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Rob and Lauren Hudson: Letter of Common Ground about outcomes in capitalism and socialism


Letters for families based on the book “It Can Be Done” @studentsleadusa

We write today to encourage frank discussions about outcomes in capitalism and socialism. We should recognize as common ground that these outcomes can change the arc of our society.

What if we had socialized the computer and electronics industry? We would have needed a head government bureaucrat or a committee to make decisions. They might have been experts, or they might just have been the best politicians.

There might only be one company, which could be a government company, providing computer and electronic products. Profit incentives to develop new technology would not exist. Apple, Microsoft, Dell, Samsung, and others would not have pushed each other to create the next big thing. These companies would not have even been formed in America. Geniuses like Steve Jobs would never have had the opportunity to compete against geniuses like Bill Gates.

In our socialized technology industry, imagine what would happen if a lower-level government employee suggested the idea of a mobile communication device like the iPhone. A likely government response would have been, “People already have phones – they have landlines.”

The iPhone likely would never have been invented. Even if someone had listened, there would have been no economic incentive to bring the new mobile phone to us quickly or to improve it. That sort of progress rarely occurs without a profit motive.

At best, we would now have first-generation iPhones, or new iPhones might come out once a decade. Features would be limited. The photo and video camera lobbyists surely would have stopped cameras from being part of the iPhone.

We might still be using old-fashioned adding machines. Computers might be the size of a small room, and we might be watching VHS videotapes. Instead, capitalism led us to a technological revolution that transformed communications and entertainment, creating millions of jobs. In technology, common ground cannot be disputed. Capitalism delivered more and better technology at lower prices.

The same logic applies to other industries. Consider the business of energy. People complained about energy costs and pollution for decades. We needed to develop cleaner, cheaper energy. We needed to find a healthy supply of it to reduce prices. New technologies and new exploration would be required to find this supply. What if we socialized the energy industry?

With socialized energy, government officials would have studied the issues, voted on the best course of action, then decided how to spend our tax dollars to “fix the problem.” Politics would be a big part of the process. For example, old energy sources would have lobbied against new energy sources, including contributing to politicians who opposed new energy sources.

Instead of having dozens of nimble, profit-motivated businesses risking their own money based on their own energy expertise, we would have had a government plan. With fewer brilliant, motivated minds “on the case,” our chances of success would probably have decreased. We might have seen “price controls,” which would further reduce supply, followed by rationing when government-controlled supplies dried up.

Frost Brown Todd LLC Member Rob Hudson is a Past Chair of the Northern Kentucky Chamber and a business lawyer. 2018 Independent Author of the Year Lauren Hudson is a Singletary Scholar at the University of Kentucky. Their next letter will explore common ground about freedom and healthcare.

Here’s what happened in real life, with capitalism. Hundreds of businesses and thousands of landowners ushered in a new age of energy abundance. They worked together, in capitalism, to develop new ways to explore and extract oil and natural gas through shale and hydraulic fracturing. It led to cleaner energy at lower prices, which helped drive the price of a barrel of oil from over a hundred and twenty dollars in 2011 to below fifty dollars in 2017.

Because of free-market innovations, citizens did not have to spend as much money on energy, meaning they had more for their families. With reasonable prices, citizens could travel more. People could better afford to heat their homes in winter.

Capitalism brings tangible benefits to people’s lives. And yet those benefits cannot be delivered if socialists strip motivating profits and creative opportunities out of our markets. If America’s taxes and regulations become more onerous than the countries with which we compete, our jobs and opportunities will go to business-friendly countries.

The free market energy and tech industries support millions of jobs. Capitalism, not socialism, delivered more products and better products at lower prices. More often than not, it does just that.


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4 Comments

  1. Richard says:

    Something to think about before casting your vote in November.

  2. Tammy Farrel says:

    Capitalism versus socialism is back and white.

    Overall capitalism leads to further prosperity and a standard of living and health for everyone. Socialism, if implemented, might seem like it works and is nice at first, but inevitability always trends on a downward spiral of failure, once you run out of other people’s money.

