Democracy and Capitalism

2nd Quarter 2017 Hotline

Market Watch
by Joe A. Hollingsworth, Jr.

Instead of direct comments on industrial real estate, I wanted to share some thoughts on democracy and capitalism. My belief is that democracy and capitalism literally go hand in hand. People generally cannot believe in democracy if it doesn’t bring happiness through improving economic environments. They are not interested in the right to vote every few years in order to just experience voting but instead do so for the hope of improving their and their family’s lives.

The true test of a democracy is to provide the framework so that progress is recognized on an incremental basis, thus providing the hope for each succeeding generation to improve their livelihoods. However, democracy by itself cannot succeed to the levels that the populous would expect just on their votes. It is best coupled with capitalism. Capitalism offers the hope of harnessing individual greed (and greed is not a bad word as long as it is managed) to produce the solid experience of earning new goods, services, or tangible experiences that justify the hope that democracy holds out. Coupled together, there has never been a more reliable form of government (even if it is not perfect). However, a quick glance at the alternatives may be enlightening: Many poets have romanticized about forms for governments. Priests have gotten involved to push the equalization in personal incomes in government. The youth envision utopia. Glorification of autocrats or outright dictators that appear to temporarily succeed all fade when compared to democracy and capitalism.

We can romanticize about what is perfect, but where is the constant migration of the poor that envision their own individual success? Throughout history, they have migrated to the successful structured democractic and capitalistic nations. Does anyone really believe that any substantial number of people have ever migrated from capitalistic nations to poor unstructured countries? Populations don’t aspire to be poor, and they very seldom aspire to be mediocre, thus industrious people are constantly looking for ways to risk their lives to flee socialism and Third World countries to experience the individual freedom to produce!

The societies that have experienced the most success throughout history have always been those that have been based on business (through a small amount of individual greed), never on military or aristocracy domination. People in those societies tend to exhibit very little jealousy toward the success of others if they are allowed to enjoy their own success. Yet, as we have seen, constant talk of inequality in income is divisive. Instead, the vision has to be to pull everyone up the economic ladder by allowing them to enjoy their own individual efforts.

Maybe the above thoughts don’t seem to be in sync with the industrial market, but it clearly has been demonstrated that our country is at a turning point where “animal spirits” are finally beginning to be stirred. Risk is not as much of a four letter word; the vision of success is no longer a kaleidoscope of random diversity; and, people can envision their family’s individual successes. I recently traveled for several weeks in Southeast Asia. To my surprise, my conversations that I had were with industrious individuals living under communist rule about the fact that America once again needs to lead the world back to hopeful societies.

“Joe Hollingsworth participated as one of our first equity investors. In addition, Joe Hollingsworth has served as a board member and leading advisor for strategic planning and direction.” — Scott Kelley, President and CEO, Service Center Metals