World of Wealth, A: How Capitalism Turns Profits into Progress

by Donlan, Thomas G.

• ISBN13: 9780132350006
• ISBN10: 0132350009
• Edition: 1st
• Format: Hardcover
• Copyright: 2008-01-01
• Publisher: FT Press

Summary

"Thomas Donlanrs"s defense of free market capitalism is especially timely today given all the pressures to regulate and stifle it. The anti-globalization movement wants more trade protectionism and less immigration. The global credit crisis is putting pressure on governments to bail out irresponsible lenders and borrowers at taxpayersrs" expense. Instead, Donlan convincingly and clearly explains why we would all prosper more by doing all we can to make markets freer." -Ed Yardeni, President, Yardeni Research, Inc. "Thomas Donlan reminds us all that capitalism is not simply one choice among different and equally valid economic systems, but instead that hard work and the accumulation of wealth is the natural tendency of successful people and healthy societies around the world." -Christopher Whalen, Managing Director, Institutional Risk Analytics "It has been several decades since Joseph Schumpeter observed that the philosophical defense of a free-market economy must never cease. Thomas Donlan has taken up that challenge, but this clear-eyed book is much more than a defense. It is a magnificently constructed explanation of how the world works and why free-market capitalism continues to offer the greatest hope for solving our greatest challenges." -Carl J. Schramm, Ph.D., President, Kauffman Foundation "The author brings to the table a healthy skepticism of the conventional wisdom, an admirable ability to separate fact from fancy, and an undisguised repugnance for the mumbo-jumbo thatrs"s the curse of so much commentary on anything to do with economics or investment.A World of Wealthis not only a lively read, but an exceptionally enlightening and rewarding one to boot." -Alan Abelson,Barronrs"sColumnist "With the facts of a primer laid out in the fast-paced narrative of a storyteller, Thomas Donlanrs"sA World of Wealthlucidly explains todayrs"s marketplace. From the credit crisis to immigration and from oil prices to global warming, the book guides the reader through the economic issues of our day-jargon-free. Itrs"s a fast, fun read that illuminates while it entertains." -Thomas W. Hazlett, Professor of Law & Economics, George Mason University "An indispensable-and highly readable-primer on how the economic world really works, whether politicians of both left and right want it to work that way or not. If it were required reading for all political reporters, they might do a lot more reporting and carry a lot less water in the process." -John Steele Gordon, Author ofEmpire of Wealth: The Epic History of American Economic Power Acknowledgments xii About the Author xiii Introduction xv Chapter 1: The Capitalist Answer to the "Energy Crisis": Pay Higher Prices 1 Chapter 2: The Capitalist Approach to Environmental Pollution and Global Warming: Breathe Easy 23 Chapter 3: A Capitalist Prescription for Trade: Free Exchange Enriches Both Sides of Every Deal 43 Chapter 4: Capitalist Immigration Policy: Tear Down the Walls 65 Chapter 5: The Essential Elements of Capitalism: Investment and Invention 81

