Calling out Republican Bullsh*t on Capitalism

“A note on republican bullshit on the deficit” elicited some negative responses from my republican friends. After reading the responses, it became clear to me that one needs to call out the Republican bullshit on capitalism as well. These guys are so enamored with this catchword that they fail to look at the implementation.

Now that I think back, the biggest piece of crap to go unchallenged prior to the last election is this perceived ‘opposition to capitalism’ from democrats. It is rather unfortunate that being a democrat is immediately equated with one being a socialist, anti-capitalist and supportive of a nanny state.

We must set the record straight as nothing can be further away from truth. Democrats are not anti-business. What democrats oppose is the republican model of capitalism. Let us take two examples:

Romney’s plan for saving auto industry was touted as a working model that does not use deficit financing.

“A managed bankruptcy would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.”

It is rather obvious that people touting this as the ultimate solution do not understand the concept of velocity of money. They do not understand how such an action would have certainly lead to a deflationary cycle that would have been impossible to break.

Since this concept has been properly discussed in my earlier post, I am not going to repeat here. What I want to do instead is to highlight one particular piece of this proposal that will illustrate how ‘Republican Capitalism’ works.

The key sentence is The federal government should provide guarantees for post-bankruptcy financing

What this means is if the plan fails then government is on the hook. However, if the plan succeeds then investors get the prize.

This is exactly the ‘Heads I win, Tail you lose’ capitalism that democrats do not like. I am quite sure that after bringing this to your attention you would feel the same.

A different example would be of Robert Murray, the chief executive of coal provider “Murray Energy”. This guy claimed that if President Obama were re-elected then the conditions for his business would deteriorate because of more regulation and taxes, and weaker economic activity.

The key to correctly interpreting the above claim is “more regulation and taxes.”

What this means is Mr. Murray has this nice, well-settled business that has been running for a long time. For him it does not matter that our planet will certainly turn into a wasteland if we keep on burning coal. What is more important to him is his profit. One would have thought that such a successful entrepreneur would have the vision to get into industries of the future; I guess he just got lucky in life.

This is another example of the “Republican Capitalism” that the democrats do not agree with. Yes, we want more regulation on coal industry. Yes, we need to declare war on coal. Does this make us anti-capitalist? Bullshit!