Many people in the media talk about U.S. consumerism as if it’s something evil, something we should all feel guilty about, something that’s out of control. Especially around the Christmas holidays, we’re made to feel guilty for being consumers. But consumer spending is a driving force of our economy; it’s a big part of why our country continues to grow richer, and I’m proud of that.
Next time you’re discussing market uncertainty with your clients, an uncertainty partly caused by what’s often euphemistically called “unrest in the Middle East,” you may want to remind them of what capitalism provides to its adherents: a system in which capital is privately owned; resources are allocated through open markets; human wants for goods and services are satisfied through supply and demand. Capitalism is what fuels the movement of money through the economy, provides corporations with funds for expansion enriching its citizens individuals along its way.
In my opinion, much of the Arab world still believes in a zero-sum game. If I’m rich, you have to be poor, because there’s only so much money to go around. Karl Marx assumed that there was only a finite amount of money–if I get some, you have to lose some. As it turns out, he was dead wrong. If I get rich by creating a successful product or business–e.g., the computer, the airplane, the Internet, the printing press, the automobile–that makes us all richer. When I deposit $10,000 in my savings account and the bank lends that money out to a contractor, who buys lumber in Seattle, and the lumber company deposits his check in its bank which now has additional assets on its balance sheet it can lend out sets in motion the velocity of money. The original $10,000, depending on how many hands it is passed through, could grow to be worth between $50,000 and $1 million over the course of a year. That’s amazing and something that ensures security.
Arab states do not allow personal lending, so when a consumer buys a TV set, he pays cash for it, and the transaction ends–the seller gets the money and the buyer gets the goods–and leverage stops. Their economy has little to do with what their people do for a living or how they spend their money. Muslim states do not make money from taxes; rather, they rely on their country’s natural resources–oil that’s usually owned and controlled by a tiny group of wealthy people. The Saudi royal family controls all of the money, the Saudi people don’t. Other than the same religion, they have no real connection to their population.This may sound harsh, but if all of their people died tomorrow, their governments would not be affected. Whereas, in the U.S., if all of us died off, our government would close up shop because there would be no one–and no one’s wealth-building companies–left to tax.
Because the well-being of their people is irrelevant, there’s no motivation for those governments to invest in roads, education, or the means of production, other than oil. So like any dysfunctional system, the people in these countries are mad as hell well before we even show up. What their leaders have done is no different than what communist states did during the Cold War or Germany did in the 1930s: they have directed their people’s anger outward toward us, not at their own problems. If we disappeared tomorrow, nothing would change in their world.
I’m proud to be an American, an investor, a capitalist, and a consumer. Enjoy the New Year.
Chambers & Associates