Values & Capitalism - American Enterprise Institute

The Men Who Built America: J.P. Morgan, Financial Hero

T. Kurt Jaros — Fri, 17 May 2013 22:26:36 +0000

In my previous post I presented J.P. Morgan. Now let's explore some of the negative thinking behind Morgan, and discuss claims of "too much wealth" and judgments passed on Morgan related to his philosophy of charity.

Morgan was the man with the money to invest heavily in electricity. He became one of the wealthiest men in the world—so much so that he bought out Andrew Carnegie’s steel empire. But is having so much money immoral? Is it immoral that Morgan live like a king while others live like paupers? This greedy robber baron was another man to lead to an increase in the wealth gap, right?

Not quite. Some think that if someone is rich, he or she must donate their money to the poor. But I submit to you that this is not the only way to take care of the poor. Consider some of the ways that Morgan used his money: He invested in businesses (specifically his own) and he bailed out organizations (governments and banks).

Morgan invested in businesses. By investing in businesses, he created jobs and provided a product that we all take for granted today. The lights you have on right now, the computer you are using, the air conditioner you are running, and the refrigerator to keep your lunch cold and the milk from souring are all because of the financial investment that Morgan made. Each and every one of these, and other things, has brought about jobs for people and products for you to buy at affordable prices. The light bulb you have may have been invented by Thomas Edison, but it was manufactured in mass product by the power and will of Morgan. Furthermore, light bulbs have to be made in a factory, built by humans and powered and managed by humans. So some of the money you pay goes toward the materials for the product itself, the workers involved in the production process, the builders of the factory, the administrative staff, etc. And some of the money also goes back to the investor plus interest for staking his or her money on the line.

Morgan bailed out governments. By bailing out governments, Morgan was able to bring societal peace where chaos was ensuing. He lived before the era of the central banking system, in functionality, served as the central bank. In 1895, he was a part of providing the U.S. Treasury with 3.5 million ounces of gold in exchange for a 30-year bond. This 30-year bond saved the federal government from bankruptcy. Additionally, Morgan was a part of a major bailout of New York banks during the Panic of 1907, which occurred during a recession. Imagine what would have happened in 1895 and 1907 had Morgan not saved the day. Quite possibly, there would have been financial ruin to our country; such an event could have brought devastating long-term effects, especially for those in the lower class. Morgan and his wealth brought stability to the fiscal atmosphere for all Americans.

By investing in businesses and bailing out organizations, Morgan played a part in taking care of the poor. He brought economic growth and in harder times, stability. Today, all people are reaping the benefits of Morgan’s heroic efforts that, even if motivated by self-interest or greed, have brought about a higher quality of life.

But what should we think of Morgan for increasing the wealth gap between the rich and poor? The often unsaid premise of this argument is that the poor are getting poorer as the rich get richer. But why think that? It very well might be the case that as the rich are getting richer, the poor are getting richer too. And thus, the wealth gap increases, even though everybody wins. In my next post, I will close my series on "The Men Who Built America."

Respecting, Not Worshipping, Free Markets

John Murdock — Thu, 16 May 2013 14:28:26 +0000

In his modern classic "The Call," the Christian social critic Dr. Os Guinness (and yes, for those wondering about the name, beer is in his blood) tells of a blunt Singaporean economist who made the following statement:

The decisive question for the West is its capacity to direct and discipline capitalism with an ethic strong enough to do so. I myself don't believe the West can do it.

In my mind, that question—and the quest for a different and more hopeful answer—sits at the heart of the Values & Capitalism initiative.

A number of traps are set against us. One temptation for many religious types on the Right—accustomed to running in circles that confusingly mix and mingle strictly-business interests with the politics of piety—is to assume that capitalism can operate independent of higher values. There is no reason to guard one's heart in this realm, the seductive whisper goes, because the market itself turns vice into virtue. Each person need simply to follow his or her natural affinity for self-interest and societal betterment magically results, right?

