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CAPITALISM IN THE TRENCHES, FIGHTING FOR ITS LIFE
By Kenneth B. Petersen, Ph.D 
"
The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery 
." -- Winston S. Churchill.“
Laissez-faire, c’est fini! 
” -- Nicolas Sarkozy.“
Some may try to tell us that this is the end of an era. But what they overlook is that in America, every day is a new beginning. For this is the land that has never become, but is always in the act of becoming 
.” -- Ronald Reagan.The economy is in bad shape and some people are starting to believe that capitalism has run its course. French PresidentNicolas Sarkozy hosted a symposium called “New World, New Capitalism” in January 2009, where he and former BritishPrime Minister Tony Blair together with German Chancellor Angela Merkel, advocated the idea of “social markets” as ablueprint for a “new capitalism.” Even the highly respected
Financial Times 
last week ran a daily analysis on the future ofcapitalism and its potential replacement. One word: Crazy!Capitalism and all the prosperity that comes with it, rests on a handful of kingdoms: Property rights, low taxes, soundmoney, free trade, and reasonable regulation. Except for reasonable regulation, all the other components that makecapitalism so successful are largely well-behaved. We don’t need communism, socialism, or “new capitalism” but simply areturn to reasonable regulation.For example, putting credit default swaps (CDS) on an exchange, forcing investment banks to get back to the old 12 timesequity rule (leverage), forcing mortgage originators to actually check peoples W-2’s, and splitting investment banks fromcommercial banks, would allow us to once again reap the abundant fruits that capitalism is capable of producing.
Table 1
Income Per Capita in Five- Capitalistic Countries, Socialistic Countries, and (former) Communistic Countries
(GDP per capita, purchasing power parity (PPP) dollars, 2005)
Capitalistic Socialistic Communistic 
Luxembourg 69,984.26 Denmark33,543.49Hungary 16,986.86Singapore43,332.96Sweden32,705.81Poland 13,571.35U.S.41,929.08France30,634.99Russia11,832.45Switzerland36,566.58Germany30,486.12Belarus8,562.36Hong Kong35,549.52Italy28,107.88Ukraine5,625.91
10-yr T-Note: 2.68% DJIA: 7,659.97 NASDAQ: 1,516.52 S&P 500: 806.25 S&P 500 Undervalued: 170.2%
LAFFER ASSOCIATES
Supply-Side Investment ResearchMarch 24, 2009
Summary
•
Communism, socialism, or “new capitalism” are all vastly inferior systems for organizing economic activity thancapitalism. There is nothing above or beyond capitalism.
•
A return to reasonable regulation would cause capitalism and prosperity to reunite. We should not let the “cure”destroy capitalism.
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