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The Fallacy of Capitalist Exploitation

January 17, 2012

The video above explains that exploitation in a capitalist society- or a society that limits the power of government and that separates state and economy- is almost an impossible phenomenon. Exploitation, in reality, is only made possible by government through economic intervention (e.g., protectionism, cronyism, closed economy, subsidy, etc.) Government intervention protects, benefits and rewards incompetent and unproductive businessmen who either maintain close political connections with power-brokers or who happen to be  local or domestic employers. Economic protectionism is one of the worst economic ideas invented in the past two centuries. It is based on the premise that when a state or society protects its state-owned industries or local businessmen, the domestic economy would grow and be able to compete in the long run in the global market. The idea is to disallow or limit the entry of foreign investors who might pose an economic threat to the government’s state-owned industries or to local investors.

Real-world events prove that protectionism does not merely hurt domestic economies; it also punishes ordinary citizens who do not enjoy political connections and protection. Thus, protectionism is the cause of cronyism, bribery, graft and corruption, and almost all kinds of economic evils. For instance, a country that limits foreign ownership penalizes foreigners compelled by the system to use “dummies” in order to invest and to provide jobs to locals. According to the legal system of this protectionist state, foreigners who employ “dummies” are criminals who must be penalized by law. In other open economies like Hong Kong and Singapore, foreign investors are welcomed and even thanked by the former’s governments. This is the main reason why these Hong Kong and Singapore are economically successful and progressive.

In the Philippines, the leftists and Marxist academics naively, ignorantly, stupidly believe that capitalism causes many social evils like exploitation, pollution, environmental disasters, etc. To back their stupid claim, they point to many big companies that allegedly exploit their employees as proof that capitalism is the root of all economic exploitation. But is this so naive a claim true? NO!

The problem in the Philippines is that it is not an open, free market economy. The Philippines, which is a mixed economy, is a protectionist, semi-socialist society. The main proof of this claim is the Constitution that limits foreign investment, totally bars foreign professionals like doctors, engineers, scientists, architects, among others, and justifies government intervention or even central planning.

The reason why there is high unemployment in the country is because of the Constitution’s protectionist provisions and welfare statism. No rational businessman would risk his money to invest in a protectionist society that bars him full control of his ownership or equity and that taxes him nearly 50 percent (46.5 percent) of his profits.

Naturally, because the Constitution discourages or limits the entry of foreign investors to protect local businessmen, there exists very low competition among businesses and companies in the country. So do not wonder why only cronies, politicians, and people who maintain close political connections and who receive government grants and subsidies get rich in the Philippines.

If you’re a stupid leftist or a moronic college professor who derides “capitalist exploitation” yet supports protectionism, then blame only your ‘self’ because you’re more than a useful idiot.

The reality in the Philippines is that the 1987 Constitution is the real cause of exploitation by “protected” cronies and local businessmen and of almost all political and economic evils in the country.

5 Comments leave one →
  1. January 17, 2012 3:38

    Great article. I agree completely with your analysis that part of our problem is in our current constitution. It really needs to change.

    Just a couple of suggestions for improvement: the video is really about minimum wage laws, and not about protectionism. This is not really a big deal because minimum wage laws is also another government intervention, which we also have in Pinas. Also, “protectionist” is an adjective; the noun is “protectionism”.

    • January 17, 2012 3:38

      “Real-world events prove that “protectionist” does not merely hurt domestic economies.”

      — Thanks for the heads up.


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