But this makes too much of Adam Smith's famous insight, "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." Before setting the self-interest cruise control, we should remember that the same man who penned "The Wealth of Nations" also wrote "The Theory of Moral Sentiments" where he observed:

And hence it is, that to feel much for others and little for ourselves, that to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature; and can alone produce among mankind that harmony of sentiments and passions in which consists their whole grace and propriety. As to love our neighbor as we love ourselves is the great law of Christianity, so it is the great precept of nature.

Smith advocated capitalism within a pre-existing cultural framework rooted in natural law, rather than directly proclaiming it as an independent or self-executing source of morality.

For many, however, free market principles have indeed risen to just such a higher realm, a phenomenon long chronicled by University of Maryland's Dr. Robert Nelson in works such as "Economics as Religion: From Samuelson to Chicago and Beyond." Regarding the existence of a supreme being, Nelson counts himself an agnostic, but this economist with a keen eye for quasi-spiritual worldviews concludes, "The most vital religion of the modern age has been economic progress." He sees modern day oracles like Gary Becker and Richard Posner as openly asserting that "self-interest, not the teachings of the church, drive the world."

As a follower first of Christ rather than Smith or the Chicago School, I am reminded of the parable in Luke 14 about the fool who found his security in bigger barns filled with grain. Jesus concludes that it is better to be a simple barnless bird cared for by the Father than "one who lays up treasure for himself and is not rich toward God." Paul famously warned that "the love of money is a root of all kinds of evil," and elsewhere Jesus went so far as to describe wealth as a spiritual power (Mammon) in conflict with the one true God.

Christians must therefore engage any wealth-creating system with caution, because all economic arrangements are subject to abuse. We should view capitalism with respect—not worshipful awe—recognizing that free markets can be good as opposed to believing that free markets are intrinsically good.

The goal is to effectively control this power tool while not becoming a cog in service to a machine that controls us. Thankfully, as suggested in the parable of the talents found in Matthew 25, the voluntary transactions, innovation and entrepreneurship that free markets foster can often lead to hearing the words "Well done, good and faithful servant," from the true Master.

The successful stewards in that story recognized their relationship to the Master and that subsidiary position guided their successful thinking. On the other hand, the rich young ruler of Matthew 19 turned away from Jesus because he was convinced that the wealth he possessed was his and his alone. Os Guinness summarizes the situation well saying, "Either we serve God and use money or we serve money and use God. Ultimately we follow what we have loved most intensely to is natural destination—eternity or death—'for where your treasure is, there will your heart be too.'"

John Murdock is a natural resources attorney working in Washington, D.C. John has also been published in The New Atlantis, Relevant and Christianity Today among others.

The RJ Moeller Show: Mike Murphy

RJ Moeller — Wed, 15 May 2013 17:58:56 +0000

Our special guest this week on "The RJ Moeller Show" is Mike Murphy. Mr. Murphy is a long-time political consultant who currently resides in Los Angeles, Calif. He attended Georgetown for graduate work before starting his own consulting firm. He has advised such politicians as John McCain, Mitt Romney and Arnold Schwarzenegger.

Mike is a contributing columnist at Time Magazine and a regular member of "Meet The Press." In recent years, he's added "Hollywood writer/producer" to his impressive list of professional credits, and he's one of the most interesting conservative cultural voices.

Always lively, always informative, Mike Murphy can be found on Twitter at @MurphyMike!

You can listen in on our conversation with Mr. Murphy by clicking the play button below, by heading over to our Stitcher.com station, or by downloading and subscribing (for free) to "The RJ Moeller Show" on iTunes.

