Lively Truth-Teller

Original Article

The 5 Big Lies About American Business: Combating Smears Against the Free-Market Economy—by Michael Medved (Crown Forum, $26.99).

Must reading for the White House and every anticapitalist politician, pundit and economist. Employing a mother lode of facts, Medved, with verve and wit, thoroughly demolishes five myths about business: capitalism is dying because of the economic crisis; when the rich get richer, the poor get poorer; business executives are overpaid and corrupt; big business is bad, small business good; and government is fairer and more reliable than business.

One of the reasons many Americans have ambivalent feelings about commerce is our popular culture’s antibusiness bias, a negativity that is fueled by an unusual characteristic of the entertainment industry itself:

Unlike the widget-manufacturing business, the entertainment assembly line uniquely lacks any objective criterion of excellence. Every actor or actress, no matter how accomplished, realizes at the deepest level that his or her popularity owes as much to a winning smile or burning blue eyes as to painstakingly developed thespian skill.

The rewards of Hollywood, in other words, flow to studio executives and to the creative community alike in a random, fickle and manifestly unfair manner, which leads pop culture powerhouses to assume that capitalism at large is similarly random, fickle and unfair.

With one delightful punch after another, Medved makes the case for capitalism: “Even if you toil at some supposedly noble nonprofit enterprise, every element of your job depends on some productive capitalist venture—from the car (or bike or bus) that took you to work to the lights, phones, desks and electricity essential to any office to the building itself to the food, plates and glasses in the lunchroom.”

Every convenience and necessity we take for granted relies on the fruits of free markets: “The satisfaction of each of our needs in daily life requires processes of overwhelming complexity that for-profit business provides in seemingly effortless, organic fashion. The companies that serve themselves by serving others manage to bind us together in an intricate system of demand and fulfillment.”

Capitalism is uplifting: “Far from the heart-hardening and spirit-killing processes cited by poets or movie producers who loudly lament the central role of business in our society, the capitalist system actually opens us to a greater sense of connection, community and, even, creativity.”

Capitalism is dead? No. It is currently—but only temporarily—suffering from the stupidities of government policies. As for those advocating onerous new regulations, Medved dismisses such nostrums, detailing “the abject failure of such regulations in the past.”

The notion that the rich get richer and the poor get poorer bangs up against numerous inconvenient facts, including a Treasury Department report stating that folks in the bottom 20% of wage-earners increased their median income by over 100% in real terms between the mid-1990s and the middle of the last decade. Quality of life has also improved immeasurably over the years: “The lowest rung on the income ladder lives better lives today than the average middle-class Americans of the last generation.”

Overpaid, rapacious business executives? Medved makes the point that executive talent, as with sports professionals, doesn’t come cheap, particularly as companies get ever larger and ever more complex.

Medved definitively deals with our somewhat contradictory attitude toward businesses—”loving private companies when they’re small and struggling but then suddenly hating them if they become too large or profitable”—which finds expression in the insanity of our antitrust polices. Truth is, monopolies don’t last long in free markets.

Medved has his most fun with the fairy tale that “the pure-souled and disinterested idealists in government will serve people more reliably than the greedy go-getters in the private sector.” Whether it’s the Post Office, public schools, Amtrak, Medicare, Medicaid, public parks or light rails, the government’s record has been routinely abysmal when it comes to efficiency, effectiveness, service and careful use of financial resources.

Of course, my joy in reading Medved was enhanced by his frequent citing of FORBES, including quotes from yours truly.

A very instructive and jolly good book.

Steve Forbes

Steve Forbes is Chairman and Editor-in-Chief of Forbes Media. Steve’s newest project is the podcast “What’s Ahead,” where he engages the world’s top newsmakers, politicians and pioneers in business and economics in honest conversations meant to challenge traditional conventions as well as featuring Steve’s signature views on the intersection of society, economic and policy.