Real Investment Advice: Millennials Are Mad As Hell.

Lance Roberts at Real Investment Advice talks about why Millennials Are Mad As Hell while explaining why financial markets don’t work the way the used to. The market is no longer about understanding the value of a company, but rather is a game of bets by major players — which means if you aren’t a major player, you lose.

The Occupy Wall Street movement that emerged in the financial crisis of 2008 was interesting because a general sense of discontent seemed to merge. Also interesting was the lack of consensus as to the causes of dissatisfaction. More recently, the trading mania surrounding Robinhood and Gamestop reflected many of the same dynamics. A broad sense of anger was channeled variously against Wall Street, “suits,” boomers, short-sellers, and a sundry list of other participants deemed to be bad actors.

One thing is clear: Just like in the 1976 movie, “Network,” a lot of people are “mad as hell.” That anger is a symptom of a bigger problem, however. Digging into its root causes reveals insights about society and how it can reshape and defuse anger and become more productive.

Roots Of Anger

It is not hard to understand some of the sources of anger. Perhaps one of the most revealing single indicators is the variance in wealth distribution over time. In the 1990s, when Baby Boomers were in their late 30s, just slightly older than Millennials’ age in 2020, they owned seven times the share of household wealth (21% vs. 3%). The opportunities for income and wealth accumulation were massively more significant for Baby Boomers than for Millennials.

Missing The Target

As a result, it isn’t too surprising to observe a fair amount of discontent directed at the Baby Boom generation, and it is clear from a number of the Reddit/wallstreetbets threads that this is happening. Further, any reader of The Fourth Turning by William Strauss and Neil Howe can come away with plenty of material for younger generations to incriminate the Baby Boom generation.

For example, Baby Boomers in the US grew up in an environment of enormous economic growth in one of the world’s wealthiest countries. Yet, those prodigious benefits seemed not to be enough; massive debts got used to boost consumption even further. From a historical perspective (and to younger generations), Baby Boomers’ generation appears rapacious in its consumption, like locusts stripping the country bare.

A Generalization

Of course, such a view is a generalization that belies the existence of countless individual Baby Boomers who act and behave in ways that are utterly antithetical to that characterization. It is not hard to find smart and talented individuals and are generous with their time, financial support, knowledge, and experience. As a result, it is hard to consider the entire generation of Baby Boomers an appropriate target of opprobrium.

There are other targets. For instance, short-sellers have received a great deal of anger following the Gamestop and Robinhood episode. Such too appears unjustified. For one, there are at least two sides to every story, and it is essential to hear both to get closer to the truth. Besides, given the upward bias of stocks, short-sellers must work even harder to make a living. Some of the most accomplished (and humble and generous) investors are short-sellers.

As a result, the targeting of outrage against groups such as Baby Boomers or short sellers is at best misguided. At worst, such efforts are both malicious and counterproductive. It only makes things worse by directing outrage in a general direction, including people sympathetic to the cause.

A Bad Game

Where should anger be directed then? Ben Hunt guides us to a better understanding by completely flipping the perspective. It is not a whodunit where the perpetrator needs catching. Instead, the problem is the economic, political, and financial system has become a destructive “game” for most participants. In other words, the odds stacked against us are such that there is little chance of success over time, regardless of performance.

To see this, we need to reconsider our assumptions and mental models. In his piece, “Hunger Games,” Hunt explains how things have changed in the markets:

“You have been told that you can be a PARTICIPANT in the game of markets, that you can storm the playing field of companies, that you can take matters into your own hands and rescue a promising company under unfair attack.”

In a world of entirely free markets, strong property protection, effective regulation, effective enforcement, and a level playing field, this might be true, as the Robinhood episode revealed. However, many of these assumptions are no longer valid:

“We all saw that the thing that determines whether or not our stock market bets pay off is … other bets. We all saw that there is no ‘game of companies’ taking place independently of our bets. We all saw that our bets, in and of themselves, can win the ‘game’, with absolutely zero input from the ‘team’ that is supposedly out on the ‘field’.”

Such is a very different concept of markets than what most of us have operated on. It boils down to two straightforward tenets:

“Everyone knows that everyone knows that 1) The bets ARE the market. 2) Market makers OWN the market.”

Implications

The implications of this are huge. Success in investing in this context is not about researching and applying analytical skills and hanging in when it gets tough. Nope.