Podcast: Play in new window | Download | Embed

Liberty Without Virtue: A Nation Without Its Heart

Tyler Castle — Tue, 14 May 2013 13:50:30 +0000

A few weeks ago, I sat drinking coffee with my sister outside of the Barclays Center in Brooklyn, N.Y. Just as we got up to leave, we were startled by a yell from across the way: “Hey! You dropped something!” We looked back to see my sister’s sweater lying underneath the bench, and were greeted with a smile when we thanked the nameless man for his help. I didn’t think much of the occurrence at the time, until I saw the same thing happen a couple days later outside of Union Station in Washington, D.C. This time, three different people—including one man who appeared to be homeless—quickly caught the attention of a woman when she dropped her scarf.

Having witnessed the same act of kindness twice in only two or three days, my first thought was that people apparently have a very hard time holding on to their clothing accessories. But I also thought the acts of kindness were out of place in Brooklyn and D.C.—locations not known for their hospitality and civic virtue.

My reaction to these events brought me to both good and bad conclusions about our society.

First, the good. Though these examples are anecdotal and generally insignificant, similar virtuous acts are done every day. Whether or not the intent is purely altruistic, people often do genuinely kind things for others. And there is no familial explanation for these actions; they are done by complete strangers in metropolitan settings. In that sense, it is encouraging to know that American society can still prove itself to be an authentic community of people who selflessly look out for each other.

But, there is also the bad. The fact that I was in legitimate awe because of two consecutive acts of kindness is not a good sign—it means they were out of the norm. Stereotypically, but also in reality, our culture is an individualistic and selfish one. People look out for themselves, and—if we are lucky—try not to do harm to others. But it is unusual to find people who are consistently sacrificial and truly care about the well-being of others in their community.

So, the moral of the story is that although public virtue in America is still existent, it is waning—and this is a serious issue.

Commenting on his book, "Coming Apart," Charles Murray explains that “historically, the engagement of Americans in the life of their communities—at an intimate level—was taken for granted.” In other words Americans were consistently engaged with the “stuff of life,” the problems and issues that plague normal communities.

Alexis de Tocqueville made note of this in "Democracy in America" when he described the enumerable amount of “associations” that Americans naturally formed. America’s civil society was incredibly robust and virtuous, which made it possible for the nation to function freely.

But as Murray suggests in his book, the “civic culture” that once made America exceptional is now not much more than a memory.

America prides itself in being “the land of the free.” But as it turns out, liberty is not free itself. It comes at a cost. Part of that cost was paid by the precious lives of Americans who sacrificed everything for their country. But in times of peace, citizens must also foot the bill by being responsible and virtuous. A free society does not just magically work. It requires a people who are willing to cooperate with each other and selflessly care for one another.

If we love liberty, we must also love justice, kindness, mercy and charity. Otherwise, the liberty that we dearly love will disappear, and the America that we call exceptional may join the ranks of failed experiments in democracy.

Like those two inconsequential acts of kindness, it’s funny how you don’t tend to notice things until they are meaningful to you. I was recently walking toward the east end of Union Station—something I’ve done probably a hundred times, when I spotted an inscription for the first time (ironically, it is taken from a poem written by famous transcendentalist Ralph Waldo Emerson). It reads:

VIRTUE ALONE IS SWEET SOCIETY

IT KEEPS THE KEY TO ALL

HEROIC HEARTS AND OPENS TO YOU

A WELCOME IN THEM ALL

Now, that’s the kind of society I want to be a part of, and the kind America needs.

The Men Who Built America: J.P. Morgan

T. Kurt Jaros — Mon, 13 May 2013 13:39:11 +0000

The History Channel’s miniseries on the entrepreneurs who built America in the second half of the 19^th century portrays J.P. Morgan as a greedy robber baron. For those unfamiliar with that term, a robber baron was (according to my dictionary) “an unscrupulous plutocrat, esp. an American capitalist who acquired a fortune in the late nineteenth century by ruthless means.” In this post I’d like to introduce you to Morgan and his work. In my next post I’ll provide an assessment of how we should view Morgan.

