American economics – a beautifully woven myth

Ava Wittman, Staff Writer

All economic systems, with some early day exceptions such as the Mesopotamian Empire, are quite the vortex of knowledge: the more you learn the more you feel you are flailing around in a vast emptiness of continuously more complicated problems and their even more complicated solutions. However, at its base level, economics is really very simple. Economics is merely the flow of goods, services and money throughout our lives. There are a few main types of systems into which most modern day economies fall, and the difference in the systems tends to rely on government interference. 

Most of us are somewhat familiar with the more popular economic systems of capitalism, socialism and communism. Let’s start with the one most familiar to Americans: capitalism. While the United States isn’t completely capitalist, as it is almost impossible to be solely one economic ideology, it is the one we are most commonly associated with. Capitalism is characterized by its use of the free market; corporations control what is produced with profit in mind, with minimal government interference. There are numerous fruitful benefits to be reaped from capitalism; corporations must produce what people want in order to stay afloat, which leads to competitive markets that benefit consumers often via  better prices and constant innovation. However, do not be fooled, as capitalism is by no means perfect. But we’ll circle back to that. 

Next up are socialism and communism, the subjects of some dangerously deceitful misconceptions. Before we can get into exactly what either of these systems is, one thing must be made perfectly clear: under no circumstances whatsoever are socialism and communism the same economic system. In fact, some socialist pieces are at play in the American economy and it has been defined as a period in between capitalism and communism. For example, do you plan on receiving your social security check in your retirement years? That is a socialist piece of our economy. At its core, socialism is about the workers of an economy and protecting their quality of life in a sense. Often higher taxes can be seen, but more return for the citizens on those taxes such as healthcare, schooling and other things are all possibilities. Communism on the other hand is near-complete government regulation of the economy. It aims at completely removing social classes from society.

So where exactly does the United States lie on the spectrum? Well, there is no exact answer for that. We are somewhere in between socialist and capitalist, however our stance on that has fluctuated greatly throughout our history. With the rise of an ideology known today as Social Darwinsim, we saw a decisive push towards capitalism on the spectrum. Social Darwinism was derived from Charles Darwin’s theory of evolution which is greatly known as “survival of the fittest” or essentially whatever group is most suited to their environment will thrive. Social Darwinists believed that this theory transferred over towards American economics, with the idea that, in an unregulated market, only the companies that best fit the consumers would survive, thus cultivating incredibly competitive markets that would have to fight to meet consumer’s needs. We saw a small shift away from this and towards socialism during the rise of labor unions in the late 1800s, but that was short-lived with the introduction of the Laissez-Faire, which greatly limited government interference in the market. 

Social Darwinism seems like a rational enough idea, the economy should be a jungle that corporations must not only already be suited for, but constantly adapt to in order to keep up, and would seemingly produce an incredibly favorable market for consumers. However, it is pertinent to Social Darwinism that two things must be true: luck is not a sizable factor in the economy, and, therefore, it is up to every individual’s skills, work ethic and intelligence to be successful. This idea is still engrained in most of our heads today. Bad grades? You aren’t working hard enough. Company went under? Guess your company wasn’t good enough. Didn’t get that promotion at work? Clearly you are insufficiently skilled. Think of these ideologies like salt to a meal: a little bit of it can greatly improve the meal as a whole, but too much of it can be detrimental to the entirety of the meal. 

These ideas force us to ignore the inconvenient truths. Luck is an incredibly integral part of the economy that has absolutely nothing to do with an individual’s capabilities. Don’t believe me? A house cat named Orlando outperformed a team of professional stock investors by randomly picking stocks, according to The Guardian. More importantly, luck extends even further than simply our performance in the business world into our home worlds. Where you come from, or rather how much money you come from, has a dominant say in what class you will be in come adulthood, which is an uncomfortable truth for Americans. The Pew Charitable Trust discovered in an article released by The Economic Populist that the majority of children born into poverty would remain in poverty in adulthood, and that those born in wealth would remain wealthy. 

John Oliver, host of Last Week Tonight, referred to the classist divide in America as the “lottery of birth” in his piece on the wealth gap. The reason this is so uncomfortable for Americans is because we were all raised on this idea of rags to riches, and it’s part of what makes our country so phenomenal.  At the birth of our nation, you could come here with nothing, and become a titan of industry, and we still expect ourselves to experience that today. But the days of springing through the wealth divide are over, and it is time we set up measures to protect our citizens. 

The necessity to protect our citizens has been exacerbated by the economic effects of COVID-19. According to an article by Fortune, around 100,000 businesses have gone under due to COVID-19. Is it these businesses’ fault they did not predict a global pandemic that the government itself was not prepared for? No, of course it isn’t. So why aren’t there safeguards for them? COVID was completely by chance, it did not prey on the weakest or the strongest. It merely hit those who were naturally predisposed to be hit by the “lottery of birth” mentioned earlier. 

We are young, relatively speaking, as a nation. It is not too late for us to realize our mistakes and correct them. We are a government built for the people, not for the corporations, yet somehow we end up protecting the corporations before the citizens. It took over 100 deaths of workers in the Triangle ShirtWaist factory fire before decisions about workplace safety were reached and it took the Great Depression to create social security. We must start protecting people before catastrophic events, instead of siding with corporations until it is a necessity not to. We can start with taxing corporations more heavily than individuals, as many corporations dodge the taxes they are supposed to pay by operating specific portions of their companies outside of the U.S. 

While optimism and hope that we will see ourselves and our children richer than those before us, is what makes the United States the United States, it is unrealistic to think one’s success relies solely on their skills. Perhaps it is time to grow up as a nation, and realize our current economy is not sustainable as larger corporations control more and more of the industry. Perhaps it is time to switch our focus from being the richest to being able to provide a nice life for our families. Perhaps it is time for a nation of dreamers to become a nation of realists.