Capitalism After 911, American Air

Capitalism

After 911, American air carriers faced economic disaster because of the public's belief that the airlines had not taken the necessary steps to make their planes secure. Several of them faced bankruptcy. The federal government stepped in and loaned the airlines the money needed to keep them solvent. Was that the right thing to do?

In a land such as ours, reading Gunnar Myrdal's "Planning in the Welfare State" which is an unapologetic celebration of the power of government to socially engineer society for the better seems surprising. However, that is exactly the type of power that was deployed to restore solvency to the airlines in the wake of 9/11 and what has been used again in a bipartisan effort to prevent the nation's and the world banking and credit system from collapsing. In looking at the map of the world's "Freedom," and "Economic Freedom and Wealth" it is striking to note that most free, modern democracies, from Sweden to Great Britain embrace and accept a much more interventionist form of government than most Americans would permit. Until recently, any bit of legislation that could possibly be classified as 'socialistic' was voted down by the American public and any politician branded a socialist was voted out of office. Yet conservative administrations have bailed out car companies, airlines, and now banks.

Clearly, some government intervention is required for capitalism to function. As noted by Irving Kristol: "A Capitalist Conception of Justice" merely because capitalism is fair does not mean it is equally beneficial to all individuals in a competitive market, and capitalist freedom does not equal human freedom or social justice. Unavoidable circumstances that damage one's enterprises, from a terrorist strike to a hurricane to a credit crisis, can cause good businesses to fail. Or an individual may not be able to stay afloat in a capitalist system because of the injustices he or she has weathered in his or her life, through no fault of his or her own. Social justice and economic freedom must not be equated, and improving the economic health of society through a government-funded bailout or giving an individual some welfare assistance may be more important than pursing a pure capitalist, free market ideal.

The need to bail out airlines and banks demonstrates that the recent enthusiasm for deregulation and unchecked capitalism may have been misplaced, as might the past equation by entities such as the World Bank of private enterprise and human, personal freedom. Despite the seductiveness of the ease of mapping freedom, as done graphically by Freedom House in its "The Map of Freedom," and "Freedom in the World," there is a highly subjective element in defining freedom -- what does it mean that Russia is 'not free' -- Russia may be capitalist now, but politically repressive, while other nations may be socialistic and not economically 'free' but allow free political discourse. Democracy and capitalism may be correlated, at least according to World Bank's "Economic Freedom and Wealth and "Democracy and Rule of Law in Supporting Economic Growth, Average Growth Rates in the 1990s" but not perfectly and there may be popular support in some nations for more nationalist ways of governing economic behavior.

The Heritage Foundation's chart of "Global Distribution of Economic Freedom" stresses that nationalization leads to unemployment and a poor quality of life in the developing world, but some might counter that healthcare, government assistance, educational loans, and other state programs are needed to restrain the excesses of capitalism -- as are government bailouts. Without government intervention unemployment may increase and an economic downturn will cycle into a depression, as a result of consumer fears of purchasing goods and fears of businesses of stimulating their productive capacity, generating new inventory and hiring new workers.

Others resist the idea of taxing innocent citizens to pay for businesses in need and see taxes as a drain on the economy, purely and simply. Ours is a nation founded upon the concept of no taxation without representation, and John Locke's ideal of government protecting property as well as the right to life and liberty might strongly as Frederic Bastiat said in his essay: "How to Recognize Legal Plunder," theft is "when a portion of wealth is transferred from the person who owns it -- without his consent and without compensation, and whether by force or by fraud -- to anyone who does not own it," which could be a definition of taxation if the citizen disagrees with how his or her money is used. For F.A. Hayek: "Economic Policy and the Rule of Law" robbing individuals of their property and their means to prosper robs them of their liberty, and the property and personal liberty cannot be easily separated, as both are tied to human security.