John Pierpont Morgan, unlike Vanderbilt and Rockefeller, was born into a financially well-off family. His father grew in power to direct J.S. Morgan & Company (formerly Peabody & Company), which had international offices in London and Paris. According to Jonathan Hughes and Louis P. Cain, authors of "American Economic History," J.S. Morgan & Company was “a leading European merchant banking house” which financed “a $50-million loan to the French in 1870 at the time of the Franco-Prussian War.”

When Pierpont (as he was called) took over the family business after his father’s death, he moved the direction of the company from financing more secure and confident loans to riskier venture capital loans. The History Channel presents the strong relationship between Morgan and Thomas Edison, the investor of the incandescent light bulb. According to the History Channel, Morgan wanted to be like the other great entrepreneurs of his day by joining that highest echelon. But he didn’t have a product or business that was able to offer something to the masses like Vanderbilt, Rockefeller or others could. That is, until he met Edison.

Edison was the inventor, Morgan the investor. To show people the wonders of electricity, Morgan had an electrical system installed in his own home. People were amazed and soon enough, the city of New York was powered by Edison’s design. Morgan’s next goal was to be able to power the whole country.

He thought that there was no competition from this new industry, but one of Edison’s workers, Nikola Tesla, resigned because Edison ignored his successful invention of alternative current (AC). Edison thought it was too dangerous and impractical; Edison used direct current (DC) which moved at a lower voltage. This resignation led to some marketplace competition between Morgan and the Westinghouse Co. (the organization that bought and paid Tesla for his work).

Morgan lost some big projects such as the World’s Fair in Chicago and the Niagara Falls Power Plant to Westinghouse Co., which infuriated him. He bought more stock in Edison General Electric to have a majority share, fired Edison, converted over to AC, and formed a merger with Thomas-Houston Electric Company to create General Electric.

Not only did Morgan invest and loan to businesses, but he bailed out organizations from their troubling predicaments. In 1895 he was a part of providing the U.S. Treasury with 3.5 million ounces of gold in exchange for a 30-year bond. Also, he was a part of a major bailout of New York banks during the Panic of 1907.

Morgan’s risks of investing and loaning money played a crucial role in expanding the United States during the progressive era. He’s often seen as one of the greedy robber barons, someone who uses their money to suppress the poor from moving out of their unwanted social state. Morgan was responsible for the increase in the wealth gap between the rich and the poor; he exemplifies all the problems with capitalism. In my next post, I will expose the shortcomings of these rhetorical arguments against Morgan.

America’s Salvation, Part III: The Church’s Saving Grace

Tyler Castle — Thu, 09 May 2013 14:02:03 +0000

“Nones are on the rise”—and no, I’m not talking about "Sister Act."

A 2012 report by the Pew Research Center showed that “the number of Americans who do not identify with any religion continues to grow at a rapid pace. One-fifth of the U.S. public—and a third of adults under 30—are religiously unaffiliated today.”

Many people find this phenomenon unconcerning; they see religious belief as a personal choice that has no affect on others. Religious freedom is protected by the Constitution, which means people can choose to believe—or not believe—anything they want.

While that is true, this trend does not bode well for America’s future prosperity. Daniel Dreisbach, professor of Justice, Law and Society at American University, explains why America’s Founders would agree:

There was a consensus among the Founders that religion was indispensable to a system of republican self-government.

The challenge the Founders confronted was how to nurture personal responsibility and social order in a system of self-government. Tyrants and dictators can use the whip and rod to force people to behave as they desire, but clearly this is incompatible with a self-governing people.

In response to this challenge the Founders looked to religion (and morality informed by religious faith) to provide the internal moral compass that would prompt citizens to behave in a disciplined manner and thereby promote social order and political stability.

The French historian, Alexis de Tocqueville, expounds on this proposition in his classic work "Democracy in America." Growing up in the turbulent aftermath of the French Revolution, Tocqueville witnessed, first-hand, how democracy could go wrong. But when he visited America, he found a nation where democracy—supported by tradition, morality, virtue and religion—actually worked.