Being an investor today is more like being a gladiator. You might win some fights, even in glorious fashion, but the odds currently stacked against your long-term survival. You are mainly just an actor in a game designed to serve the ends of a select few.

“Both of these stories are narratives for our very own Hunger Game, a spectacle that chews up the participants in the arena while delivering enormous profits to the networks (media, financial and political) that put them on.”

The notion of participants getting chewed up in a contest that deliver enormous profits to others does seem to capture much of the environment – and therefore explains much of the anger if it feels like it’s not a fair game that’s because it isn’t.

Another Theory

Interestingly, Noam Chomsky’s presentation, Requiem for the American Dream, dovetails nicely with Hunt’s characterization of the higher-level structure of the social, political, and financial environment. According to Chomsky, the concentration of wealth and power is more than just an unpleasant outcome; instead, it is a distinct objective of the super-rich.

As he explains, the 1960s was an era of much greater wealth equality and was the backdrop for a substantial expansion of civil liberties. Increasingly too, young people were protesting against the government, against corporate leadership, against AUTHORITY, and it scared people in charge.

Principles

As Chomsky tells it, “The 10 Principles Of Concentration Of Wealth & Power” (the subtitle of the presentation) were something of playbook devised by the super-rich to stem the tide of egalitarianism and to reverse it. While this hypothesis certainly rings with conspiratorial tones, the “principles” sure explain many things.

One set of principles prescribes reshaping the economy through financialization and offshoring. Together, these two efforts serve to increase the role of asset owners in the economy at the expense of reducing laborers’ role. Both have succeeded spectacularly.

Another principle is, “Marginalize the population.” Such gets accomplished by maintaining the veneer of democracy while at the same time eroding its power to be representative. Chomsky describes how most people do not have a voice that counts:

“In one study, together with another fine political scientist, Benjamin Page, [Martin] Gilens took about 1,700 policy decisions, and compared them with public attitudes and business interests. What they show, I think convincingly, is that policy is uncorrelated with public attitudes, and closely correlated with corporate interests. Elsewhere he showed that about 70 percent of the population has no influence on policy—they might as well be in some other country. And as you go up the income and wealth level, the impact on public policy is greater—the rich essentially get what they want.”

Hypothesis

Based on these principles, the hypothesis seems to fit pretty well, but principle #5, “Attack solidarity,” really stands out as having explanatory power. The idea that the potential of an extensive group of people to collaborate toward a common goal is a terrifying prospect for a small minority of super-rich people with different interests. The energy of the masses, however, also represents a force that can turn on itself:

“SOLIDARITY IS quite dangerous. From the point of view of the masters, you’re only supposed to care about yourself, not about other people. This is quite different from the people they claim are their heroes, like Adam Smith, who based his whole approach to the economy on the principle that sympathy is a fundamental human trait—but that has to be driven out of people’s heads. You’ve got to be for yourself and follow the vile maxim—“don’t care about others”—which is okay for the rich and powerful, but devastating for everyone else.”

Wow, that puts a lot of things in a different context! Namely, when people fall prey to the maxim “don’t care about others,” they inadvertently advance the super-rich’s goals by disrupting the solidarity of everyone else. More specifically, when someone puts huge bets on Gamestop to stick it to the short sellers and rages about the boomers, they aren’t soldiers bravely fighting for a better system. They are pawns getting played.

Requiem

Such may get mistaken for a passing phase or a transient cultural phenomenon, but it seems like there is something far more substantive here. Chomsky hints at it with his introduction:

“DURING THE Great Depression, which I’m old enough to remember, it was bad—much worse objectively than today. But there was a sense that we’ll get out of this somehow, an expectation that things were going to get better, ‘maybe we don’t have jobs today, but they’ll be coming back tomorrow, and we can work together to create a brighter future’.”

Such highlights the problem. In the Great Depression, things were terrible, but there was a belief that things would get better. There was hope. Today, most people are far better off in terms of health and wealth, but the idea is that things are getting worse. The hope has faded.

For the first time in the country’s history, a generation has lost hope of things getting better. They have lost the American Dream. In a culture that highly values growth and competition, the fate of having less is an especially tough pill to swallow. It’s enough to make people angry.

Actions

What can we do? Diagnosed as a conflict between the super-rich and everyone else, improving the situation will not be a battle to be won by a handful of brave “soldiers.” That effort will require broader participation and more collaboration. As a result, an excellent place to start is to stop attacking each other.

