There is a town, not far away, whose people woke one morning to find that the town’s only industry had shut down. There were no jobs. The people wondered how they would earn their living. One man decided that he would earn money by doing his neighbors’ laundry. The neighbors were busy complaining that they had no jobs, and were happy for this man to do their laundry. A woman on the next block saw what was happening, and offered to do her neighbors’ laundry. The number of home laundries grew, and soon everyone in town was taking in someone else’s laundry. The town became known as Washingdon.
I don’t know who first told this story, but it contains an important lesson. Certain economic activities create wealth. Those activities are properly called capitalism. Other economic activities do not create wealth, they merely moves money around. Those activities are properly called washingdon. An economy, like that of Las Vegas, that is based on casino gambling, is not a capitalist economy; it is a washingdon economy. An economy based on the presence of a military base is not a capitalist economy; it is a washingdon economy. An economy based on tourism is not a capitalist economy; it is a washingdon economy. An economy based on retail sales and the proceeds of sales taxes is not a capitalist economy; it is a washingdon economy. An economy based on money spent by film and TV crews is not a capitalist economy; it is a washingdon economy.
Any government program that shifts money from capitalist economic activity to washingdon economic activity through taxes on the producers and subsidies to the laundries is not encouraging capitalism or creating wealth; it is creating more washingdon economies and wasting money. For example, using tax money to dredge the Savannah harbor to encourage stops by cruise lines is a washingdon program. Giving roads to a developer so that he or she can build another big box store is a washingdon program. Using taxes to subsidize movie and TV crews is a washingdon program. These programs may increase the flow of money in the short term. However, they do not create wealth. They are not capitalism.
[This first appeared in “The Citizen” newspaper, Fayetteville, Georgia, on July 12, 2011.]
Registered Curmudgeon, scientist, skeptic, humanist, and writer.