Capitalism has created extraordinary opportunities for American citizens, opportunities that would have never occurred within a Socialist or any centrally managed economy. Yet, there are many challenges with Capitalism. Essentially, the proverbial rising tide of Capitalism has not equally or fairly lifted all boats. The yachts have risen faster and higher than the row boats. In fact, the disparity in incomes and wealth between the top ten percent relative to the bottom fifty percent as a result of capitalism in the U.S. has never been greater.
The major challenge of Capitalism in 2019 is that it rewards specialization and skilled labor over generalization and unskilled labor. The high paying, low skilled manufacturing occupations of the 20th Century that lifted millions of Americans out of the working class to middle class have all but disappeared in the U.S. The manufacturing jobs of our parents and grandparents have been replaced with low paying, unskilled service related occupations.
Within Capitalism, there is little economic incentive for those few controlling and benefiting from the means of production to assist the working class majority who are not benefiting fully and who are falling further behind. John Hope Bryant, during an interview on CNBC, stated that America’s Capitalism must create incentives for the privileged few who control the means of productions to create more opportunities and more widely distributed benefits of capitalism, through internships and training for the working class majority. He stated that we need more qualified opportunity zones and entrepreneurship schools in the inner cities and rural areas.
Further, he stated to ask any majority kid working an internship at a Fortune 500 how they got their opportunity. More than likely, their response would be that they received the opportunity because they or their parents had connections and knew someone. Non-majority kids, especially those living in the inter-city, do not necessarily have parents or friends who know someone and have connections.
European Social Democratic nations, those few who appear “socialist-like” such as Sweden follow a philosophy of “create it like a capitalist and spend it like a socialist”. However, what works in Sweden cannot be scaled to work in the U.S. Socialism, throughout history, has proven unable to effectively and productively use resources to create wealth. To create societal wealth, human ingenuity must be encouraged and released. History has shown consistently that the private sector has more successfully use the means of production than the public sector.
On CNBC recently, Ray Dalio, head of Bridgewater Capital, the world’s largest hedge fund, commented that Capitalism is not working for all Americans. A fact that most Americans would agree. However, several media commentators have misrepresented his comments implying that Ray Dalio stated that “Capitalism is broken”.
In today’s global reality, it is Socialism that is and has always been “broken” around the world in countries such as North Korea, Venezuela, and Cuba. Socialism is essentially where the state owns the means of production of goods and services and determines how the wealth is distributed. In most of the world, Socialism has come to mean “shared misery” to the populace who are unfortunate to live underneath the system.
But, Capitalism should not get a pass. In many Capitalist countries across the globe, the citizens and economies of those capitalist economies are suffering. Look no further than the failed economies of Haiti.