Beyond that, Hunt provides several high-level prescriptions. He recommends pressing for lower leverage in financial institutions at the policy level. He recommends focusing on real-world companies and cash flows at the investment level. At a personal level, he recommends “calling a thing by its proper name.” Collectively, he promotes efforts designed to “diminish Wall Street’s influence over our democracy.” Such is a useful framework from which to make plans.

Conclusion

The bad news is many people are “mad as hell, and they aren’t going to take it anymore.” It is also unfortunate that much of the anger gets channeled in a way that, at best, isn’t helpful, and at worst, is counterproductive. We don’t need to descend into a Hunger Game competition, but it is possible.

The good news is that anger is a form of energy. Further, anger represents a level of energy sufficient to effect change. Perhaps the knowledge that most other people are not part of the problem can harness that energy. Maybe that energy could get used to collaborating to tear down a system that doesn’t work very well for most people and build a new one that does. Perhaps.

Mises Institute: Government’s Money Monopoly and the “Great Reset”

From the Mises Institute, Government’s Money Monopoly and the “Great Reset”

The unbacked paper money system is an economically and socially destructive system—with far-reaching and harmful economic and social consequences beyond what most people would imagine. Fiat money is inflationary; it benefits some at the expense of many others; it causes boom-and-bust cycles; it corrupts the morality of society; it will ultimately end in a major bust; and it leads to overindebtedness.

The Institute of International Finance (IIF) estimates that global debt climbed to $277 trillion by the end of 2020, amounting to a staggering 365 percent of world gross domestic product (GDP). As the graph below shows, global debt versus GDP has risen in recent years, suggesting that the increase in debt has outpaced the rise in GDP. This buildup of excessive debt, the path to overindebtedness, results from an unbacked paper money system.

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In close cooperation with commercial banks, the central banks artificially lower the market interest rate through credit expansion, which increases the money supply. Consumption increases and savings decline, while capital expenditures go up. Taken together, this means that the economy is living beyond its means. While the injection of new credit and money at artificially low interest rates causes an initial surge in economic activity, this boom will and must be followed by bust.

Learning from the Austrian Business Cycle Theory

The Austrian business cycle theory (ABCT) points to this with rigorous logic. The reason is that once the injection of new credit and money has run its course—after wages are raised, cost of capital lowered, etc.—market interest rates return to their original levels, that is the levels which prevailed before the issuance of credit and money out of thin air. Once market interest rates start to rise, the boom slackens and collapses.

Higher market interest rates prompt people to reduce consumption and increase savings from current income. In addition, new investment projects that are considered profitable in times of artificially suppressed market interest rates turn out to be unprofitable. Firms start to rein in spending, cut jobs, liquidate assets. Painful as it is for most people, this is the process through which the economy cleanses itself of overconsumption and malinvestment caused by the boom.

As a rule of thumb, the higher the debt burden on an economy, the higher its debt in relation to income, the more problematic it is when a recession hits. Generally speaking, a decrease in output worsens borrowers’ ability to service their debt. However, once debt has reached relatively high levels, a recession can cause debtors to default on their payment obligations. In fact, it can cause the debt pyramid to collapse, sending the economy into depression.

Critics of the ABCT may argue that the unbacked paper money system, despite its sky-high debt, did not collapse in the 2008–09 crisis, nor did it collapse in the politically dictated lockdown crisis of 2020–21. Doesn’t that suggest the ABCT got it wrong? The answer is no; the important point here is that when applying the ABCT to past or current real events, it is important to take “special conditions” into account appropriately.

Once that is done, it becomes evident that central banks have taken control of market interest rates in recent years. Market interest rates are no longer “freely” determined in the market, but effectively dictated by monetary authorities. Indeed, central banks can—and do—prevent market interest rates from rising, which means that they are actually disrupting the corrective force that could turn the boom into bust, keeping the boom going for longer.

This policy has consequences that should also be taken into account. When central banks successfully intervene in the credit market and fend off the bust, the misallocation of scarce resources continues and gets even worse—adding to the scale and scope of the inevitable crisis in the future. What more, the monetary policy of preventing a bust by any means allows anticapitalist forces to destroy what little is left of the free market system. And that is exactly what is happening around the world.

An Uncomfortable Truth: The State Feeds on Crises

The politically dictated lockdown crisis has slowed down economic activity in many countries around the world and in extreme cases brought it to a standstill. Recession, business failures, and mass unemployment are the results. In the meantime, the governments—which have caused the disaster in the first place—have “come to the rescue”: they are letting their central banks put ever-greater amounts of money in the bank accounts of consumers and producers.

