Capitalism, Zombies and the death of Steve Jobs.

I’ve been reading a lot about the death of Steve Jobs and the protests on Wall Street recently.  With both being at the top of the news headlines, I can’t help but think of the irony they represent.  Both are stories about the two sides of American capitalism.  I am a capitalist at heart.  I feel that Adam Smith was right that in theorizing that if there is no state or external intervention, that individuals (the market) would be able to dictate what products bring the most value to the market by how they spend their money.   If a product or a service is not satisfactory, the market will simply not reward (purchase) it.  People can say they want one thing, but prove what they want by spending their money on it.  Which brings me back to the death of Steve Jobs and Wall Street.  Fairness.  Capitalism is built on equality and fairness.  With no external forces (such as the government), a capitalistic market will balance itself out. 

Steve Jobs built Apple computer in his parent’s garage.  He built a big business and a business that most people would recognize as a good business.  A business that creates valuable products that people want.  Products that make life easier and sometimes more enjoyable. He built products that people weren’t calling for, but for products he wanted to use and that were game changing.  (see Mac, iPod, iPhone, iPad) And for this the market (the people buying his products) has rewarded him and his company for the products they have built for society.  Steve Jobs died a multi-billionaire.   And this was possible because the American capitalist system made it possible.

On the flip side, we have Americans protesting Wall Street by dressing up as zombies.    They weren’t protesting the New York Stock Exchange or the NASDAQ specifically; they were protesting the big banks and individuals that make up Wall Street.  They were protesting the unfairness in the market.  They were protesting a system that is rewarding bad behavior, irresponsibility, and a product that many see as creating no value for society and in many cases have helped degrade it.  While financial CEO’s and hedge fund managers are raking in record profit sharing checks, the people whose money they are supposed to managing, have seen their return on investment either stagnate or actually lose value.  We have a government that has given billions of dollars to these corporations that have let 401K devalue and created exotic, destructive derivative products and subprime loans that benefit no one but the corporation.  While many Americans can recognize the need for certain policies, it is those policies that still offend their sense of fairness and the concept of America as a meritocracy by basically rewarding destructive activities.  As many Americans see it, Wall Street is being rewarded with oversized compensation whether they actually create any value at all.  Many Americans look at Wall Street as being an academic version of a Casino.  Instead of people helping companies build more products that they would like to buy, by purchasing stock with hope that that company will use their money to produce more products or services people want to buy, they are being sold “financial products” that aren’t products at all.  They are gambles.  They are products that call for one group to lose money so that the “financial products” can make money.

For me one of the biggest lessons we should be taking away from these two events is that of the many reasons that the United States of America is the greatest country in the world, capitalism is one of those reasons.  A truly free market does not what the government to dictate market solutions.  A truly free market does not want the government to pick alternative fuel technology to back. (ie giving money away to back electric vehicles).  We know the market says it doesn’t like paying high gas prices and that it wants alternative fuel options, but we don’t need a government to tell the market what that alternative is.  How does the government know what is best for the future?  It can’t even do something as simple as BALANCE A BUDGET.  Most 8^th grade civic classes in this country could do that.  It really is quite simple.  You can’t spend more money they you bring in.  Dave Ramsey has been beating that concept into people’s heads for more than 20 years. Heck, God has been telling us that forever in the Bible.  Let the market decide what the best fuel alternative technology is.  We have had electric hybrid technology in the market for almost 10 years and it still holds a very small portion of the market.  The mass market isn’t buying it.  I’m not saying it isn’t the future, but it should not be the only avenue pursued.  My point is small business, big business, and capitalism is very good, but only to the extent that they are able to function in a system that dish’s out rewards for the creation of value.  It fails when rewards (bailouts) are given out regardless of any value a company or industry creates.  The rewards need to be able to be given to those that create value and give by those that receive the value.