In the wake of the federal government's acquiring a stake in some very large financial firms as a tactic to stem the present tide of economic meltdown, an unavoidable question arises: Can those who embrace the philosophy that government is not the solution it is the problem, continue to do so? In sticking to their ideological guns - as well as avowing the apparent wisdom of not allowing very large institutions to fail - many capitalists are acknowledging the need to have it both ways.
One thing that can be said to be as certain as the idea that free markets create wealth is that unfettered free markets create want and poverty. The products of free market capitalism have clearly shown that they are either not designed to provide for all, or that the distribution of whatever wealth is created needs realigning. As efficient as free markets are at creating wealth, they nonetheless have no proven answer for their unavoidable side effects, poverty and unemployment. It is not enough to suggest that these drawbacks are simply outweighed by the benefits. When the drawbacks are measured in terms of human suffering, it becomes incumbent upon purveyors of growth-at-all-cost philosophy to take into account its impact on society's economically marginalized and articulate solutions.
As the income gap between rich and poor grows ever wider worldwide - with the U.S. having the most unequal distribution of income (WorldWatch Institute, Rich-Poor Gap Widening) - the question arises as to whether large wealth-building economies have forsaken the moral high ground in promoting modern capitalism and its variations as the answer to pervasive poverty.
Does redistribution of wealth sound the death knell for innovation and growth? Some would argue that we can do without the kind of innovation and growth that builds into its very design the prospect of leaving out so many from its intended benefits.
Moreover, large companies are quick to accept government intervention when it inures to their benefit. Tax breaks and other favorable legislative accommodations actually do siphon dollars from the treasury at the outset. Revenues resulting from creating favorable market conditions do not totally make up for the largess of taxpayers. The enormity of wealth created calls for the kind of restitution that would help those who do not directly benefit from sustained growth and mitigate their suffering. Taxpayers should be considered more as de facto partners in business and reap a more proportionate benefit from the economic growth they helped create.
Redistribution may in fact result in moderating growth rates, but as is plainly evident, excessive growth creates as many problems as it solves.
2 years ago