In relying on this money flow, a growing number of people and business models become dependent on government handouts. It does not take much to realize that this whole process is clearly playing into the hands of those political quarters that want to grow the state even bigger, push back the remaining capitalist elements in the economic system, and establish a collectivist-socialist regime—that it operates the switches to a truly “socialist transformation.”

When consumers and businesspeople receive generous financial support from the government, resistance against a policy that destroys many firms and jobs is greatly reduced—compared to a situation where those who suffer from such government policies receive no compensation. In other words, by running the electronic printing presses, state power is greatly increased at the expense of civil liberties and freedom.

History shows that emergencies and crises strengthen the power of the state; and also that it is very difficult to ever take power away from the state once it has seized it. And the more powerful the state becomes, the more it will be used by resourceful special interest groups—such as the military-industrial complex, Big Banking, Big Tech—as the economic theory of so-called rent seeking would explain to us.

The Trouble with Oligarchic Democracy

This development is accelerated in democracies, because democracies develop into oligarchies, as the sociologist Robert Michels (1876–1936) argues. Why is that? In representative democracies, political parties are formed. These parties are organizations run by the most determined, power-hungry people. They become the “oligarchic party elite” and are in a position to set their own agendas, regardless of the will of the party base or party voters.

Various oligarchic party elite groups begin to work together, paving the way toward an “oligarchic democracy,” in which the powerful few rule over the many powerless. In other words: Michels argues that the idea of democracy is turned on its head. In fact, in an oligarchic democracy, it becomes possible for the political and corporate “elites” to effectively run the show, enforcing their favored political, economic, and social concept with joint forces.

Against this backdrop, the buzzwords “Great Transformation,” “Great Reset,” and “new world order” seem to be the brainchildren of today’s political and corporate elites, meant to replace what little is left of the free market system and install a so-called command economic system: While the institution of property is maintained in name, it is the central authority, the power elite, that determines what the owners of property may or may not do with their property.

In a command economic system, the oligarchic party elites would effectively dictate what is produced by whom, when, where, and at what cost, and who gets what and when from the production output; and it takes only a fairly small—and logically consistent—step to transform the command economic system into outright socialism—where the oligarchic party elites and their partners would effectively own the means of production. But socialism is a recipe for disaster.

We Must End the State’s Money Monopoly

The productivity of a command economy, let alone full-blown socialism, could not support, feed, clothe, and house a world population of currently around 7.8 billion people. In fact, a command economy or outright socialism would mean the death of millions, if not billions, of people. Ludwig von Mises (1881–1973) pointed this out as early as 1919: Socialism is impossible, it leads to chaos, impoverishment, and total loss of individual freedom.

And yet, collectivist-socialist ideologues and their supporters, politically weaponizing “climate change” and, most recently, the “coronavirus epidemic,” are pushing very hard to abolish the market system (or what little is left of it) altogether to impose a command economic system, or even a socialist regime, on mankind. Although they enjoy support by large numbers of people, that does not mean that socialism is inevitable, as Marxist-socialist thinkers wish to make their audience believe.

Mises understood that peaceful and productive cooperation among men at national and international levels requires private property and unimpeded division of labor, or what it boils down to: the free market system, or capitalism. He also pointed out that society lives and acts only in individuals, and that it is in the interest of every individual to stand up for the defense of the free market system. Mises noted in Socialism (1951):

society…was created by mankind. Whether society shall continue to evolve or whether it shall decay lies—in the sense in which causal determination of all events permits us to speak of freewill—in the hand of man. Whether Society is good or bad may be a matter of individual judgment; but whoever prefers life to death, happiness to suffering, well-being to misery, must accept society. And whoever desires that society should exist and develop must also accept, without limitation or reserve, private ownership in the means of production.

Against this backdrop, it should be clear that the unbacked paper money system is not only a cause of crises, it is also the central instrument for those political forces—namely the oligarchic party elites and their supporters—that want to overthrow the existing economic and social order and install a collectivist-socialist dictatorship. Because without the state being in a position to increase the money supply at will, people would sooner or later feel the true costs of the state’s machinations.

And once people understand the true costs of the politically orchestrated economic transformation to their own lives and the well-being of their families and communities, resistance would certainly ensue that has the potential to put an end to a political system that increasingly erodes individual freedoms and liberties. Ending the state money production monopoly and allowing a free market in money is perhaps the most effective line of defense against world tyranny.

