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Thursday, Dec 2, 2021

High gas prices a consequence of capitalism

As gas prices have been steadily rising some people have become agitated and are looking for someone to blame. Some blame the federal government because they believe that the president has influence over determining the outcome of tensions between Israel and Iran, whom they also blame for the increase in prices.
Some blame oil companies for being too greedy. They reason that because oil companies make a lot in profit they have a responsibility to provide lower prices to their customers.
Some blame speculators for artificially inflating prices based on fears around the world, most notably Iran.
Some would argue that developing nations have found a new appetite for rapid growth and have increased consumption of nonrenewable resources and tout this as one of the reasons why prices have grown.
But the only culprit is capitalism.
It is all capitalism’s fault for being so beautiful of an economic system. Capitalism is such a beautiful economic system because of its emphasis on efficiency and its incredible success rate at allowing those who control the means of production and resources to meet the demands of those with purchasing power.
The greatest tools you can wield are information, creativity and the courage and intelligence to use them effectively whether you are a buyer or seller.
Capitalism is completely amoral; it does not discriminate and is constantly evolving. It is currently the best economic system that humanity has to offer and proof is in its success relative to other systems.
You need only look to countries like the United States, China, Singapore and South Korea as examples of countries that have employed relatively free market policies and grew faster than those that did not.
So the reason capitalism is at fault is that because of its success there are always those with power who try to manipulate the system to their advantage. It could be politicians or it could be oligopolies.
What they all have in common is hubris. But to deal with this capitalism has a built in a self-correcting mechanism and there is why you see gas prices rising. Something is amiss and market forces are working overtime to correct it.
What this means is that no matter what gets done to it market forces will move in such a way as to correct whatever problem was created by moving towards equilibrium and consequently taking down the manipulators.
Inflation is one method and debt that grows faster than you can produce is another. The European Union was almost broken up because of sovereign debt and eventually the United States will face a crisis too, if changes aren’t made, because capitalism is not pro-American.
The result of manipulation will usually lead to the opposite effect of what was intended.
For example a government chooses to increase the standard of living by forcing wages above the equilibrium level. Companies that rely heavily on labor react by moving to cheaper countries.
Actually in this case someone’s standard of living did go up, just not the people the policymakers had in mind.
But the point is that you should always remember that the goal of capitalism is efficiency, and if prices are going up it’s because they need to be. Everything else is background noise.
If you want social good or want reduced prices your best option is to promote and continue to participate in free markets with less manipulation and let market forces work their magic.

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