Thanksgiving and The True Pilgrim Story & Experience

Happy Thanksgiving and to honor this day and the true story of the Pilgrims I’m going to post an article I wrote in September.  Let me start by saying that I love capitalism. While not perfect there has never been another system that has brought so many out of poverty and created such abundance.  It is absolutely the best and most profitable way for a country to run, and the proof of this can be traced back to America’s heritage and the Pilgrims. How does this tie in with the economic downturn? I’m glad you asked. Here’s the breakdown:

Ever since the economy began its downward spiral back in 2006, ‘experts’ have tried to identify the foundation of the problem. Many have been pointing a finger at capitalism. But, is capitalism to blame? Not if true capitalism is embraced. Going back to William Bradford and the early settlers who tried two completely different government systems, it was abundantly clear which one was successful. Before I give you Bradford’s details, let’s quickly define each form of government.

Communism, Socialism, Capitalism

• Communism - A communist state, of course, is where the government holds and distributes based on need. Communism has no room for free enterprise, wage labor, or private property. The government decides what the people need and provide according to their ideas.

• Socialism - Is a move where the government controls much of the business sector, but there are often private industries as well. Socialism involves more government programs and because of this, it is often referred to as the transitional stage between capitalism and communism.

• Capitalism - Is the complete opposite of communism in the fact that capitalism provides individuals with the freedom and opportunity to make their own choices. With capitalism, individuals can choose to be highly productive (such as with business owners and entrepreneurs) or they can choose to be less productive. There is no forced labor, only the obvious consequences (poverty) for a lack of motivation to be productive.  In capitalism consumers vote with their pocketbook.

Obviously, capitalism should be the clear winner. Why would anyone want a society that lacks the opportunity to succeed and thrive in business? Capitalism allows us to own property, build wealth based on our own choices and motivation, and ideally has no limits. What could be wrong? Here are just a few of the arguments against capitalism:

Complaints about Capitalism

• “Capitalism breeds selfishness.”
• “Capitalism puts profit before humanity.”
• “Capitalism creates more losers than winners.”

None of the arguments above are well thought out, nor are they true. But these types of statements are heard repeatedly about capitalism. Yes, I suppose for the sake of argument, one could say that capitalism is based loosely on a type of selfishness, or drive that motivates us to succeed, but with capitalism, we certainly all need each other. One person or one entity cannot survive without other people, industries or businesses. In simplest terms, even the very wealthy need to purchase things from others. No one is self sufficient. Because of this, capitalism allows ideas, businesses, and services to thrive and prosper. Again, in capitalism individuals vote with their pocketbook by making buying decisions.  Unlike other systems, people are free to spend their money as they like and seek services and products from companies ‘they choose’ to do business with.

What Would William Bradford Do?

William Bradford, who was the leader of the settlers of the Plymouth Colony in Massachusetts, wrote an extremely telling journal (from 1620-1647) which was later published as the book Of Plymouth Plantation. The beauty of this journal to me is the fact that Bradford saw, first hand, the disastrous effects of communism.

Let’s back up a minute for those who weren’t aware. When the Pilgrims first came over to America, they were communist in nature. That’s right, centuries before the Communist Manifesto was even thought of, the Pilgrims operated on Biblical principles used by the original disciples and followers that called for all property, food, and supplies s to be held in common.  It should be noted this was later ended and the Apostle Paul spoke out against slack hands by saying ‘If you don’t work you don’t eat.’  Now, back to the Pilgrims.   Plantation officials were to distribute goods as needed. It was the idea that such a government system would, in Bradford’s own words, “make the people happy and cause them to flourish.” Of course, this was not what happened.

Instead of flourishing when all their needs were provided for, the Pilgrims experienced chronic food shortages and crop failure. Half of them died or returned to England within the first year alone. Funny, in most classrooms, students learn about the crop failures and the harsh forces that caused the Pilgrims to suffer, but are oblivious to the fact that poor economic incentives were the root problem.

Incentives matter. When all the Pilgrims received equal rations whether or not they contributed, there was little incentive to produce. People are wired to respond to incentives. Without them, the colonists quickly realized it was easier to do nothing and still get rewarded. Despite their religious beliefs, many resorted to stealing and faking illness to get out of work. Sounds like some of employer / employee relations of today.

So, when did things turn around for the Pilgrims? 1623 was the first year they celebrated a bountiful harvest and feast. Yes, they did share meals with the Wampanoag Indians in 1621 and 1622, but the year of plenty didn’t arrive until the year that Bradford switched to a capitalist system.

In his journal, William Bradford noted the flaws of communism, ”For this community, it was found to breed much confusion and discontent, and retard much employment that would have been to their benefit and comfort.”

The ability to own private property and do with it as they saw fit saved the Pilgrims. Colonists began to make their own way. Some raised crops and kept what they produced while others exchanged crops for goods with other Pilgrims, developing a system of commerce. Bitterness and strife ended, as families were able to enjoy the fruits of their own labor without having to look sideways at their neighbor who was reaping the benefits of a harvest he didn’t put any efforts toward, and so a capitalistic society was born.

Did it work? You tell me…Never again did the Pilgrims face starvation. Never were food shortages anywhere near the levels of those in the first years. In his own words, William Bradford stated that this capitalist system ”had very good success for it made all hands very industrious, so as much more corn was planted than otherwise would have been.”

What’s the Truth?

Opportunity, not community, causes us to flourish. Capitalism works. There are plenty of people who say that capitalism is based on greed and certainly there is a certain amount of greed in all of us. But would you rather make your own decisions in a land of opportunities, or would you rather have someone in government decide how much you should have and what kind?

The true heart of capitalism sets up the people to vote with their dollars by choosing where to put them. Look at Ford Motor Company, for example. They decided against bailout money and the public liked that. Now, business is booming for them, and why? Because that’s what the American people choose. In a capitalistic society, we vote with our dollars. Our dollars give us a voice.

Capitalism can and does get muddy when government puts it’s hand in with policies and regulations, but in its authentic form, capitalism works.

Remember when the government proposed the ‘cash-for-clunker’ program? What did this accomplish? Did it benefit the economy? No. It limited the amount of available cars, drove used car prices up and punished the group who needed affordable used cars the most.

That’s only one of hundreds of examples. The best way is a system that keeps people in but limits or keeps government meddling out.

People are motivated when there is a stake in things for them, when there are incentives. Going back to William Bradford’s time, who do you think was against the change from communism to capitalism? My guess would be the ones that were riding on the coat tails of others. Certain people are content with a free ride and when it’s taken away, they are upset.

The Puritans originally came over and thought that making all things common was the Biblical way to operate, but keep in mind, the Apostle Paul also said, ”If a man doesn’t work, he shouldn’t eat.” That might sound harsh to our cushy society, but think of it this way. William Bradford also realized, the ‘one for all’ mentality does nothing but retard our growth and cause an unproductive entitlement mentality. Many of these social handout type programs we are used to today have been crippling our nation financially for generations.

The answer will take time to implement, but less government involvement, less cushions, and more personal responsibility are keys to our nation’s success.

What’s your take on this? Leave us a message; we’d love to hear from you.

Bryan Binkholder, The Financial Coach, is a business advisor, radio personality, author and motivational speaker. He is best known for breaking through the confusion and exposing the misdeeds of the financial services industry and Wall Street. For more insights, financial tips and ways to protect your wealth, continue to follow Bryan’s blog. You’ll also want to take advantage of two popular resources: 7 Deadly Traps of Investing and  The Six Pitfalls of Retirement Planning.