Independent Institute: Replacing RBG — A Lesson in Politics

Randall Holcombe writing at the Independent Institute reminds us that politics is adversarial whereas markets are based on agreement and mutual benefit. Better to rely on markets than politics for more of what we do. Replacing RBG: A Lesson in Politics

Supreme Court Justice Ruth Bader Ginsburg’s death on September 18, less than two months before the upcoming presidential election, set off a major political controversy. Democrats argued that the appointment of her successor should wait until after the election and be made by the winner of the election. Most (but not all) Republicans argued the appointment should be made now, before the election.

When Justice Antonin Scalia passed away in the last year of President Obama’s administration, Obama nominated Merrick Garland to fill Scalia’s seat, but the Republican Senate refused to give his nomination a hearing, arguing (as the Democrats are now) that any Supreme Court appointment should be made after the election, by the winner of the election.

According to the Constitution, President Trump has the power to nominate Justice Ginsburg’s successor immediately, “with the advice and consent of the Senate.” The election year argument against making the appointment is somewhat weakened because President Obama nominated Garland in an election year, although the Republican Senate did not confirm him. But arguments about whether President Trump “should” make a nomination are pretty much irrelevant, except for their rhetorical value, because he has the constitutional power to do so.

While Garland’s nomination stalled, a nomination by President Trump likely would not be, unless a sufficient number of Republican Senators declared their opposition.

The biggest difference between Obama’s nomination and Trump’s is that Obama was facing a Senate with his party in the minority, whereas Trump is facing a Senate with his party in the majority. He likely has the votes to get his nominee confirmed, whereas President Obama did not.

Even if Trump wins the election, waiting to make a nomination could make things more difficult for him, especially if the Democrats were to gain a majority in the Senate. If he wants to “win” on this issue, he should make the nomination now.

Another factor to consider is that if the election is contested, its ultimate outcome might be decided by the Supreme Court, as the presidential election of 2000 was. Trump might like to have another friendly Justice on the Court were that to occur.

I’m not passing judgment on whether nominating a candidate now would be the “right” thing to do, or whether waiting would be the “right” thing. In politics, that’s pretty much irrelevant. You take whatever opportunities you have to “win,” because in politics some win while others lose, and politicians naturally want to avoid being on the losing end.

There is a larger lesson that is playing out in this one specific issue, which is that politics is adversarial, and any political decision produces winners and losers. Thus, politicians have the incentive to take whatever opportunities are offered to put themselves on the winning side of issues.

This contrasts sharply with market activities, in which people transact voluntarily with each other for their mutual gain. Nobody has to engage in a market transaction, so individuals in markets naturally want to entice others into making mutually advantageous exchanges by offering them a chance to increase their well-being by participating in transaction.

Market activity is based on agreement and mutual benefit. Politics is based on conflict, and trying to win by preventing others from getting what they want. The more we rely on markets and the less we rely on politics in our interactions, the more peaceful and harmonious will be our society.

President Trump will make a Supreme Court nomination, not because it is the right (or wrong) thing to do, but because the Republican Senate gives him the opportunity for a win—an opportunity that might not exist after the election. That’s politics. Any other arguments for or against simply amount to empty rhetoric.

Mises: Four Reasons Inequality Isn’t What You Think It Is

Here is a short article from the Mises Institute, describing why free markets are no enemy of inequality, but rather regulated markets are greater causes of harm – Four Reasons Inequality Isn’t What You Think It Is.

One of the defining characteristics of advocates for socialism is an obsession with equality. According to this line of thinking, inequality is the central problem of the modern world, and it demands a centralized solution. Thus, socialists—and more mild social democrats—push to use the power of the state to force the transfer of wealth from the productive and successful to those who are less so. This is the way to achieve social justice, they contend.

But inequality is not the societal plague that socialists allege it to be.

The Source of Wealth: Consumer Judgment

Contrary to popular belief, the way to make money is not to exploit one’s customers. The reality is the opposite. Wealth is created by identifying the problems that people have and creating products that provide a solution and improve their lives.

In this process, the consumer leads the process by expressing his own preferences in the marketplace. If a consumer feels that a product is overpriced, he will not make an exchange. If a product seems worthwhile, he will buy it willingly. The sum of these individual choices—to purchase or not—make or break a business on the market, and this is the consumers’ prerogative. In order to meet his own needs, a person must produce something that satisfies another’s needs, whether they be labor, industrial machinery, or fine cuff links.

