We are the first nation in the history of the world to go to the poor house in an automobile.
All economic systems have some virtue at their core, or else they would be left untried. The prime virtue of communism is that it makes everyone equal even if it is an equality of misery. You will suffer, but you can take comfort in the fact that your neighbors are suffering, too. With capitalism, the primary virtue is that it produces large amounts of prosperity. Unfortunately, that prosperity is not distributed widely but concentrated in the hands of the few rich people able to dupe the rest of the population into various forms of wage slavery and indentured servitude. This con game is possible because capitalism achieves through fraud what communism achieves through force. This game is known as the "bait and switch."
The bait and switch game is a fairly simple one. You promise one thing and deliver something else. Politicians do it all the time. They make campaign promises up to the election, and then they disregard them once in office as they perform favors for their rich contributors. The hapless voter is left disappointed and embittered but will keep pulling the lever at election time as a sort of referendum for what he would like to see happen as opposed to what actually happens. My advice is to stop voting, so you can at least maintain the dignity of not being a dupe.
With capitalism, the bait is some promise of prosperity in exchange for some freedom and security. For instance, the student goes to college in hopes of having a good job and a first class ticket to the middle class. The result is no job except pouring coffee at Starbucks and a lifetime of indentured servitude. In another instance, a family buys a really nice large home with a mortgage with a low interest rate. But this is an adjustable rate mortgage that goes up making the family homeless as they lose the home they can no longer afford. Or consider the people who migrated to take advantage of the oil boom and the high pay this boom generated. Those people are now being laid off as the Saudis turn on the spigot wide open to destroy the challenge to their oil hegemony. Whether intentional or unintentional, the effect is the same. People ride the boom up, and they ride the bust down into oblivion.
The apologists for this bait and switch game of free market capitalism will defend the system as producing the greatest prosperity the world has ever seen. They would be correct. Free market capitalism has produced the greatest prosperity the world has ever seen. Thanks to capitalism, today's poor get to enjoy their poverty by endless distraction from their smartphones. Houses have never been bigger or more empty. People have more gadgets and better stuff but have never been more afraid in their lives for their own prosperity and survival. They never know when it will all go up in smoke. Prosperity should promote a feeling of stability and security, but these things are foreign to free market capitalism.
Survivors of the Great Depression learned the lessons of capitalism well. This is why they were thrifty for life and eschewed stock investing. This is why they would hoard preserves and other food stuffs, shun debt, and use up things instead of wasting them. Once you've had the ground move underneath your feet, you avoid big buildings with no ready exits. We can consider those Depression folk to be paranoid, but they look smarter all the time to us in this Great Recession.
The Austrian economists try to explain the business cycle in terms of central banking. For them, the boom and the bust is created by the machinations of the Federal Reserve as it inflates the money supply. There is some truth to this except they overlook the booms and the busts that existed before central banking. The Austrians are always at pains to point at some expansion of credit as the culprit in every bubble. But this is like pointing to oxygen as the cause of fire since it is always present in every blaze. For libertarians, government and central banks are the oxygen. But oxygen does not cause fire. It merely dictates the size of the fire relative to the fuel and the heat. Likewise, bubbles are the product of psychology as people throw caution to the wind in pursuit of fast and easy riches. Credit merely makes it faster and easier.
Whenever someone criticizes free market capitalism, the assumption is that the critic must be some form of Marxist or worse--a Keynesian. But I am neither Marxist nor Keynesian. I am a Distributist which means I believe in capitalism for the masses. I believe in an ownership society, and I don't mean that fake one George W. Bush advocated where everyone gets to be in hock to some bank. This idea is what we know as the American Dream which was the prime motivation of everyone that voluntarily emigrated to the New World. The American Dream is really a modest dream. You would own your own home free of debt to some banker. You would own your own business or farm or work your trade. You would have savings and a measure of self-reliance. You could have a family. This dream is a small dream. There are no mansions or yachts or Maseratis in the American Dream. There is simplicity and security. Yet, this dream eludes virtually everyone in America today who is enslaved to some corporation to pay off some moneylender with Uncle Sam ready to tax the rest and Wall Street to scam you, too. The working man is nothing more than an animal being milked and bled until he is dry and turned into glue and dog food.
How did this farce come about? Like it or not, many people living the American Nightmare are there because of their own choosing. They swallowed the bait, and the hook is now set. You can get off the hook, but it will hurt you in the process because the hook always goes in easier than it comes out. The bait is swallowed everytime you sign an agreement on a loan or a mortgage. The basis for this bait and switch game is simple usury. The Austrians blame central banking, but the real culprit is just banking.
Usury is the trick where people take their future labor and exchange it for something now. This is how people can pay for three houses over a liftetime where patience and thrift could have bought them the same home in less than a decade. Poor people are always borrowing money which means they are always perpetually in debt. Rich people never borrow money and may actually lend money. This creates an effect like a Hoover vacuum cleaner that sucks wealth from the bottom up to the top. The automobiles and the smartphones and other consumer items are merely the bait on the hook of usury. The apologists for this colossal joke try desperately to defend that bait as a good meal. The reality is what Will Rogers explained so eloquently when he said that we are the first country to go to the poorhouse in an automobile.
Economists will try and use fancy jargon and other tricks to explain how this system is a good one. But ecnomists are self-deluded liars who will say anything for the sake of a job with a think tank or the government. Common sense will tell you that someone who goes on a spending spree with a credit card is not actually rich despite having a lot of stuff. Americans have a lot of stuff, but they are also the biggest debtors in the world. Even Uncle Sam owes the usurers which gets passed on to us.
We can make arguments for all sorts of laws and regulations to try and fix this problem, but there is only one law that needs to be passed. This would be a law against usury. Even the most die hard Austrian will still defend usury. Austrians see the culprit in credit expansion but overlook the fact that usury is the spark that sets the house on fire. Credit expansion is where you lend money that doesn't actually exist, but money itself doesn't actually exist except as a medium of exchange. The boom happens when the money is lent, and the bust happens when it can no longer be paid back. The way to end the boom and bust is to put an end to the lending of money at interest.
Distributists despise usury. But a law against usury is unlikely to see passage. This may seem like doom until you realize that it is always in the power of anyone to not accept credit. Cut up those credit cards. Refuse to buy on time. Always pay cash for things or do without. Pay off debts as quickly as possible. Live a simple life. The result of doing this is a growing sense of security as debts vanish and savings grow. If you are stressed out, you are not prosperous no matter how much stuff you may have. Prosperity is the elimination of risk and not the concentration of risk. Free market capitalism is nothing more than a casino where everyone is a loser except the house. The drinks and meals are free until your chips are gone. Then, you are put out on the street. Do yourself a favor, and don't take the bait.