What Tocqueville and our nation’s Founders understood, was that a free, democratic country could not long survive without a virtuous citizenry. And regardless of each of their personal convictions about God, they all firmly believed that religion was instrumental in maintaining this public virtue.

That is why our nation’s continuing decline in religiosity is troubling.

Without religion, morality lacks support and virtue lacks purpose. Without morality and virtue, civil society will slowly crumble. And if civil society fails, government is forced to pick up its slack—and as I’ve mentioned before, it is not very good at it.

To avoid this fate, America desperately needs to regain the robust civil society that caused Tocqueville to marvel. In order for this to happen, religion needs to stage a comeback, reversing the current apathetic trend towards non-belief.

On a structural, macro-level, churches—along with families—are the foundation of civil society. They help create virtuous communities by bringing people together who can then care for each other spiritually, emotionally and physically. Churches also serve people in their neighboring communities; providing for needs in holistic ways.

However, in many ways, the church has inadequately filled this role.

The evangelical Christian church especially has tended to overemphasize the personal nature of faith, and in turn, ignored the church’s mission of service within communities. That has to change. Christians are called to further God’s kingdom, and one way they can do that is through active service that cares for the needy and strengthens America’s civil society.

Private, non-religious organizations do wonderful work as well—I do not want to belittle their efforts. But churches are the lifeblood of social justice and help sustain the virtue that is requisite if we are to have a society where such secular organizations can exist.

And on a personal, micro-level, those of you who have experienced and accepted God’s love and grace know how it changes your life—everything is different. Individuals are reinvigorated and motivated to serve, relationships are redeemed, and society is positively affected as a result. Religion is ultimately a matter of the heart, but it also has immense societal ramifications. Christians, through the church, must realize this and provide the underlying presence that this country needs to be prosperous.

We, as Americans, are blessed to live in a great country. But the sacred liberty that we enjoy can only last if it is complemented by virtue. Without it, government will only get bigger and freedom more limited.

Alexis de Tocqueville has been quoted as saying, “America is great because she is good, and if America ever ceases to be good, she will cease to be great.” So at a time when the number of “nones” is only growing larger, it seems that now more than ever before, America’s future depends on the church.

America's Salvation Part II: O Father, Where Art Thou?

Tyler Castle — Wed, 08 May 2013 18:54:05 +0000

As I’ve thought about societal problems over the last few years, I have consistently come to one conclusion: We need to focus on the family. Turns out James Dobson named his organization well.

Think about education. Public schools across the country are often maligned for being ineffective—even after the No Child Left Behind Act was enacted, many kids are being left behind. In 2011, the high school graduation rate was only 59 percent in the District of Columbia. Teachers and school systems take the brunt of the blame for this, but should they?

From my experience—I attended public schools through high school—the quality of a child’s education is mostly dependent on their parents. As early as my elementary school years, my parents were supportive, encouraging and demanding. I was expected to do my best, but I also received help with homework and science projects when I needed it. As a result, I got a solid education from a school that was not at all special. Other kids in my classes had behavioral problems and could not care less about learning, so they ended up struggling. By no means was I inherently superior academically to my peers, but I did have one step-up on them: the blessing of a supportive and stable family.

While good teachers are important, even the most capable instructors are not miracle-workers. A healthy family life is essential to a child’s flourishing. And this is not just a partisan assumption; there is consensus across partisan lines about this truth. Lyndon B. Johnson once said, “When the family collapses, it is the children that are usually damaged. When it happens on a massive scale, the community itself is crippled.”

So, family life is important. But what makes for a healthy family? Do we need to universally enlist fathers and mothers in parenting classes? I don’t think so. Research overwhelmingly shows that what kids need above all are simply a mother and father that are married and present in their lives.

As the Heritage Foundation reports, “children fare best on virtually every examined indicator when reared by their wedded biological parents.” Similarly, the Wall Street Journal found: “…instability is one of the greatest risks to children's well-being. It greatly increases the likelihood that they will experience academic, social and emotional problems like poor grades, drug abuse and (perpetuating the cycle) unmarried childbearing.”

