Capitalism – an economic system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.
The United States is currently a capitalist economy with free markets; however, we do bail out banks in times of extreme stress and subsidize farms and gas and oil industries. We also have public utilities. Given these examples, the U.S. is not a pure capitalist or pure free market system. It has evolved over the years to provide Medicare, Social Security, welfare and the Patient Protection and Affordable Care Act (Obamacare).
Do I believe that income inequality is harming America? Yes. I believe this comes from the changing business climate rather than capitalism. In the current economy, new skillsets are needed for higher incomes and the costs to getting there are much higher (e.g., university costs). For 2018, the top 10 jobs were all in the medical field (according to Courtney Connley’s CNBC article, “These are the 25 best-paying jobs in America in 2018”). After that, it’s engineers, IT and marketing managers, lawyers and financial managers/advisors. Most of these careers take at least a bachelor’s degree, which for many, means loads of debt.
My belief and hope are that the cry for socialism is a cry for a reworking of American capitalism. I was thus excited when I spotted a Forbes cover (the March 31, 2019 issue), “Reimagining Capitalism.” In it, Bill Gates said, “It is fascinating, that for the first time in my life, people are saying, ‘Okay, should you have billionaires?’” This is one of the men that created Microsoft (MSFT), one of the most valuable companies in the country. He dropped out of university and took a huge risk creating a company from nothing. Has the tide of the American economy turned so much that we don’t believe he deserved to profit and prosper from this?
If Bill Gates hadn’t created Microsoft, there would not be the Bill & Melinda Gates Foundation, which sees equal value in all lives, supports K-12 education and provides grants to 501©(3) organizations in the U.S. Bill and Melinda Gates have donated $28 billion to the foundation. Billionaires (Gates, Bezos-Amazon, Bloomberg, Branson-Virgin Galactic and Ma-Alibaba) also created Breakthrough Energy Ventures, which pledged $1 Billion for startups that promise radical solutions to carbon emissions.
I would rather have billionaires helping the world and making education more accessible than the government. An innovative, energized human being can create and build more than a government with red tape and soaring costs. How do we make this happen?
I agree whole-heartedly with the intent of the Forbes article; to create a capitalist society that is authentic, accessible and accountable. The article sites the fact that for Millennials, the bottom three priorities for business should be profits, efficiency and sales. The top three were generating jobs, improving society and innovation. My question is: Are these six objectives really opposites or can they work together to make a successful economy and business?
A quote from Jeff Bezos, founder and primary shareholder of Amazon (AMZN), says it all; “Missionaries… engender the one authentic trait that’s ultimately the most profitable: trust.”
When a company loses trust, it also loses business. Take Wells Fargo (WFC), which has survived numerous scandals. It may have survived, but the company was damaged. The April 9, 2019 Wall Street Journal article, “Wells Fargo, Stuck in ‘Wait-and-See Mode,’ Struggles to Boost its Businesses,” explains how the bank struggles due to its’ “tainted image.” Maybe the reality of changing capitalism is putting “our money where our mouths are.” ESG investing, which stands for Environmental, Social and Governance, was previously called socially conscious or sustainable investing. ESG was once a niche area but is growing in importance for investors.
Whatever path we choose forward, I hope that socioeconomic mobility, equality and capitalism are key parts.