I’m Duane Lester and this is the Paradigm Shift.
I want to start off with a short story about women’s panties.
Not long ago there was a store owner who was always looking for better deals for his customers. He drove all over, looking for what he called “off beat suppliers and sources” to get special buys below what he was already paying.
He found a guy who would sell him women’s panties for two dollars a dozen. His current supplier could only give him women’s panties for two fifty a dozen. At that price, he could sell them at three for a dollar, but the new supplier made it possible for him to sell them for a quarter each, or four for a dollar.
He noted that he didn’t make as much profit per pair of panties, but because he sold three times the amount, “the overall profit was much greater.”
The store owner would take this lesson and apply it over the life of his career, eventually building the largest retail chain in the world. The store owner’s name was Sam Walton.
Now let’s walk back through this entire process. What do you find?
People acting in their own self-interest.
The supplier of the panties won, because he was able to sell his product for the price he wanted to Sam Walton.
Sam Walton won, because he was able make a profit by selling his product to his customers.
The customers won, because they were able to purchase a product for less than they could before.
What is consistent in all of those things?
First off, each party placed a value on what they were buying and selling. The value wasn’t intrinsic. Each member looked for the objective best value. The supplier felt two dollars was worth more than a dozen panties, but the panties were worth more to Walton. He felt a dollar was worth more than four pair, even though the customer valued the panties more than the dollar.
Meanwhile, other customers might value the dollar more, so they don’t buy anything. Each participant placed their own value on what they were trading based on what they rationally felt was best for them.
This is possible because there is an absence of force. Not one person was forced to buy anything for more than they wanted, and not one person was forced to sell anything for less than they wanted.
In other words, every step is voluntary. It’s just.
This absence of force show a respect for individual rights. Each person owns their property and can enter into trades based on their own self interest.
No one is exploited. They can’t be because no rational person accepts a deal that does them harm. Everyone gains or they don’t take the deal. They are free to walk away at any time.
This is what capitalism looks like: it’s a socio-economic system where individual rights are respected and because of that respect, no force is possible. Under capitalism, property trades are made because they are mutually beneficial.
I know what you’re thinking. This didn’t happen in a capitalist system, and you’re right. This occurred in what Ayn Rand referred to as “a mixed economy,” meaning there was “a mixture, in varying degrees, of freedom and controls, of voluntary choice and government coercion, of capitalism and statism.” Of all the mixed economies in history, America’s has been the freest, and has seen the greatest success.
Let me tell you another story relating to this, a personal story that I think is kind of cool.
I bought a gallon of milk.
Now this all started when I went to my refrigerator and noticed we were out. I got in my car, drove to the store and went inside. Now mind you, this is in a town of about fifteen hundred people. Small town Missouri.
The store layout has the milk as far away from the door as possible. This is because people have studied what people come to the store for and the store placed those products so that a customer has to walk past a lot of other stuff to get what they need. This increases overall sales, but doesn’t force anyone to buy anything.
So in this small store in a town of fifteen hundred, I have to walk past rows of canned goods. Fruits and vegetables on one side. On the other are cans of chili, jars of spaghetti sauce and bags of pasta.
Turning the corner, there’s a cooler filled with different meats. Ground beef, ground pork, t-bone steaks, Angus beef, cured hams. Just stocked with different cuts of meat. Further still, I come to another cooler filled with different cheeses. Colby, pepper jack, extra sharp cheddar, processed slices and bags of shredded cheese. There are even take and bake pizzas and soft taco shells here.
Finally, I make it to the milk case. There’s quarts, half gallons, gallons, whole milk, 2 percent, skim. There’s milk that’s 100% lactose free. There’s almond milk. There’s fat free milk, half and half along with heavy whipping cream. And there are different brands.
Think about that. Different brands offering the same products, but asking more money because the quality might be higher.
All this in a town of fifteen hundred. This isn’t even a major city.
Why do I think something so routine like buying a gallon of milk is something so cool?
I think it’s cool because it’s so routine. It’s amazing what we take for granted in this country.