Echoing this research, in his 2008 Father’s Day speech, President Obama stated:

We know the statistics - that children who grow up without a father are five times more likely to live in poverty and commit crime; nine times more likely to drop out of schools and twenty times more likely to end up in prison. They are more likely to have behavioral problems, or run away from home, or become teenage parents themselves. And the foundations of our community are weaker because of it.

Yet sadly, marriage rates are falling and the number of children growing up in broken homes is only increasing. According to the Pew Research Center, only 51 percent of marriage-eligible adults were married in 2011, compared to 72 percent in 1960. A study by the Family Research Council shows that only 45.8 percent of children still have married, biological parents when they reach the age of 17. These numbers are unsettling; and they uncover the primary source of the societal problems that our government tries to solve.

Like with most problems, however, it is better to focus on the underlying cause than the symptoms. Thus, efforts to strengthen families—partly by encouraging marriage—are essential to America’s well being.

Mostly, America needs a cultural movement that reemphasizes the immense value of a stable family, reminding us that it is necessary for the proper upbringing of children, and is an essential aspect of society as we know it. The family is the primary channel through which human beings care for and support one another, especially in times of need—when we are young, sick and elderly. If families are strong, ineffective government programs won’t have to take their place.

Above all though, this message must be reflected in our own lives. Those that have families must be committed to their spouses and supportive of their children. They must also be sacrificial, willing to compassionately care for their parents and grandparents. And we all must be supportive of families that we know, encouraging them when times are tough—which can be all too often in family life.

In the end, this is how our society will change. This is how we can make progress on the issues of poverty, education and crime. According to data from the Brookings Institution, if the 1970 marriage rate existed today, poverty would fall by 25 percent. I know food stamps and Medicaid are important, but how’s that for a welfare program?

If you are interested in this issue, look forward to “Home Economics: The Consequences of Changing Family Structure,” by Nick Schulz, a Values & Capitalism monograph that will be released in the coming weeks.

Foreign Aid More About Helping Friends at Home

Wed, 08 May 2013 16:46:44 +0000

The U.S. gives more international humanitarian aid than any other country in the world, but how effectively is this money being spent? In a recent USA Today article, Jared Pincin and Brian Brenberg, professors at The King’s College, argue that U.S. foreign aid spending often ends up benefiting special interests at the expense of taxpayers and the vulnerable. Food aid—for example—is “tied,” which means that it must be sourced from U.S. producers and transported on U.S. ships. This may help politically connected businesses, but it is also inefficient and wastes money that could go those who need it. If we really want to help those who are most in need, separating assistance from cronyism may be a necessary first step.

Even though reforming such tied aid programs would help the needy and save money for U.S. taxpayers, Congress is unlikely to change the system. Foreign aid is a lucrative business for interest groups, which aggressively lobby political leaders for pieces of the foreign aid pie, i.e. contracts. Elected officials often reward these powerful industries or companies in exchange for help with re-election, sometimes even lobbying on their behalf. Citing the same concerns as the industry groups above, members of the Senate Committee on Agriculture, Nutrition and Forestry, including Chairwoman Debbie Stabenow (D-Mich.) and ranking member Thad Cochran (R-Miss.) sent President Obama a letter opposing the food aid reforms. With this type of relationship, politicians and interest groups win while those in need lose.

A paper slated for release in the September 2013 issue of the journal Oxford Development Studies (Jared Pincin, "Political Power and Aid Tying Practices in the Development Assistance Committee Countries") shows that as competition for elected office intensifies, tied aid increases both absolutely and as a percentage of total aid.

In other words, the hotter the political climate, the greater the incentive to vote for foreign aid that helps political friends at home.

The goal of foreign aid should be to assist the needy, not to protect special interests or serve the re-election goals of politicians. Reforming tied aid programs would save money for taxpayers here in the U.S. and help promote economic development abroad. A more prosperous world is a better world, and routing out cronyism will help get us there.

