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19 Jul 2012

Christopher Salute Featured in Fiscal Debate on Free Market by Michael Russo

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Michael Russo, a Philosophy professor at Molloy College, recently asked Salute to participate in an online debate about free market featured here:

http://www.michaelsrusso.org/2012/07/debate-on-free-market.html

in regards to these two readings:

Arthur Brooks, “Five Myths About Free Enterprise”  (Washington Post, July 2012)

Joseph Stiglitz, “Of the 1%, By the 1%, For the 1% ” (Vanity Fair, March 2011).

Here is Salute’s response:

Christopher Salute (Pro-Business Centrist)

I agree, for the most part with Brooks’ five points. Though, I find anyone who stands completely on one side of any playing field more ignorant than those reading their articles. At least those reading the paper and educating themselves are attempting to find middle ground. And, I think that’s where we’ll all find peace with corporate and governmental policy.
I’m baffled at the stances I’m seeing against free trade, lately. I see it in students and even my own colleagues. We play the blame game and debate in circles. It comes down to a few inescapable facts:

Yes, many large corporations are corrupt. This is the case all over the world. The difference in the US is that they are not DIRECTLY tied to the government, local law enforcement, and exploiting their employees for pennies a day in unsafe work environments. And, you have the freedom to protest this without lethally being shot at.
The financial landscape exists this way for a few reasons. One is that bankers are constantly looking for higher margins. This is true. And, I think that there is a ridiculous amount of unshared wealth, out there. But, I’d prefer that over being allowed 2 pairs of shoes, a sack of flour, and a mule after working my tail off to become a doctor. Because, that’s the other side of the coin.
What we forget are the other few reasons that the financial landscape is this way. The first is that corporate banks (unless they hold on to and service their “paper”) borrow and sell to and from the US government. This is regulated. In order to remain competitive, loan agencies will push the legal limit to how far they can lend because they have to hit their quotas to be able to sell their loans back to the fed.. And, they depend on the government banks to say “yes you can” or “no you cannot do this.” I think that is where the major breakdown was during the meltdown. Loan agencies are going to do everything they can to make money. This is to be expected. If you are the regulator, you must regulate. This is the difference between morality and LEGALITY.

The second is that consumers are no longer doing their homework. I have worked in finance, communications, human resources, marketing, sales, etc. etc. And, the silliest thing I hear from co-workers, colleagues, customers, alike is “Well, nobody ever told me that.” Did you really think that borrowing another $100,000 against your home at a volatile interest rate was a good idea? Prime and other rates like this were jumping all over the place. Loans are subject to change based on this. You MUST know what you’re doing before you jump into the deep end with all or most of your money.
  • “Nobody told me this rate could jump to 12%”
  • “Nobody told me that my art history degree wouldn’t get me a job”
  • “Nobody told me that this product I paid $1 for was inferior to the $20 counterpart.”
I think that what happened this decade was a perfect storm of uneducated (but more importantly irresponsible) consumers who expected someone else to do their work for them, definitely corrupt large corporate bankers, and a lending/government system that LOOKED more regulated than it actually was.
But, free enterprise? THAT is what creates jobs. Nearly 90% of us work for small businesses (under 1000 employees). They are responsible for the most job growth, innovation, and revenue in the US. So, why attack them?
I am all about job growth, giving back (believe me when I tell you I give a larger proportion of my earnings to charities all over the world than most anyone you’ll meet), etc. And, I am the last one to buy a new car, 20 new suits, or a rolex. But, as a small business owner and executive in the top 10% of US salary earnings, I can tell you I have earned every dime I’ve made. And, if I were in the top 1%, I’d have earned that, too. What probably keeps me back is my desire to educate myself and see my family more. The career track I was one would have put me in that same bracket had I not gone back to school and chosen a different path. And, nobody is entitled to that money but me! Tax me all you want. I’ll donate at my leisure. But, don’t penalize me because you don’t think I worked hard for it. I’m sorry that I don’t have my own reality show for you to watch.
I continue to struggle because I live just outside the largest city in the world, am earning my PhD, and graduated college just a few years before the recession. I have debt, I have sat up at night wondering if I could make my mortgage payment, couponed my way through a grocery store so I could eat, etc. etc. I woke up the next day and I figured it out. But, thank GOODNESS I am in a country where I can do that. This sense of entitlement is the biggest barrier to getting us out of the recession. Nobody owes anyone a job, a suit, and a meal. If you think that, you’ll be waiting for those until your last day. There are thousands of employed illegal aliens doing manual labor. That Art History degree is doing nothing on your wall so use it to dig up some potatoes in the midwest if you’re that hard up for work.
To generalize this group of people and say “all business men are criminals” is just as bad as saying “all protestors are bums.”

 

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