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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of Jim Cook
January 29, 2002
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ENRON AND ENVY

By James R. Cook  

Years ago the author Jerome Smith told me that the government was responsible for everything that was wrong in the world. If you looked deep enough, you’d find the hand of the state. I never quite bought the idea. Lots of things go wrong that the government has nothing to do with. However, it is true that government actions often create problems, and frequently do so, in ways that most people don’t see.  

Most of the large companies that are failing nowadays, including Enron, got into trouble through the excessive use of credit. The Federal Reserve primarily enacts the wishes of the political parties and various administrations which, unanimously, demand loose money. The ease with which credit is made available promotes consuming over saving, financial excess, overexpansion, speculation and other risky practices. To that extent Jerome Smith was right. Enron couldn’t have turned into an over-leveraged speculator without the government’s expansionary monetary policies.  

Nor would so many people have dumped 100% of their retirement nest egg into Enron stock, if it wasn’t for the credit-induced boom of the 1990s. The bull market fooled all too many investors into thinking stocks were completely safe, if you just held them long enough. Margin debt and corporate financial engineering, through the use of credit, caused the stock bubble to inflate and investors to throw caution to the wind. Sound ideas like diversification were forgotten. Here again Jerome Smith was right; government intervention through manipulation of interest rates spawned excesses and painful financial loss. Stocks were proven to be risky and dangerous. It’s a lesson that still has to be learned by an army of small-time speculators.  

Yes Dorothy, big companies do fail and their stocks collapse. Most small companies fail because they take advantage of their customers rather than serve them. Crooks almost always fail in business. Success requires integrity. Companies also fail because they manage poorly or do something stupid. Enron might have been guilty of all three. That’s the way it is with capitalism. Most companies eventually fail. There are always upstarts who are more efficient, more aggressive and better at providing the product or the service. Everyone’s familiar with the old bromide that entrepreneurs make lousy managers. Well, in the case of Enron it appears to be true.  

The media, who know little of these things, are feasting on this bad example of capitalism. The left loves to pounce on anything that gives business a black eye. Strange it is that the greater the prosperity enjoyed by the nation the more fervent the hatred of capitalism. I think it stems from envy. Scratch a socialist or liberal and you’ll find a person who’s worried about someone else making a profit or high income. Why is that? Author Helmut Schoek writes, “Envy is a drive which lies at the core of man’s life as a social being…”  

It’s disgusting. Even the mainstream newspapers imply that riches are evidence of greed, bad character and ruthlessness. Nothing could be further from the truth. Henry Ford became the richest man in his day by providing low-cost automobiles for the public. That’s how riches are accumulated – by serving others. Many wealthy people started from lowly positions in life. Only through hard work, struggle, diligence and improved service to customers did they prosper.  

The sight of people who have given proof of greater ability bothers some people. To console themselves they rationalize that their skills have gone unrecognized. They blame business, which they claim does not reward the meritorious but gives the prize to dishonest promoters, greedy speculators or crooked entrepreneurs. They were too honest to swindle people, and they chose virtue over riches.  

In a society where everyone is the founder of their own fortune, it is particularly galling to the teacher, the politician, or the bureaucrat to see the large income disparity between themselves and successful entrepreneurs. However, in business, everybody’s station in life depends on their own doing. Everyone has the same opportunity to meet the needs and wants of the public with a better product. However, if someone prefers writing for a newspaper, then that person can’t make as much money as someone who fills the needs of a greater number of consumers. That is the law of the market. Those who satisfy a small number of people collect fewer dollars than those who satisfy a greater number of people. In money-making, the creator of computer software outstrips the social critic or the school teacher.

 

Even among many conservatives there exists an unhealthy level of hatred towards the wealthy. Nor do they hesitate to join with professors and politicians to suggest that the worst exploitation and greed comes from big business. They fail to realize that large corporations got that way because they did a superior job of meeting the product needs of the people, in the best and cheapest way. The hallmark of big business is mass production for the benefit of the masses. In fact, big business standardizes the people’s ways of consumption and enjoyment, and every citizen shares in most of these material blessings.  

Nobody goes without in the market economy because someone got rich. The money earned by the rich is not the cause of anyone’s poverty. The same process that makes people rich satisfies people’s wants and needs. The most millionaires are found in countries with the highest living standards. The entrepreneurs and the capitalists prosper only to the extent that they succeed in supplying and satisfying the consumer.  

Unfortunately it’s impossible to convince the liberals and the media of these simple truths. Their glaring misunderstanding of business and how it works originates more from envy than intellect. It’s easier to say someone is a crook than to admit that they did a lot more with their life.