I was talking to another tennis player during a break in the match. I’m in my little house in Canada, and we’re playing 3 on 3, which sounds weird but it’s a real kick.
He told me that he is a socialist and that his beef with capitalism is the inequality it creates. He was thinking about “capitalism” the system that Canada and the US have.
I replied that you cannot say that the current level of inequality is caused by capitalism because we do not have capitalism; we have a mixed economy.
I pointed out that the word “mixed economy” is good. I found it in an introductory text by Paul Samuelson in my only economics course at the University of Winnipeg, 1969 to 1970. (Actually our text was written by Samuelson and Anthony Scott, a Canadian economist at UBC, because Samuelson needed someone to add some Canadian content that had to do with Canadian institutions.) The term was widely used at the time.
But, I noted to my tennis friend, that name has almost disappeared.
What is a mixed economy. Wikipedia has a good treatment here.
The entire Wikipedia entry is worth reading but here are the first two sections:
A mixed economy it is an economic system that accommodates both private enterprises and government services incorporated into the country, such as public services, security, military, welfare, and education. A mixed economy also encourages some form of regulation to protect society, the environment, or state interests.
This is in contrast to a laissez faire capitalist economy that seeks to eliminate or privatize many government services while decentralizing the economy, and a fully organized economy that seeks to make most of the national services as under the early Soviet Union. Examples of political philosophies that support a mixed economy include Keynesianism, social liberalism, state capitalism, fascism, social democracy, the Nordic model, and China’s social market economy.
Governments do many things that reduce inequality and many things that make it greater. The example I gave him of a government agency that makes inequality worse is the government’s near-monopoly on K-12 schools. Poor children are getting a terrible education and the teachers union, like the public schools, which is almost alone in the most important opinion in the public schools, labor, makes things worse.
I hereby declare that I will do my best to bring back the idea of a mixed economy.
UPDATE: I just saw that I posted about this in 2011. Oh, that’s right. It should be said again, this time in the context of inequality.
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