Nathan Brown is a senior economics, accounting and finance major and writes “Ahead of the Curve” for the Daily News. His views do not necessarily reflect those of the newspaper or The Daily. You can write to Nathan at nbrown2@bsu.edu.
Capitalism is the foundation of which America has been built upon; helping it to become the most prosperous nation in history. However, it is often associated with extortion and inequality. People tend to forget that the invisible hand, more often than not, finds a way to improve the lives of everyone in our society.
Payday lenders, used-car salesman and rent-to-own businesses are often the subject of media attacks. These institutions are known for their “predatory” strategies as they often “take advantage” of unsophisticated consumers. Contrary to this standard belief, these predatory acts actually are a great example of the reason capitalism is successful.
A 2000 study by the Federal Trade Commission found that only 2.3 percent of American households had used a rent-to-own transaction, but 73 percent of those that did had a high school education or less, and 59 percent had an annual income of less than $25,000.
In tough economic times such as now, these numbers increase and most likely include people with a higher level of education that are finding it tough to make a decent living.
You don’t have to search hard to find the articles and consumers who proclaim that these institutions overprice their items up to 100 percent of their retail value in addition to customer service that leaves much to be desired. These factors make them an easy target for criticism.
The greatest asset of a free market, capitalist economy, is that people are free to make choices.
The reason these institutions continue to thrive despite their well-publicized weaknesses is that they provide a service that many people desire. People are free to choose to do business with them. Low-income families or those with little to no access to credit are able to go out and improve their standard of living and happiness with items that they want but cannot afford to purchase outright.
A free market economy provides the incentive and opportunity for some entrepreneurial citizen to recognize there are people all over the country who are more than willing to pay a premium in order to receive items that they believe will make them better off. No one is a victim in the open market if their wants are fulfilled.
In a free market system, any person who is able to recognize and satisfy an unmet desire of society can go into business. Therefore, it is in anyone’s self-interest to do what’s best for society as a whole.
Profit-seeking individuals only interested in their personal gain end up benefiting everyone whether they intend to or not. The trickle-down effect of individual success is, in part, responsible for the high standard of living that even American citizens at the bottom of the income scale enjoy.
We can compare poverty in our country to poverty in worse-off countries to see this. Approximately 97 percent of all American households own at least one television while around 15 percent of them live in what is classified as poverty. In countries without the economic institutions of a capitalist society, citizens living in poverty often not only do not have televisions, but also lack access to basic amenities such as electricity and shelter.
It would be naïve to ignore the fact that there are Americans who cannot make ends meet, let alone have the certainty of where their next meal will come from. However, the true beauty of our system is that any individual with the drive and determination can work hard to change their situation.
That’s why we should embrace our economic freedoms and always remain true to the principals this country was founded upon.