The RJ Moeller Show: Jonah Goldberg

RJ Moeller — Wed, 08 May 2013 12:46:42 +0000

Our very special guest this week on "The RJ Moeller Show" is none other than Jonah Goldberg!

A bestselling author and columnist, Jonah Goldberg's nationally syndicated column appears regularly in scores of newspapers across the United States. He is also a columnist for the Los Angeles Times, a member of the board of contributors to USA Today, a contributor to Fox News, a contributing editor to National Review, and the founding editor of National Review Online. He was named by the Atlantic magazine as one of the top 50 political commentators in America. He has written on politics, media, and culture for a wide variety of publications and has appeared on numerous television and radio programs. He is the author of two New York Times bestsellers, "The Tyranny of Clichés" (Sentinel HC, 2012) and "Liberal Fascism" (Doubleday, 2008).

We chat with Mr. Goldberg about the paperback release of "Tyranny of Cliches" and what it's like to sit next to Charles Krauthammer. Be sure to follow Jonah on Twitter at @JonahNRO.

Listen to this week's episode below, head over to Stitcher.com, or download the show for free on iTunes.

Music and Money: The Art of Exchange

Wesley Gant — Tue, 07 May 2013 14:22:15 +0000

A new commercial for Guitar Center caught my attention, because it captured the fundamental force of economics in one sentence. The scene opens with two musicians performing for strangers in the subway and on street corners. One of them says, “you don’t have to be rich to do what you love.” That’s not the line. In fact, it doesn’t even ring true if your hobby is traveling the world in a private yacht. But the statement does have merit—more on that later.

The key line comes next: “At the end of the day, if I walk home with fifty dollar bills in my pocket, that means that fifty different individuals have said ‘I believe in what you’re doing.’”

This street musician may have been thinking that people are simply giving to his cause. Perhaps he believes that society should work this way—people sharing with one another to support something they think is valuable. Indeed, it does! Whether he realizes it or not, his words strike at the heart of capitalism.

An economy is built on the interactive process of creation and exchange. We only gain value by creating it first for others. By dropping a dollar into a “donate” box, passers by are not giving, they are exchanging, just like any other transaction. In doing so, they are acknowledging the value they derived by hearing good live music on their way to and from work, where they themselves will exchange talents for currency.

Treating this situation as a cold “transaction” in exchange for “currency” may seem to debase what has happened. Frankly, it sounds selfish, as if people are motivated merely by money. This takes all of the beauty and inspiration out of the story. However, the difference is merely semantic. The mechanical description of something doesn’t make it more or less moral, so we can use words like “transaction” to describe a type of act, regardless of motivation.

In order to understand behavior, economists describe human actions in this kind of objective language. When speaking to a broad audience, free-market advocates must learn to translate economics jargon into more appealing language.

A dollar bill is more than a Federal Reserve note. A dollar carries meaning because it represents the time, talents and labor a person has sacrificed in service to another person. Before currency, value could only be represented and exchanged through the barter of goods such as cattle, clothing or food. Currency enables us to break down our wealth into more easily tradable pieces.

Imagine if, instead of having one employer that gives you a paycheck, you had to work for 30 different people to exchange for a shirt here, piece of furniture there, and a even a house. Good luck finding someone who has what you want and needs what you have. Money simplifies the process, so we can focus on what we love and have access to the products we need.

Ultimately, this is what the commercial is about. By earning money, the musicians are able to fund their enterprise, and Guitar Center is providing the opportunity that lets them do it. This is what the first speaker meant by “you don’t have to be rich to do what you love.” As long as what you love is something more valuable to others than it is to you, you will be able to fund it by exchange. Sailing in a yacht doesn’t qualify, unless you are taking a tour group. We achieve our dreams by helping others achieve theirs.

There is nothing inherently wrong with money, and there is nothing wrong with exchanging something for it. Engaging in the creation and exchange of goods and services is how we make a better world together.