For years, milk shortages have plagued socialist Venezuela, but I can find more milk than I can possibly drink in small town America.
How is this possible?
Simple. Self-interest and voluntary trades create abundance.
The dairy farmer buys a cow, not because he feels a responsibility to provide milk for society, but because he wants to make money. He sells it to the market, who buys it because the manager intends to sell it. Not for some feeling of social good. Those sales create a profit large enough to feed his family and pay his mortgage.
The only way this can happen is if customers, like me, voluntarily trade their property for something they value more.
As I mentioned before, Wal-Mart and the grocery industry were built and exist today in a mixed economy. This use of force did more harm than good.
For example, the cotton used in making underwear was most likely subsidized. Taxpayers were looted by the government to pay the farmers because the market price is lower than they can produce the cotton for.
Statists love this, pointing to the farmers who are able to keep their farms at the expense of the tribe. But they are committing the most common economic fallacies there are, as highlighted by Henry Hazlitt.
While the immediate effects of subsidies look good for farmers, they aren’t good for taxpayers, who are propping up an industry that can’t support itself. The long term effects are the unseen losses taxpayers bear, not only in money, but in quality of life. The money taken from them and given to farmers could have been used to buy nicer clothes or higher quality food. Instead, they couldn’t buy those things because of a collectivist belief that the farmer is more important and needed their money more than they did.
That isn’t moral. And that’s in the freest economy in history.
Now consider the one of the least free in history.
In China, between 1958 and 1961, historians estimate almost 45 million Chinese starved to death. The Chinese government admits 15 million. Because of the starvation, it’s estimated another 40 million Chinese weren’t born. That’s 76 million lives ended because of the allegedly moral superiority of the collectivist philosophy.
This is what’s known as the “Great Chinese Famine.” It’s one of many famines in collectivist countries. All the world’s worst famines during the 20th century occurred in communist countries.
There is no historic record of a famine caused due to capitalism.
Since we are talking about China, let me finish with one final story that might give an idea of what happened when the producers returned following The Strike in Atlas Shrugged.
In 1978, a meeting was held in a small Chinese village called Xiaogang (See ow gong.) This was at the height of communism in China, so there was no personal property in this village. To get an understanding of the collectivist mindset at the time, at a previous public meeting with communist officials, a farmer asked if he owned the teeth in his head. He was told no, that they belonged to the collective.
The meeting in this story was secret. The farmers gathered that night were there to sign a secret contract that could result in their execution. But their situation was bleak so they were willing to risk it.
Year after year, the village found itself short of food and the farmers often turned to begging the neighboring villages to help. Finally, they had enough. They decided that rather than farm as a collective, each family would get its own plot. If that family grew a surplus, they could keep it.
It was an introduction of personal property and self-interest, albeit extremely limited and secret.
The farmers there say that before the contract, they would drag themselves out to the fields only when the village whistle blew. After the contract, they were working before dawn.
By the end of the season, they harvested more than the previous five seasons combined.
This got the attention of Communist party officials, who dragged the author of the contract before them. Rather than being executed, he was interviewed. Within a few years, farms across China adopted the capitalist principles laid out in that mud hut. Since 1978, 500 million Chinese have risen out of poverty.
It wasn’t stricter adherence to altruism that did that. It was self-interest and respect of individual rights.
Today, that secret contract is in a museum.
Which brings us to today’s paradigm shift.
While leftists will tell you capitalism is immoral, the stories I shared today prove that capitalism is the only moral socio-economic system.
Where capitalism respects individual rights, collectivism destroys them.
Where capitalism accepts self-interest, tribalism demonizes it.
Where capitalism creates abundance, altrusim creates famine.
Capitalism permits survival. Collectivism kills.
Mankind using their mind, what Ayn Rand called man’s greatest natural resource, to turn raw materials into property is glorious. Trading that property with others in a voluntary agreement creates wealth, and wealth creates a better life. It creates abundance.
Abundance allows life to flourish.
How could a system all that does that be anything but moral?
That’s the paradigm shift. I’m Duane Lester.