Whither Capitalism? The Times They Are A-Changin’!
Pre-COVID19 (February 5, 2020) commentary even more pressingly relevant today
There is a phrase, politicians across the ideological spectrum constantly use, “Take our country back…” And, we have heard all those retorts, “from whom,” “to where,” “to the fifties,” etc. But given the current state of our national, economic, geopolitical and technological discourse, it might be time to turn that phrase on its head.
Jamie Dimon, chairman and CEO of JPMorgan Chase, recently wrote a timely Time magazine piece, “Unless We Change Capitalism, We Might Lose It Forever.” It sounded more like a restatement of capitalism’s vexing problems than an offer of any realistic solutions. The few cases — from the “hundreds of other examples” that he cited — of corporate America’s largesse are a drop in the ocean compared to the structural reform that is necessary to make capitalism actually work on an enduring basis for the common man.
If structural reforms are not implemented, it’s not “losing capitalism” forever that is worrisome as much as the fear that our country could begin a slide towards chronic ABC — anarchy, bankruptcy and corruption — evils that plagued some third world nations in the past. Even though corporate America continues to rake in record profits in the Trump era, it appears to be defaulting on its newly adopted corporate purpose, referenced by Dimon in his article as, “creating economic opportunity for all of their stakeholders: customers, employees, suppliers, communities and shareholders.”
Our ever-widening ideological divide is being exacerbated by an imperial presidency that keeps testing constitutional boundaries. In the current debate about capitalism’s evolving role in our democracy, it seems like the roles of the legislative (Article I) branch and the judicial (Article III) branch have been rendered inconsequential. So, trying to change capitalism — at this critical juncture in our history — before trying to heal the country, might seem like putting the cart before the horse. Even though some might argue that the two could be inextricably linked and require a “walk and chew gum at the same time” approach.
No tax cut too big; no trade war too small.
In the past decade, we aggressively pursued a “too big to fail” strategy in various sectors of our economy to ensure the survival of capitalism — we bailed out financial institutions, the auto industry, homeowners, and farmers! These bailouts were more or less mandated because of disastrous fiscal and trade policies enacted over the past four decades. As a result of which, our $23 trillion national debt now exceeds our $22 trillion GDP! And to complicate matters, the U.S. economy grew by a mere 2.3% in 2019, after its 2.9% growth in 2018. This despite Trump’s promises of “3%, 4% and even 5% growth,” when he was pushing for the “largest tax cut in the history of our country” as it was being debated in 2017! Meanwhile, Trump’s simultaneous and disastrous trade war with China over the past couple years forced him to to dole out $28 billion in subsidies to his agricultural base in the heartland.
Leading indicator or faulty gauge?
And yet, President Trump touts a successful economy based primarily on a record stock market performance, which essentially reflects the results of huge corporate profits induced by his massive corporate tax cuts. More significantly, stock buybacks have trumped business investments, which were expected to further juice the economy. Incidentally, per the last Gallup survey in 2019, only 55% of Americans own stock and even this percentage is inflated by Americans’ largely passive investments in mutual funds. Nasdaq estimates “that 50 percent of stock trading volume in the U.S. was being driven by computer-backed high frequency trading,” whose benefits accrue largely to hedge funds and investment banks, not the average Joe.
Notably, Bloomberg reported in late 2019, “The middle-class Americans who are the main targets of Trump’s economic pitch aren’t sharing much in the gains of U.S. growth.” Even more significantly, the morning after Trump’s 2020 State of the Union address, Steve Rattner, a “Morning Joe” contributor on MSNBC, exposed the true state of Trumponomics. Using Bureau of Economic Analysis and Bureau of Labor Statistics data, Rattner compared the last 35 months of Obama’s term with the first 35 months of Trump’s term and revealed the following facts:
- Slower Job Growth Under Trump: averaging 191,000 vs. 227,000 under Obama
- Real Wages (adjusted for inflation) Barely Rising: 0.6% vs 1.1% under Obama
- GDP Growth: 2.5% vs. 2.4% under Obama
The grass is always greener… or so it seems on the socialism side.
Having said all of that, a drastic leap towards socialism is not the answer to capitalism’s myriad troubles — especially in the form of more bankrupting proposals being offered by some Democratic presidential candidates. While climate change, education and healthcare are serious and urgent problems, budget-busting solutions that further exacerbate our fiscal situation are hardly prudent. And then, there is the disheartening state of our aging infrastructure — airports, bridges, highways, railways, et al. — that needs to be tackled on a war-footing. But unfortunately, modern capitalism long ago stopped seeing the forest for the trees, especially when its stewards started putting short-term business interests over the longer-term national welfare! Meanwhile, we are headed to old third-world status in this regard, as any international traveler to new third-world nations is wont to verify.
Nonetheless, we can’t be swapping conservative priorities for progressive ones, knowing that the country is going to fiscal hell in a handbasket. While promising crazy big solutions to pet problems might win elections, as Trump proved in 2016, the titanic hole in the U.S.S. Treasury just keeps getting bigger and bigger. The nation is sinking faster fiscally due to unrestrained spending, even as it is worsening environmentally due to climate change.
Then there is the last bastion of our economic and military power — our technological edge, which has been our competitive advantage worldwide for over a century, and which we are likely to cede to China and India in the near future. As they invest more and more human capital and make larger and larger public investments in 5G, artificial intelligence, biotechnology, blockchain, data analytics, Internet of Things, machine learning, nanotechnology, space exploration, quantum computing, et al. The potential for falling behind in many aspects of this vast technological frontier — in which we have always led, even before President Kennedy foresaw the moonshot — brings me back to that annoying phrase that politicians always use and one that needs to be turned on its head.
So, it’s time to elect a visionary president in 2020, who is committed to… “Take our country forward!” No more taking it back, let’s look forward and reclaim our standing as a global leader, by revamping all facets of capitalism — domestic economic policies, international trade deals, global supply chain agreements, geopolitical relationships, and disruptive technologies — to better serve the masses, not just the upper echelons of business and society. Because, as the legendary Bob Dylan crooned over 55 years ago, “The Times They Are A-Changin’”:
Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside and it is ragin’
It’ll soon shake your windows and rattle your walls
For the times they are a-changin’
And, it’s about time capitalism got the message — socialism is knocking at our doors and the younger generation is increasingly restless like it was in the 1960s. If we don’t get our act together and reform capitalism in a meaningful way, the ideological pendulum will swing dramatically to socialism whether we want it or not. There are many 21st century FDRs waiting in the wings with their respective versions of a new, “New Deal” and each one of these deals is greener than a healthy greenback can handle! So, seize the moment, folks — because the slippery slope to socialism beckons. Socialism is not all that it’s cracked up to be — trust those of us who have been there!