Does Wealth Accrue at the Expense of the Poor?

One of the socialists’ key assumptions is that there is always a losing side in a transaction. They think that wealth is like a pie, and that the rich take the largest slice, leaving workers and customers with almost nothing. In reality the market is always expanding the pie, and voluntary exchanges are always win-win when they are made.

Bill Gates, Jeff Bezos, and all the other “evil capitalists” have managed to create an unprecedented amount of wealth, but not only for themselves. Those working for them have benefited from their jobs, and the people who buy their products and services have benefited from better or cheaper goods (or both). Other benefits include more time to pursue more important things, and in ways that cannot be quantified (i.e., they are measured in psychic profit). The entrepreneurs, in turn, have benefited from the services of their workers—which are well worth paying for. Entrepreneurs also benefit from the voluntary purchases made by their customers.

Profit and Competition Are Not Antithetical to Collaboration

Socialists pit profit and competition against an ideal of sharing and collaboration. But rather than being a wicked, stolen good, profit is a crucial incentive for collaborative human action.

People are always searching for the best and cheapest products in order to satisfy their needs, and their demands raise prices. The prospect of profit quickly pushes entrepreneurs into producing what people want—and what they are willing to pay for. Profits illustrate how much people value an entrepreneur’s services. Consumers only pay if the entrepreneur satisfies their desires.

As long as there are profits to be made, others enter the market. The competition spurs entrepreneurs to make production more efficient and cheaper, because the greater the competition, the more the businessman will have to do to earn the customer’s business. As more goods enter the market, consumers can be more picky about whom to purchase from, and prices drop. It’s their own demand that sets the prices, and once they are satisfied and there’s not as much profit in the business, entrepreneurs shift to making other things that people want.

As many Austrian and non-Austrian economists have figured out, the market is an everyday “voting system” of what needs to be produced. Every penny acts as a vote for how best to use limited resources. Profits point entrepreneurs toward what people want most badly. The resulting production is a form of collaboration rather than exploitation. People can do more, because they don’t have to do everything themselves, and they can focus on what they do best.

Income Inequality Is Heightened by a Restrained Market

The Left makes the mistake of arguing that only the rich have gotten richer and attack capitalism without looking at the facts. The market has made nearly everyone richer, not only in terms of income but also in terms of the overall quality of life and the products that they own.

Leftists also ignore income mobility in market economies, when studies show that in fact most people born to the richest fifth of Americans fall out of that bracket within twenty years while most of those born to the poorest fifth climb to a higher quintile and even to the top.

Though their rhetoric makes it seem surprising, this makes sense. As Ludwig von Mises pointed out in The Anti-Capitalistic Mentality, the businessman owes his wealth to his customers, and this wealth is inevitably lost or diminished when others enter the market who can better satisfy the consumer through lower prices and/or a better quality of goods and services.

The problem with income inequality today is that it isn’t entirely a byproduct of the free market but instead is the result of a market crippled by interventionist policies, such as regulations, expensive licenses, and the most complicated tax system in the history of this country. Such restrictions have limited competition and made wealth creation more difficult, causing the stagnation of the middle and lower classes.

Though leftists contend that these restrictions protect people from the “dangers” of the free market, they actually protect the corporate interests that progressives claim to stand against.

Colossal businesses like Amazon and Walmart in fact favor higher minimum wages and increased regulations. They have the funds to implement them with ease, and such regulations end up acting as a protective barrier, keeping startups and potential competitors from entering the market. With competition blocked, these businesses can grow artificially large and don’t have to work as hard to earn people’s business. Instead they can spend money on lawyers and DC lobbyists to fence small businesses out of the market.

Ironically, efforts to regulate businesses in the name of protecting laborers and consumers harms small businesses and makes everyone less equal than they could be in a free market.

Conclusion

Markets are not the enemy of inequality. Regulated markets are. The income inequality that naturally occurs in the free market as a result of human uniqueness is needlessly amplified by restrictive government policies to the detriment of all.

Voluntary exchanges in capitalism are mutually advantageous. If they weren’t, the exchange would never take place. People who live in countries with more economic and social freedom enjoy greater incomes and a higher standard of living. Free trade has contributed more to the alleviation of poverty than have all the government-run programs. Socialist intervention in the market can only distance man from eradicating poverty and from happiness: only unrestrained competition driven by profit can bring about the expansion of choice, the fall in prices, and the increased satisfaction that make us wealthier.