Capitalism is a hot topic in a recent podcast with Patrick Donohoe.
These days, the trend of capitalism and freedom is strong – everyone wants to be an entrepreneur. Ryan and Patrick talk about why capitalism is good, universal basic income, political leaders, alternative economic systems, and more. You can listen to the podcast below and read the following article based on their discussion.
We have also held two previous podcasts with Patrick Donohoe, check out part one and part two!
Depending on who you ask, there can be many definitions of capitalism. Formally, capitalism is an economic system based on private ownership. Ryan’s favorite definition is “strangers serving one another” as he mentioned on the podcast. It essentially relies on people working together.
To most, capitalism is a way of expressing freedom. It allows people to pursue their greatest ideas and be rewarded for them. Capitalism gives people a motivation to work hard, not to mention it propels our society to move forward through innovation.
Why the Pushback?
Many people consider both the pros and cons of capitalism and decide that it’s a good thing, but some focus entirely on the negatives. These people generalize capitalism as bad. This stems from witnessing the world’s wealthiest people hoard millions, even billions, and judging them because they’re not using their riches to better society.
It’s true – they could be using this money to better society. However, taking away rights is not the solution. They earned their money, so it should be fair if they want to keep what they earned.
“A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.” ― Milton Friedman
Capitalism is the only economic system that rewards good ideas. Without capitalism, people wouldn’t have the motivation to provide genius ideas that lead to innovation. Why would someone want to work harder than their peers without a motivation? This is why capitalism works.
Universal Basic Income
A popular topic of political discussions has been universal basic income, especially with the growing popularity of Andrew Yang (an advocate for universal basic income). This is a model that provides every citizen with a regular sum of money that will meet their basic needs. It would be enough to live on, but not enough to make you rich. People would be able to work, start businesses, and pursue dreams without having to worry about poverty.
Some politicians are convinced that universal basic income will be necessary in the near future because important jobs will be taken over by technology. Andrew Yang has even begun to test it using his own money.
Is universal basic income a better and more efficient way to promote income equality, while still living in a capitalist society? Andrew Yang defines it as capitalism starting from not zero. On the other hand, Ryan uses the phrase “socialism with lipstick” to describe universal basic income. He believes it’s just a different way to redistribute from the government.
For a program like this, taxes would very likely raise and take money from people who work hard to earn it.
Is Capitalism Getting Harder or Easier?
We often hear that it’s getting harder to start your own business. Contrary to this belief, Ryan states that capitalism is actually getting easier. This is another one of the good things about capitalism! Advertising is cheaper than ever and any message can go viral, at any time. Overall, there are more opportunities and new resources becoming available!
Just 15 years ago, you couldn’t run an online business or gain millions of sales based on one viral video. You couldn’t make thousands of dollars every month from Youtube videos alone. Very few people were able to make money without physically working at a job. Now, wealth building opportunities are endless.
The only difficulty is the fact that it’s changing faster than ever. There is more possibility for creative destruction than ever before. If you don’t keep up with the times and new resources that become available, your business could quickly decline. Even so, this can be another reason why capitalism is good – it can just lead you to new ventures and opportunities.
A Unique Take on Happiness
Before we finish up, Ryan makes an interesting point in the podcast – happiness is an illusion. Happiness is actually the chemicals that fire when our brains think we have a higher chance of surviving. How do we have a higher chance of surviving and unlocking happiness? By solving problems.
If we were to live in a non-capitalist society, there would be a much larger lack of happiness. People wouldn’t be working for a higher motive and “unlocking” happiness.
Overall, there are many arguments as to why capitalism is good. Most importantly, it promotes freedom and the opportunities are endless in a capitalist society. There are always going to be people who could be investing more money to help others, but there are still millions of entrepreneurs who are working hard to make the world a better place. Overall, the positives greatly outweigh the negatives of capitalism.
If you want to get started on your own wealth building, check out Patrick's Perpetual Wealth 101 course -- absolutely FREE for Capitalism.com community members!