Capitalist Nick Hanauer recently gave a TED talk that should not only impress everyone but should be the narrative used against the Right and neoliberals going forward. It is must-listen-to-now.
Interestingly his speech articulates much of what’s written about in our blogs and talk about on Politics Done Right. A few months ago I wrote the article “The foundation of America’s economic system is now an inhumane fraud” that pointed out the following.
It is said that capitalism affords the efficient allocation of resources. That may be the case in theory. The reality is it has failed to do that as it has allocated resources to the lease deserving internally. For the economic system in the aggregate, it has allocated them stupidly. Why are we burning fossil fuels when the technology exists to go green en masse? Why are the most valuable workers who produce paid less than paper pushers? One could go on and on.
Only when Americans understand the corrosive nature of the internals of our economy, will they force a change. When they realize that the economic system isn’t divine, but human-made will they engage to change the parameters to fix it in a manner that gives all equal access to success.
Nick Hanauer, a capitalist, and billionaire, corroborates the tenets of the article in his 15-minute TED talk. Nick starts out by acknowledging the dirty little secret most Americans already know.
Sadly, no. It all comes down to just one thing: economics. Because, here’s the dirty secret. There was a time in which the economics profession worked in the public interest, but in the neoliberal era, today, they work only for big corporations and billionaires, and that is creating a little bit of a problem. We could choose to enact economic policies that raise taxes on the rich, regulate powerful corporations or raise wages for workers. We have done it before. But neoliberal economists would warn that all of these policies would be a terrible mistake, because raising taxes always kills economic growth, and any form of government regulation is inefficient, and raising wages always kills jobs.
We can all judge the success of policies based on outcomes. All of the economic policies to date have behaved exactly as its opponents said it would. It destroyed good jobs, made most poorer, destroyed the environment, and enriched a few with ill-gotten gains from the legal thievery of the labor and intellect from the rest.
Nick Hanauer proposes five rules which sound eerily similar to Elizabeth Warren’s Accountable Capitalism.
So how do we leave neoliberalism behind and build a more sustainable, more prosperous and more equitable society? The new economics suggests just five rules of thumb.
First is that successful economies are not jungles, they’re gardens, which is to say that markets, like gardens, must be tended, that the market is the greatest social technology ever invented for solving human problems, but unconstrained by social norms or democratic regulation, markets inevitably create more problems than they solve. Climate change, the great financial crisis of 2008 are two easy examples.
The second rule is that inclusion creates economic growth. So the neoliberal idea that inclusion is this fancy luxury to be afforded if and when we have growth is both wrong and backwards. The economy is people. Including more people in more ways is what causes economic growth in market economies.
The third principle is the purpose of the corporation is not merely to enrich shareholders. The greatest grift in contemporary economic life is the neoliberal idea that the only purpose of the corporation and the only responsibility of executives is to enrich themselves and shareholders. The new economics must and can insist that the purpose of the corporation is to improve the welfare of all stakeholders: customers, workers, community and shareholders alike.
Rule four: greed is not good. Being rapacious doesn’t make you a capitalist, it makes you a sociopath. And in an economy as dependent upon cooperation at scale as ours, sociopathy is as bad for business as it is for society.
And fifth and finally, unlike the laws of physics, the laws of economics are a choice. Now, neoliberal economic theory has sold itself to you as unchangeable natural law, when in fact it’s social norms and constructed narratives based on pseudoscience. If we truly want a more equitable, more prosperous and more sustainable economy, if we want high-functioning democracies and civil society, we must have a new economics.
And here’s the good news: if we want a new economics, all we have to do is choose to have it.
We have got to get this message out over the simplistic noise. The “Are you a capitalist?” question is shallow and ignorant. Let’s get the job done. Please share.