How Capitalism Will Save Us Read Online Free Page B

market to work; GM would have taken the usual route and restructured in bankruptcy court. But with the government taking control, GM has been prevented from making the kind of tough Real World decisions needed to bring about a true turnaround.
    Wall Street Journal
columnist Holman W. Jenkins Jr. wrote in the spring of 2009 that the true priority of GM’s new government-appointed CEO, Ed Whitacre, was not the needs of the marketplace but “first and foremost, making sense of GM’s relationship with Washington.” Whitacre’s decisions are likely to be driven not by what will succeed with customers but by what will please his political bosses, as well as the people who
they
need to please, the labor unions.
    We explore the unintended consequences of government micromanagement in our chapters on government policy: “Don’t Regulations Safeguard the Public Good?” and “Isn’t Government Needed to Direct the Economy?”
    Overbearing regulations by bureaucrats—from price controls to draconian accounting rules—produce damaging economic distortions that hurt people. The foremost example, which we explore in detail, is health care. In our chapter “Is Affordable Health Care Possible in a Free Market?”we show how government participation in the health-insurance market and layers of regulation have produced a tangled market with runaway costs that benefits fewer and fewer participants.
          REAL WORLD LESSON      
    Efforts to impose political constraints on market forces end up producing unintended consequences that hurt those they were supposed to help
.
    Efforts in the United States and other nations to make health care more available and affordable have helped only to drive up prices and lead to rationing. Sadly, the economics of health care remain the least understood of any market.
    Almost as poorly understood is the process of wealth creation in democratic capitalism. That is the focus of our chapter “Isn’t Capitalism Brutal?” which explores the disruptive and often painful dynamic change that is part of economic growth. Economist Joseph Schumpeter, as we have mentioned, called this process “creative destruction.” The very technologies and businesses that produce new industries and jobs can also devastate old industries they render obsolete.
    Think about personal computers. They wiped out demand for typewriters, and no doubt thousands of jobs. This is why, even in good times, there will be disturbing stories of corporate layoffs. Businesses and jobs created in a capitalist economy don’t always spring up in the sectors where you expect them.
    Take a more recent product spawned by the growth of personal computers: the iPod. Apple’s revolutionary innovation (which includes not only the iPod but the iTunes software that works along with it) has become a cultural icon. It has created, by one count, more than 40,000 jobs; and that number does not include those related to selling its countless accessories. The technology has brought numerous benefits: It enables consumers to buy single songs instead of pricier CD compilations, making their music dollars go further. It allows smaller artists access to the market without having a record label. And it has generated opportunities beyond the music industry, providing a new way to sell or distribute video content—such as movies and informational “podcasts.”
    Yet there’s no question the iPod has been destructive. It helped accelerate the boom in music downloading that devastated music retailers,forcing many to close down or dramatically alter their businesses. Record labels and recording artists are increasingly having to make their money from the sales of singles rather than more profitable CD compilations. The iPod has also presented challenges for makers of traditional stereo equipment that had to tailor their offerings to the new technology.
    For those negatively affected, these changes are unquestionably painful. But does that mean we would