included on the black list compiled by the socialist government as one of the 12 that "ruins" the country.

The attack on capitalism has left the President of the Federal Association of the German Employers’ Association (BDA), Dieter Hundt, disappointed and furious. In an interview with the German broadcast station ZDF he said: "…instead of us working on our current [economic] problems, we are talking about locusts plagues and the beast of prey of capitalism, of its anti-social behavior and suchlike…."

He feels that foreign investors will be scared off by the harsh critique of Mr. Müntefering, jeopardizing opportunities of growth that can be achieved through new capital investments. Businesses that can create employment are continually punished by their own government for making money; one reason why the current administration has not been able to deliver the promised 40% reduction of social contribution that companies are to pay to the state.

Remaining competitive on the world market requires spontaneity and innovative ideas of creating new products and service that can keep up with the rise of new technology. It requires capital and flexibility which the pressure of socialism restricts. It is only natural that German companies want to remain competitive on the open market. And still, the administration’s Green coalition party is calling for another tax hike on those companies that want to move out of Germany going east where capital is easier to come by.

Although the SPD/Green administration’s approach to lower the corporate tax from 25% to 19% in order to stimulate the economy is reasonable, it will have to find new ways of getting back what it loses out of. One of those examples is in the health industry. Insurance companies are sternly asked to lower their premiums, which are heavily regulated by the state. The Health Minister, Ulla Schmidt, wants to force pharmacies into bypassing co-payments by the insured, claiming that pharmacies are making too much money. The insured is again being charged for medication after they already paid their insurance premiums. Doctors are told how to run their practice, how and when to administer medication and when to go on vacation. The entire health care systems is manipulated and regulated by the state, squeezing out much of an incentive for profitable ventures.

Socialism wants to regulate itself with a multitude of oppressive laws to create social justice and equal distribution to the point of exhaustion. It will take the people down a path that keeps them entitled and destroys the free market by making it impotent. Years of propaganda and policies become reflected in the attitudes of private citizens and their relation to their government. The state gets offended when pharmacists can guarantee their income through co-payments, but finds it appropriate to add air tax to travelers to support undeveloped countries like Africa. Laborers and employees demand regulated wages, protection and benefits, but become disturbed when the state wants to cut benefits to have more money available to create jobs.

The centralized German government has an expenditure of approximately 50% of its GDP showing an economy whose GDP growth over the past four years was roughly an even 1% per year. In an economy with a modern technological edge the growth should be at last 3%. A Soziale Markwirtschaft (social market) just isn’t making progress as a freer market economy model such as China, Poland, and Ireland have experienced in recent years. The growth of these countries in 2004 for China’s was 9.5% and Poland 5.4%. Other heavily socialized Nations in Europe such as France were 2.1 % and Netherlands 1.2%.

Even some German economists teaching at universities who support the social ideology of big government would rather increase taxes than considering the reduction or elimination of its burdensome welfare system. Giving up the artificial control of the market through strict regulation and its plan to save the world by generous state contributions of taxpayer’s money is like asking a child to give up a toy.

Mr. Müntefering may have another motive for starting the big criticism on capitalism. The upcoming election on May 22, 2005 in the heavily industrialized state of Nordrhein-Westfalen shows a considerable decline of the SPD party, who dominated the state for years. Traditionally very red (socialists) in its political inclination, recent polls show that the opposition party, which is a more conservative – but still rather socialist, CDU has a 7% lead. It always has been a power struggle of who will control the state, which currently has one million people unemployed. Since the beginning of the SPD/Green coalition in 1995 the state had a debt of 45 billion Euros on its books. Since then it has risen to 110 billion Euros.

Maybe blaming the failure of raising productivity on capitalism can convince the struggling Nordrhein-Westafalen populace with an average debt of 7,710 Euros per citizen that socialism could not possibly be the furnace that burns the cash. Attempts to attract the settlement of new industry have not proven to be successful because labor regulations are not exactly a building block for new enterprises in a de facto Marxist environment.

Government has no ability of making money but can only take from others to provide services and benefits for its citizens. Spending other people’s money is always easier when it is not earned. In order for the German government to sustain its power and service, it must tax it off businesses, the wage earners, and consumers and fines. It can regulate how much trash to dump per household, enforce recycling and force children to attend public schools all along being unaware how their muddling destroys their culture.

