Dan Mitchell – November 21, 2018
I periodically explain that labor and capital are the two factors of production and that our prosperity depends on how efficiently they are allocated.
But I probably don’t spend enough time highlighting how they are complementary, meaning that workers and capitalists both benefit when the two factors are combined. Simply stated, workers become more productive and earn more when investors buy machines and improve technology.
In other words, the Marxists and socialists are wrong when they argue that workers and capitalists are enemies. Heck, look around the world and compare the prosperity of workers in market-oriented nations with the deprivation of workers in statist economies.
This becomes painfully clear when you read this Wall Street Journal story on the statist hellhole of Venezuela.
Irish packaging giant Smurfit Kappa recently joined other multinational companies abandoning Venezuela…President Nicolás Maduro’s socialist government. But this case comes with a twist. Hundreds of employees, who counted on the Irish company for transport, education, housing and food, continue to show up at work. They take turns protecting idled heavy machinery from looting that has become rampant as Venezuela plunges into hyperinflation and economic chaos. …“Help, we need a boss here. We’re desperate,” said Ramón Mendoza, a Smurfit forestry division worker for 17 years. “We’re so scared because we now know that all the government does is destroy everything, every business.” Their plight underscores the devastation that rural Venezuelan communities face as private companies pull out of a country that was once Latin America’s richest. The economy has shrunk by half over the past four years.
Wow, Mr. Mendoza hit the nail on the head when he explained that “all the government does is destroy everything.”