Table of Contents

Introduction	p. xv
The Capitalist Answer to the "Energy Crisis": Pay Higher Prices	p. 1
Market Movements	p. 3
The Power of Price	p. 4
The Limits of Planning	p. 7
Doing the Right Thing in Spite of Ourselves	p. 12
Are We Really Running Out of Oil?	p. 17
Peak Coal Foreshadowed Peak Oil	p. 19
Summary	p. 21
The Capitalist Approach to Environmental Pollution and Global Warming: Breathe Easy	p. 23
Shrinking the Energy Budget	p. 26
Sustaining Progress	p. 29
Ecological Economics and Vice Versa	p. 30
Adam Smith and the Division of Labor	p. 33
Ecological Accounting	p. 35
Tragedies of the Commons	p. 37
A Flood of Problems	p. 41
Summary	p. 42
A Capitalist Prescription for Trade: Free Exchange Enriches Both Sides of Every Deal	p. 43
Founding Traders	p. 44
Restraint of Trade	p. 47
The Productive Power of Outsourcing	p. 49
Make Jobs-Don't Protect Them	p. 53
The Benefits of Free Trade	p. 56
Solving Our China Problem with Trade	p. 58
Trade Enriched without Conquest	p. 59
The War God Demands Gold	p. 60
The Earnings of Trade	p. 62
Summary	p. 64
Capitalist Immigration Policy: Tear Down the Walls	p. 65
The Economic Lure	p. 70
An Unpalatable Menu	p. 73
A World Market for Labor	p. 75
Immigration and Imagination	p. 76
Summary	p. 78
The Essential Elements of Capitalism: Investment and Invention	p. 81
Creative Capitalism	p. 87
Summary	p. 91
The Capitalist Take on Taxes: Keep Taxes Low and Equal	p. 93
Squeeze the Rich	p. 94
Tax Magic	p. 97
The Robin Hood Principle	p. 99
The Impossible Quest for Fairness	p. 101
Tax-Exempt Citizens	p. 104
The Most Burdensome Tax	p. 106
Beneficial Taxes	p. 108
Summary	p. 111
The Capitalist Struggle against Low Finance: Price Controls and Regulation Endanger the Free Market	p. 113
Price-Gouging Disaster	p. 114
Permanent Price-Fixing	p. 116
State of Emergency	p. 118
Ancient Traditions	p. 121
Incommunicado	p. 126
Restraint of Trade	p. 127
Summary	p. 130
A Capitalist Diagnosis for the High Cost of Health Care: Pay What It's Worth	p. 131
A Century of Failed Reform	p. 133
Caring about Health Care	p. 137
The Frightening Future	p. 139
The Wizard of Health Care	p. 140
Who Pays for Health Insurance?	p. 142
Free Choice at a Price	p. 144
Summary	p. 148
The Capitalist Approach to Retirement Security: It's an Individual's Duty First	p. 149
It All Started with Bismarck	p. 154
More Straws for an Aging Camel	p. 157
Slouching to the Future	p. 161
Make Way for X and Y	p. 166
Summary	p. 168
A Capitalist Look at the Current Economy	p. 169
Rogues' Gallery	p. 172
Booms and Busts Born in Debt	p. 177
Depression and Recovery	p. 179
Summary	p. 184
The Capitalist Quest for Productivity	p. 185
The Power of Capital	p. 187
The Wage Gap	p. 191
Unequal Wealth Rises Anyway	p. 194
The Highest Return on Investment	p. 195
Creative Disorder	p. 198
Summary	p. 200
Reading Further	p. 201
Index	p. 205
Table of Contents provided by Ingram. All Rights Reserved.

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Excerpts

Introduction Introduction There are two kinds of economists: Those who think the free market always works, except when the results don't suit them; and those who think the free market never works, except when the results do suit them. In my view, the free market always works. Whether the results suit me or you is a matter of taste, and if we don't like the results, we can change them anytime, just by adding our money to the market. The best thing about economics is the free market, and the best thing about the free market is freedom. In this book, I am attempting to provide intelligible advocacy and explain economic issues, and I offer some historical background for the topics in each chapter. I'm throwing out all the charts, graphs, and technical terms, throwing out the mathematical analysis, throwing out game theories, and throwing out professional economists. What remains is a way of looking at the world through the powerful lens of capitalist investment and productivity. This book cannot give you all the answers, but I hope that after reading it, you will be ready to have interesting conversations with other intelligent people interested in politics, business, and history. If you take the lessons of this book to heart, you should be ready to have warm and vigorous conversations, for the ideas here are controversial. Many well-meaning people would rather impose their ideas on others for their own good; they recoil at the idea that people should make their own choices, for better or worse. The consistent philosophy in this book is that free markets are effective--capitalism provides superior solutions to most of our looming problems. Even more important, free markets and capitalism are good because they promote individual liberty. Economics has been called the "dismal science," and there's plenty going on in the world that supports that charge. Poverty and the unequal distribution of wealth, the population explosion, trade conflicts, immigration, outsourcing, environmental damage, rising energy prices, uncertain health and pension benefits, and many more discouraging economic issues push their way onto our computer displays, television screens, and front pages every day. The phrase "dismal science" was coined by Thomas Carlyle, the nineteenth-century essayist, in a retort to the forecasts of Thomas Malthus, an economist who projected that the earth's food supply could not grow as fast as its population; hence, humanity is doomed to suffer frequent famines. "Dreary, stolid, dismal, without hope for this world or the next," said Carlyle of the Malthusian prophecy. He also applied the whole phrase "dismal science" to his own economic argument in 1849 that freeing the slaves who worked the West Indies sugar plantations had not been in the slaves' best interests. Carlyle said that, without plantation owners' capital and enterprise, the best the former slaves could do on their own was subsistence agriculture and fishing. Sugar had been more lucrative and life as a slave had been more secure, he claimed. Dismal science, indeed, if it were true. Man, however, does not live by bread alone: A hungry free man is better off than a well-fed slave. In this book, we explore some hard questions about capitalism and humanity. It's true that economics sometimes turns up some distressing conclusions because it is the science of human behavior stripped of all illusions. Economists observe what people do for money; it is often not a pleasant sight. Capitalism is business, and the study of capitalism is the study of the sources and uses of profits--how money becomes wealth. Although some historians consider capitalism to be a form of social organization, all forms of social organization are based on the concentra

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