If one really wants to compare locusts to an economic system, it is more likely that the state is the one who comes in and devours the crop of those who sow and labor. And then it is the state that gives it to the "kind-hearted" socialist who will distribute the "bootie" as he sees fit. The doses of every portion are now equal and fair and can be fed to a classless society who paid into the service to be delivered without any preferences and discrimination.

The one who is left out of the process is the one who is not allowed to keep the fruits of his labor; the townsman of his community who has less and less control on how his money gets spent. He watches it disappear into the ever-hungry apparatus of government in which citizens not only sacrifice their money but also their own soul for salvation.

Unfortunately many Europeans don’t know what real capitalism actually means. It operates best when government is small and stays out of people’s business and their ventures. It requires that people be allowed to own their own property and work and invest for a living. Also known as Free Market, it demands that people are mature in recognizing that the world consists of ups and downs, of success and failures, and that one is able to take risks when people are allowed to operate in a system that’s based on trust and respect of each other’s boundaries. It functions on integrity and certain virtues that if broken have a natural negative consequence.

A Free Market system permits choices and creativity, and has no room for envy and childish remarks of unfairness. There is room for expansion and one is prepared to make adjustments when the demand of the market changes. One takes care of himself first and their family and any overflow is often voluntarily re-invested. People are also willing to tithe more and give to charity; which is different than being taxed for the purpose of helping Third World countries as a new EU proposal is suggesting.

Germany has experienced an era after WWII where their economic boom was jump-started by foreign capital investment. It was the era of Konrad Adenauer and Ludwig Erhard who made Germany into an economic miracle, because they believed in the market. Erhard abolished price control as soon as a new currency was established. Although his decision was believed to be disastrous at first, his brave move removed the black market, stopped inflation, and shortages ceased to be a problem, creating one of the strongest economies Germany has ever seen during the 60’s and not seen since.

The world is not perfect, and there will always be people who will try to get away with corruption when greed becomes addictive. However, most corporate corruptions have been brought to light in recent years by honest employees and whistle blowers. German people have the smarts and the good sense to see when corruption is happening in their own government. They can find the courage to get out of their politically correct mode in which years of past guilt has been imposed on them by the media. People can put an end to the control that socialism has imposed on them for the past 40 years.

Germans and their small communities can regain their rights for self-governing under the law again if they would not sell out their liberty over security through a consolidated government. They have the ability and skills and a rich culture to live within this freedom of a market that can be a way of life, if they accept to be accountable and responsible for their own actions. This is what real freedom requires – a mature mind of an adult. Capitalism – Free Market – could actually be the answer to their financial and economic crisis. The German parliament has already voted part of this freedom away when it approved the new EU constitution earlier this month. Most citizens are unaware that the constitution removes even further rights.

The words "Das ist Verboten" comes from a time where black lists and nonsense laws have supported a regime that was founded on the soil of socialism. The weak Weimar Republic was a field of socialists and communists that have elected a crazy man to be their leader. Germans want to prevent this from repeating at all cost; but the price they are paying is a loss of their liberty. They rather support a political system that at its gut core does not look any different in its mechanics from Socialists of the National variety. It only looks a bit "kinder" and "gentler." Social Democrats cannot pride themselves in achieving success over the past 40 years – they halted the process that was started during the 60’s.

The rhetoric of the enemy of capitalism needs to be more scrupulously examined so people can see their contradictions. Their promises may sound generous – almost kind and utopian – but their results leave a country looking like a herd of locusts just ransacked their crop. The sweet promises of a socialist who will take care of every child, mother and the elders may sound enticing to the immature ears of a child. Only, what good is that if daddy can’t work? He is forced to stand in the unemployment line collecting his benefits that his contributions to his labor union negotiated for him, because most of his money went to the common good.

May 21, 2005

Sabine Barnhart [send her mail] moved to the US in 1980 and lives in Fort Worth, TX with her three children. For the past 15 years she has been working for an international service company.

Sabine Barnhart Archives

Back to LewRockwell.com Home Page