An operating system is a set of instructions that orchestrates the moving
parts of a larger system. The most familiar example is a computer operating
system that coordinates the keyboard, screen, processor, and so on. Operating
system instructions are written in code that can reside in electrons (as
in a computer), chemicals (as in genes), or social norms and laws. Frequently,
parts of the code can be expressed mathematically.
Just as our Constitution sets the rules for our democracy, so our economic
operating system sets the rules for capitalism. Our economic operating system
isn’t as widely understood as our Constitution, nor is it spelled out
in one concise document. It’s visible if you look for it, but it’s
hidden in a shroud of statutes and court decisions. Still, like the Constitution,
it’s there — and it runs the mercantile life of our nation.
I like to think of our economic operating system as analogous to the rules
of the board game Monopoly. It defines such things as starting conditions,
rules of play, and the distribution of rewards and risk. It defines them
partly through law, and partly by assigning fictional things called property
and money. ... read
the whole chapter
The perennially popular board game Monopoly is a reasonable simulacrum of
capitalism. At the beginning of the game, players move around a commons
and try to privatize as much as they can. The player who privatizes the
most invariably wins.
But Monopoly has two features currently lacking in American capitalism:
all players start with the same amount of capital, and all receive $200 each
time they circle the board. Absent these features, the game would lack fairness
and excitement, and few would choose to play it.
Imagine, for example, a twenty-player version of Monopoly in which one player
starts with half the property. The player with half the property would win
almost every time, and other players would fold almost immediately. Yet that,
in a nutshell, is U.S. capitalism today: the top 5 percent of the population
owns more property than the remaining 95 percent.
Now imagine, if you will, a set of rules for capitalism closer to the actual
rules of Monopoly. In this version, every player receives, not an equal amount
of start-up capital, but enough to choose among several decent careers. Every
player also receives dividends once a year, and simple, affordable health
insurance. This version of capitalism produces more happiness for more people
than our current version, without ruining the game in any way. Indeed, by
reducing lopsided starting conditions and relieving employers of health insurance
costs, it makes our economy more competitive and productive.
If you doubt the preceding proposition, consider the economic operating
systems of professional baseball, football, and basketball. Each league shifts
money from the richest teams to the poorest, and gives losing teams first
crack at new players. Even George Will, the conservative columnist, sees
the logic in this: “The aim is not to guarantee teams equal revenues,
but revenues sufficient to give each team periodic chances of winning if
each uses its revenues intelligently.” Absent such revenue sharing,
Will explains, teams in twenty of the thirty major-league cities would have
no chance of winning, fans would drift away, and even the wealthy teams would
suffer. Too much inequality, in other words, is bad for everyone. ... read
the whole chapter