A New Form of American Capitalism

My Comments: I’m a Social Capitalist. I invented (I think…) this term because I’m convinced that unfettered capitalism, the economic model favored by the United States, is doomed.

What few on the right will acknowledge is that we already have elements associated with ‘socialism’ built into our lives dating back decades, if not centuries. The knee jerk response is that anything other than pure ‘capitalism’ is by definition ‘socialism’.

My idea of ‘social capitalism’ says that private enterprise need not be the exclusive provider of the means of production. Whether it’s something manufactured, services offered or the creation of intellectual property, there is a role to be played by the state.

To the extent the state does own it (think of a state owned hospital like UF Shands here in Gainesville, Florida), the state is functioning as a public enterprise that exists to support the public good. None of this precludes the existence of the other major health care facility in Gainesville, a privately owned enterprise. If you receive care from either one, you can expect to pay for that care.

Capitalism rests on the premise that all activity that results in the production of goods and services must be privately owned. Think mom and pop grocery stores, inventors and companies like General Motors. The profit motive drives the engine that puts everything out there on the table from which you and I can choose or reject with our wallets.

That’s all well and good until the drive for profit, or return on investment, creates unintended consequences that if society is to survive and thrive, must be addressed. One of those consequences is income inequality.

Income inequality, in this country, is becoming an existential threat to our future as a democracy. A population with insufficient means to purchase those goods and services inevitably results in a population with very limited, if no discretionary income. Freedom, the rallying cry of the right, is dramatically compromised.

My hope is this blog post will advance in some small way, a necessary understanding of why I call myself a Social Capitalist.

by Jim VanderHei on April 7, 2019

The modern version of American capitalism seems destined to change — perhaps profoundly — for the first time in our lifetimes.

What’s new: Capitalism is being squeezed from both sides by a debate over socialism vs. strongman nationalism: President Trump bullying the Fed, publicly pressuring CEOs and juicing short-term markets at all cost.

Why it matters: It’s no longer debatable: The system makes the big, bigger and the rich, richer. The rest of America stagnates or suffers.

Ray Dalio, the billionaire capitalist, argues that the rich vs. everyone else divide is an existential threat.

  • “I believe that all good things taken to an extreme can be self-destructive and that everything must evolve or die,” he writes on LinkedIn. “This is now true for capitalism.”

A lot of CEOs and rich people are coming to the same conclusion — many reluctantly and privately. But the change in tone is noteworthy.

  • JPMorgan Chase chairman and CEO Jamie Dimon wrote this week in his annual shareholders letter: “Capitalism enables competition, innovation and choice. This is not to say that capitalism does not have flaws, that it isn’t leaving people behind and that it shouldn’t be improved.”

The flashing signals are everywhere:

  • The data — the unambiguous reality — is sobering and startling: Since 1980, the incomes of the top 1% tripled, the top 10% doubled, and the bottom 60% of prime-age workers were flat.
  • History — and the past half-decade here and abroad — shows this is a key ingredient of populism.
  • All of this also makes socialism attractive — to the young, especially, but also to Democrats broadly.

The Democratic debate is less about Trump and more about redistribution, government intervention and huge safety nets.

  • While it gets insufficient coverage, the 2020 policy debate among Democrats is fascinating and foretelling.

There’s also a healthy debate about how we judge whether something is a monopoly. Right now, antitrust law focus on whether concentrated power results in higher prices for consumers.

  • As Axios Future Editor Steve LeVine has written, the debate is shifting to whether too big and too powerful is simply too big, too powerful and too dangerous.

What’s next: This may manifest on the campaign trail as a referendum not only on reversing the tax cuts and implementing a Green New Deal, but then moving in the exact opposite direction — Trump as the last gasp of trickle-down economics, Axios’ Dan Primack notes.

  • Axios chief tech correspondent Ina Fried points out that this comes as artificial intelligence and automation are about to disrupt and displace even more of the labor sector — and vastly increase the pace of change.

Be smart: It’s hard to imagine a more worthy debate at a more important time for America. It’s tempting to fixate on Trump. But the real action is the policy and philosophical debate unfolding before us.

Go deeper: Read Axios’ deep dive on the new political and economic order

Source article: https://tinyurl.com/yxgruvfq

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