We've heard a lot about "fairness" in this election campaign. Both sides talk about it. Malcolm Turnbull says "fairness" is an "absolutely critical" part of his economic agenda. Meanwhile Bill Shorten says he thinks economic growth comes from "fairness". No politician has ever defined what fairness means — which is maybe why so many politicians talk about it. No Australian politician has ever said whether it's fair or not that when a person's income reaches just over double average earnings the government then takes half of that income.
Politicians are more comfortable talking about fairness than opportunity because the victories of capitalism and free markets are taken for granted. It's hard to think of the last MP from either of the major two parties brave enough to launch a full-throated defence of free markets.
Between 1990 and 2010 the number of people living in extreme poverty in the world fell by one billion. That outcome was because of free markets — not fairness. China's own brand of capitalism has got 680 million out of poverty in the last three decades.
Yet for all the good that capitalism and free markets have done, economic freedom invariably loses the moral argument. Lower taxes and smaller government to provide "opportunity" gets defeated by higher taxes and bigger government to provide "fairness". Part of the reason capitalism and free markets are so often on the losing side of the moral argument is they are portrayed as promoting selfishness and self-centredness. Such a caricature is powerful — but it's not correct. An exchange in a free market is a win-win situation. Both the buyer and the seller are better off after the transaction than before it, otherwise they wouldn't have made the trade.
Human relationships flourish in societies where free markets prevail, because free markets need individuals to interact with each other. It is no coincidence that the most free market country in the world, the United States is also the home to the world's most diverse and vibrant civil society. America is built on the idea of opportunity, not fairness.
Peter Thiel is probably the embodiment of modern capitalism. He's the 48-year-old co-founder of PayPal who on the latest estimates is worth $2.8 billion. When Facebook was just beginning he bought 10 per cent of the company for $500,000. That investment later came to be valued at $1 billion. Thiel is an avowed libertarian who has written passionately about "confiscatory taxes" and "totalitarian collectives". And he's a big supporter of Donald Trump.
Yet for all of this Thiel puts at the centre of his political beliefs the importance of maintaining deep and long-lasting personal relationships.
A few weeks ago Thiel gave the commencement address at Hamilton College, a small liberal arts college in New York state. What he said confounds all the stereotypes of capitalism and free markets. He talked about a particular cliché which is constantly repeated, but wrong. He said that in fact people should not "Live each day as if it were your last". And he went on to explain:
"The best way to take this as advice is to do exactly the opposite. Live each day as if you will live forever. That means, first and foremost, that you should treat the people around you as if they too will be around for a very long time to come. The choices that you make today matter, because their consequences will grow greater and greater. That is what Einstein was getting at when he supposedly said that compound interest is the most powerful force in the universe. This isn't just about finance or money, but it's about the idea that you'll get the best returns in life from investing your time in building durable friendships."
In those few sentences Thiel summed up the essence of capitalism and the free markets.
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