A recent Gallup poll suggests only 54 percent of Americans have a favorable opinion of capitalism. The same poll says that 81 percent of Americans approve of “free enterprise.” This is proof positive that at least 27 percent of Americans would fail a basic vocabulary test (and that 19 percent of Americans are just plain nuts).
This illustrates one of the failures of our modern education system. One of the reasons Americans appear to be so polarized is that we no longer speak the same language. For culture to exist there must be a common language, and I am not just talking about English or Spanish. We all must know things like, “There is no such thing as a free lunch.”
My generation is the last generation in America that has a common language. Allow me to illustrate. I met my wife a few weeks before her 30th birthday. She had two good friends turning 30 around the same time and they very cleverly threw a party called, “The Trio Turns 3-0”. She invited me with a friend. When we arrived, we immediately searched for her as she was the only person we knew there. As we were looking around, my wife’s best friend Kathy jumped in front of us with hands on hips and said, “May I help you?”
My Northern readers might be thinking, “How kind,” but as a Southerner I can assure you this meant, “What are you doing here? I don’t think you belong and I think you should leave!” Knowing I was in the right, I took the statement on face value and said, “I’m looking for Frost, have you seen her?” Kathy then asked if I was a work friend, to which I honestly said no, and then she announced, “I’m her best friend and I know all of her friends, and I don’t know you.” At this point it was clear that honesty was not helping so I did the only thing a person of my generation could do. I said, “I’m here with the Underhills.”
Kathy laughed and said, “Oh! You must be Chuck.” Thank goodness Frost had told her I was funny, even if she didn’t tell her what I look like. Why did The Underhills work when the truth didn’t? Culture. My generation is the movie-quoting generation. We didn’t zone out on our own devices streaming our own content; we sat together and communally watched the same movies and TV shows. (For those not in on the joke, Mr. Underhill comes to us from the 1985 Chevy Chase movie, “Fletch.”)
A more erudite explanation comes from “The Dictionary of Cultural Literacy.” We share a language because we share a culture. Today we can’t even agree on what it means to be a woman, so is it any surprise that 27 percent of our population dislikes capitalism while simultaneously liking free enterprise?
This is because critics of capitalism are everywhere today. We have people publicly admitting to being socialist. Obviously, the vast majority of people who admit to such don’t understand what they are saying. The socialist ideology is a bloody ideology responsible for anywhere from 90 million to 150 million deaths. In case one believes this to be hyperbole, a recent Emerson poll reported that 1 in 6 Americans believe that the assassination of UnitedHealthcare CEO Brian Thompson was “acceptable.”
That roughly 17 percent is frighteningly close to the 19 percent who are against free enterprise, and to not see a connection is to be willfully ignorant of the history of socialist ideology.
While 27 percent do not understand what capitalism is, I’m fairly convinced that even more misunderstand socialism. This is understandable as the term has been used by many political parties in Europe – and now in the U.S. – to mean whatever they want it to mean, but if we go to the original definition of the word it describes an economic system, not a political one. It describes a system where the state controls the means of production. This is important to understand, because socialists can be on either the right or the left politically. The Soviet Union had a socialist economic system, as did Nazi Germany. They were not identical in the details, but in the big picture, the state controlled all economic activity.
While we should be concerned about the emergence of the Democratic Socialists of America and their takeover of the Democratic party, we should also be concerned with the rhetoric of JD Vance, the heir apparent to the leadership of the Republican party. He has made his disdain for free enterprise well known.
He claims that the new Republican party has replaced the ideas of Milton Friedman with the ideas of Alexander Hamilton. For those who have studied economics, this is funny. Hamilton’s best-known economic idea was the founding of the first central bank, Bank of the United States. Friedman may be best known for his popular work defending free enterprise, but one doesn’t win Noble prizes for writing about basic fundamentals of economics. His work as an academic economist was on monetary policy. He and Hamilton may not be as different as JD thinks.
Hamilton did famously conflict with Thomas Jefferson, wanting to move America towards industrialization, while Jefferson wanted to maintain our agricultural roots. But this, too, is hugely misunderstood. Hamilton wanted to invest in the future, which in the late 18th century meant manufacturing, and not cling to the industries of the past. If he were a man of the 21st century, he would be rejecting the idea of protecting the manufacturing of basic goods raising prices for all Americans for a tradeoff of a few low paying jobs no one any longer wants, and championing the growth of AI and technology. (I wrote a paper on that in the mid-1980s, minus AI of course.)
Joe Biden proclaimed that “Milton Friedman isn’t running the show anymore.” JD Vance seconds that. The problem here is that 81 percent of Americans still believe in free enterprise. As Friedman famously observed, “Underlying most arguments against the free market is an underlying lack of belief in freedom itself.”
Rejecting the “ideas of Milton Friedman” is like rejecting the “ideas of Sir Isaac Newton.” Reject away, we will still be subject to the forces of gravity no matter how much one may not like it. Similarly, we can reject Friedman, but the laws of economics will be there no matter how much we wish otherwise. We may not understand what each other are saying, but one thing the vast majority of Americans still agree on is that we should be free, and that is a good thing. At least that is my perspective.
Warm regards,
Chuck Osborne, CFA