    As is, if you look at a snap shot of america right now with no preconceived opinion or knowledge of existing systems, we are already fairly socialistic. Perfect examples: If you have an accident the hospitals have to treat you for “free” and you can’t be turned away. If you have a disability and can’t work you get disability checks for “free”. if you are laid off work and file for unemployment you get assistance for “free”. If you make below a certain amount of money, the government subsidized much of your housing costs for “free”. If you can’t afford food, you apply for food stamps and get food for “free”. Public transportation is heavily subsidized and you can pay a couple bucks to travel all the way across town, partially for “free”. You can essentially pay 0% in taxes but still send your kids to a public school to get an education for “free”. social security, medicare, Medicaid, etc, etc, etc,

    The list goes on but this paints a simple picture that america is already socialized and doesn’t need more of it. We are already there. With the already huuuuuge budget shortfalls and deficits of cities, states, counties, and the federal government, the downward spiral of socialism as mentioned above would happen extremely fast (in under 5 years) if we implemented the textbook communist style socialism that AOC and others dream of. The system is already socialistic and is only propped up by fake debt and numbers to make it look like it works. it will come crashing down, or in another generation they will scrap all of the entitlement programs to prevent it from completely crashing.

    As is, the system is already teetering on the edge of collapse due to too much “free” stuff. It’s all a debt game and play on numbers. existing socialism in this country has already set up the stage for a collapse in the next generation.

    Behind the curtain of any “socialist” state or country is a capitalistic engine that let’s it survive.
    _
    Honestly, I’m okay with certain “free” stuff and socialistic things to help the poor of the poor, but ONLY if capitalism is left to flourish to support it.

    If all of the regulations and un-elected government bureaucrats vanished, you would have so much more prosperity and more people to pay taxes, and stay out of poverty. Perfect example: The last generation of people who grew up in say the 60’s through the 80’s; many many of them started their own businesses. Look at kids today entering the workforce or who have been in the workforce for years already. I would say maybe 1 in 20 start their own business, and those that do only start what is a small side business working out of their homes that can’t be scaled and grow into anything due to regulations and un-elected government bureaucrats sucking the life out of them.
    Small businesses are dissapearing and will continue to shrink, and all we will be left with is huge corporations that jump from city to city every decade after their tax breaks run out, who don’t pay their employees that well once they get monopoly sized. Let small businesses start again so people can control their own destiny, keep all of their money local and in their communities, instead of corporate profits going straight out of the states to New York or other conglomerates of corporations.

    In today’s america you are punished by the government and regulators for creating goods, starting or running a business, and paying all of the taxes so people (many of which who don’t need it) can have “free” stuff. So why would anyone want to innovate, build things, invent things, etc. if the regulators year after year are only going to make it harder and harder by adding more regulations, more rules, more permits, more fees, more time, new and more agencies, and more BS that doesn’t do any good but just slows businesses down?

    The only solution at this point is to slash regulations tenfold, somehow shut down all of the bureaucratic local/state/federal government agencies, and let capitalism run its true course to help feed the fake failing socialist system we already have.

    Just remember, socialism works out great until you run out of other people’s money.

  3. Charles McMillan says:

    There’s a huge hole in the logic of this article. Access to an IPhone is not guaranteed, in fact, a large portion of the population can not afford one. This is okay because these things are not absolute necessities; they can improve our life but the absence of them does not hurt. Also business do not succeed/fail based on access to IPhones.
    Are we as a society OK with the implications of this article; that it’s OK for large portions of the population to not have access, and for electricity to be just an expensive technology-forward luxury? How would this decision affect our local businesses and economies? This article is written by someone who’s either never had to be without or has never seen an economy where electricity wasn’t a guarantee. He’s making an incorrect assumption that the market actually cares about it’s consumer.
    In countries where electricity was not guaranteed it’s affect on class division is great, and it’s effect on the economy is high. Productivity and quality of life are greatly reduced when this important modern need is not reliably available. People have smaller appliances, or do without. Their carbon footprint is higher as they need to use other fuels for the same purpose. Their jobs are more manual, and there are fewer of them.
    Our country is what it is today because government, decades ago, decided to do the hard thing and protect access to all citizens. With our needs stable, the country was free to be productive, grow and focus moving forward. Sadly voters and our government getting complacent and are beginning to forget this history. “Free Enterprise” is creeping in, in the name of progress, and are leaving services we rely on unprotected. While often compared to more popular areas of our economy It has yet to produce better products or innovation, just triple digit percentage fee increases padding investor wallets.

  4. ruth bamberger says:

    Neither unbridled capitalism nor unbridled socialism promotes the common good. A free market economy provides opportunities for people to establish businesses and market their products and services. An economy where government supplements what the free market does not or cannot provide protects those who by reason of circumstances need assistance. We need to start thinking about the private sector and government as a PARTNERSHIP rather than as adversaries. It’s not an either-or, but a both-and. Art. I of the Constitution gives Congress the power to regulate interstate commerce. Historically business has looked to the government for protection against unscrupulous fraudsters, e.g., consider why we have an FDA and meat inspection oversight to protect the food and drug industries. The proper mix of capitalism and socialism is perhaps the best guarantee in assuring a just society.

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