Mostly whimsical reflections on life
David Brooks suggests the 2016 presidential election could turn into a serious debate about the future of capitalism in the United States. However, the run for the presidency could be the worst stage to expose the best ideas for restoring vigor to our capitalist system.
In his New York Times column, Brooks foresees a debate between a larger governmental role in ensuring economic opportunity versus a system where pretty much anything goes or, as Brooks refers to it, the “rough intensity” of open competition.
While welcoming the debate, Brooks plants his feet on the side of competition.
“The beauty of capitalism is that it takes a dim view of human reason. No group of experts is smart enough to allocate the resources of society well. Capitalism sets up a system of discovery as different people compete and adapt in accordance with market signals. If you try to get technocratic planners organizing investment markets or internal business governance, you will wind up with perversities and rigidities that will make everything worse.”
The worst outcome, Brooks says, would be to stultify “capitalism’s creative destruction” that results in innovation and attracts some of the world’s brightest minds.
I agree with Brooks. Adding layers of planning and regulation to the economy is not the solution to the problem we face in America. Yes, checks on unbridled marketplace practices are needed, but those checks won’t redress the gaping and growing inequality of incomes and individual opportunity.
Brooks starts his column by citing the keynote speech of Anand Giridharadas at the Aspen Action Forum. His most provocative statement centered on the philanthropy of business executives who he claims fund good deeds in exchange for muffling calls for underlying change.
Giriharadas branded this implicit exchange as the equivalent of Middle Age indulgences from the church – “a relatively inexpensive way of getting oneself seemingly on the right side of justice, without having to alter the fundamentals of one’s life.”
“The winners of our age may be helping society with their foundations, but in their business enterprises, the main occupation of their life, they are doing serious harm,” Brooks reported Giriharadas as saying. “First they are using political and financial muscle to enact policies that help them ‘stack up, protect and bequeath the money.’”
Tough comments, but an observation that slices deeper into the issue of the day – the attitude of capitalists toward capitalism.
Warren Buffett and Bill Gates have urged their capitalist colleagues to become more engaged in the problems around them. Led by the examples of Buffett and Gates, many captains of industry and technology pioneers have contributed huge sums for important works. They deserve praise.
However, they could do something even greater. Far-sighted capitalists could see the foundations of capitalism shaking and take steps to widen the path of opportunity and broaden the road to success. Not through welfare, but smart, long-term policies of sharing wealth with people who help create it.
Wealth-sharing is not the same as income redistribution. Wealth-sharing invests in common opportunity and rewards success. Wealth-sharing can take the form of ensuring adequate revenue to modernize our transportation and communications systems and provide a strong digital backbone for every school in America. Wealth-sharing spreads the fruits of success through profit-sharing and access to stock to those who help create wealth. We often call this opportunity, which is one of the best motivators mankind ever invented.
Capitalism is not without its warts, but it has a proven track record as an economic system flexible and fluid enough to conquer income inequality in a way a higher minimum wage never could. Capitalism can mint opportunity. Only capitalists can share it.
Brooks predicts a looming presidential debate over stronger government action to curb “abuses of an oligarchy” versus advocates for unfettered competition. Americans have always leaned toward open competition, but that tendency is being tested as income inequality widens. The surging crowds at Bernie Sanders for President rallies attest to that.
Government policies can placate simmering resentment, but only the oligarchs can turn resentment into renewed capitalist zeal on a broad scale. Only they can begin to take the class out of class warfare.
They don’t need to wait for the 2016 election to start.