To better understand what is currently motivating rock star billionaires (such as Warren Buffett of Berkshire Hathaway (BRK.A), Ray Dalio of Bridgewater Associates, Marc Benioff of Salesforce and Tom Steyer of Farallon), organizations like the Business Roundtable and the lower-class of just millionaires (Patriotic Millionaires) to save capitalism, it might be helpful to use an analogy.
Imagine there is an ocean liner, like the Titanic, going too fast in ice berg strewn waters surrounded by fog. The first-class passengers are enjoying every luxury, while those in steerage are miserable and sea sick in the lowest decks.
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An experienced seaman in steerage understands the ship is going too fast. However, he is not allowed out of the lower deck. His voice does not matter. In first class, some knowledgeable yachtsmen also know disaster could be imminent. Unlike the seaman, they can summon the captain and make their concerns known. They alone can prevent disaster.
Ray Dalio has written a series of articulate articles on inequity. Warren Buffett has long called for a tax structure not tilted to the ultra-wealthy. Marc Benioff just declared capitalism “dead” in a New York Times op-ed, and the Patriotic Millionaires have banded together to pay more taxes!
As the crisis of capitalism grows in America, the titans of industry, technology and finance know the ship is in danger, and they, in order to save themselves, want to change course. Not surprising, since self-preservation is near the top of Maslow’s hierarchy list. If it were only the left-wing progressives who were concerned, it would be construed as partisan politics. However, serious economists on the right, like David Stockman (former Reagan budget director), have raised the alarm. Stockman’s bestselling doorstopper of a book, The Great Deformation: The Corruption of Capitalism in America, is chilling reading on how off-track our economy is.
If you have not read The Communist Manifesto, you should. It’s short, more of a pamphlet than a book. However, its description of late-stage capitalism is so prescient, so accurate, as to be unnerving. karl marx and Friedrich Engel’s depiction of the Lumpenproletariat, the impoverished class capitalism created in England’s 19th century, mirrors today’s homeless, opioid-addicted and incarcerated masses to a T. Our society’s economic inequality and resultant anger is exactly as The Manifesto chillingly predicted.
Marx’s basic belief was that capitalism would destroy itself by creating the conditions wherein workers would no longer feel they had a stake in the game and so would revolt. Marx may have been off in his prescription (communism) for what ails the world, but as an economic diagnostician, he has few equals.
As countless books, including both The Economists’ Hour and Capitalism, Alone, tell us, a myriad of familiar factors got us here: rising inequality in which the top 0.1% in America own more wealth than the bottom 90%; the loss of millions of middle-class jobs to off-shore manufacturing and automation; the relentless rise in education costs (and the resultant debtor class of millennials); the rise of corporate monopolies that force governments to give them huge tax breaks (corporate welfare); high housing costs; medical costs, including unexpected hospitalizations, leaving 43 million Americans with debt, resulting in more bankruptcies than any other factor.
The 2008 economic crisis seems to have been the breaking point. Bank bailouts plus job and home losses attributed to Wall Street greed and stupidity created a political backlash against capitalism. President Donald Trump, Senator Bernie Sanders and Senator Elizabeth Warren have all called for an end, in one form or another, to the “rigged system.”
There is the perception that Buffett or Steyer have credibility when they call for reform. Benioff, in his op-ed, is not manning the ramparts or threatening to tear down the walls of the temple of wealth. He’s just saying he worries the country will not be safe for him, or anyone, if there is not real economic change.
Why would he and other billionaires think that? For one, they are well traveled. They’ve seen up-close what wealth disparity does to societies in Asia and Latin America, where, for example, bodyguards take elite kids to school. They’ve been greeted at five-star restaurants in Jakarta by security guards, packing serious heat. They know no one will be safe if we go down the road of $50 million mansions in the sky (Manhattan’s 57th St., anyone?) while blocks away is public housing with perennially broken elevators and urine-reeking stairwells.
Every month seems to bring a new convert to the “Billionaires for Social Justice Club.” Take the Roundtable, that citadel of corporate capitalism, which recently announced “shareholders” (i.e., stock owners) would be replaced by “stakeholders” (i.e., the larger community) as the receivers of corporate profits! In essence, the Roundtable, with a wave of a recommendation wand, just re-classified the entire S&P (70-80% of all listed companies) as “Certified B” corporations.
When the billionaires are worrying about economic injustice… it must be getting pretty bad.
