The-Morality-of-Capitalism-PDF

well-being reflects a potentially cataclysmic state of affairs—a dangerexacerbated by successive political administrations repeatedlypromising all sorts of benefits to their constituencies.To deal with the challenges that face us, we have to clear awaycertain misconceptions.Job creation is not a role of the state. For jobs to be sustainable,they have to be created by the private sector. Governmentgeneratedjobs are at the taxpayers’ expense and amount tosubsidized employment. Being unsustainable, they have no positiveeconomic consequence. The private sector is the main creatorof wealth, and the state sector a consumer.Money is merely a medium of exchange for goods and servicesand should therefore relate to and reflect productivity. When Ivisited post-communist Russia and Czechoslovakia in 1991, thejoke doing the rounds was that the workers pretended to workand the government pretended to pay them. Thus, in my opinion,when we talk about meaningful job creation we should focussolely on the private sector.This begs the question as to which policies should apply toprivate enterprises. Which ones will enhance their productivityand which retard it? What should be done?Let’s examine the principles that underlie the simplest of exchangesbetween two parties. Simple transactions can serve as anexample and a microcosm of the bigger economy. They shouldinform policymakers as to which policies are most compatiblewith human nature, because the human factor is pivotal in theeconomic context. Start far back in time with a hypothetical cavemanwho is skilled at hunting but inexpert at making a weaponfor hunting. Our caveman meets a skilled weapon maker andagrees to exchange part of his quarry for a weapon. Both mencome away from the transaction feeling they have profited bygetting in return something of greater value to them than whatthey gave away. Sooner or later, the weapon maker finds that ifhe specializes in weapon making, instead of going hunting, hecan barter the weapons for fur, meat, ivory and so on. He is inbusiness. He prospers and all his customers prosper because theyare now using more efficient hunting weapons.What is important to note about this scenario is that there97