In a scene from the spy film The Good Shepherd, Matt Damon’s character, an ex-Yale CIA officer, presses an Italian-American mafioso for information, with the threat of deportation. After a long conversation, the mobster (played by Joe Pesci), in frustration, takes a look at Damon’s character, Edward Wilson: a member of the WASP Establishment, raised with wealth and privilege. Pesci’s character says (and I’ll paraphrase because of the foul language): You know, we Italians have family and the Church. The Irish, have the homeland. The Jews, have their tradition. Even the blacks, have their music. What do you people have?” Wilson answers without hesitating: “The United States of America. And the rest of you are just visiting.”
Wilson’s quote, of course, has all types of racist overtones, but from an economic perspective, he is representing the viewpoint of the Protestant Ethic — the approach to life that the Establishment and most of the middle-class have espoused for over 200 years, and which has dictated America’s domestic economic policy. The Protestant Ethic emphasizes that it is our duty to achieve success; that success is achieved through hard work, strict morality, and frugality; and that such success is a sign of God’s favor. It exalts the acquisition of wealth, with a Calvinistic type of Christianity – a version of what our early Puritan colonists upheld. Economically and morally, it advocates a tough, cold, rapacious, survival-of-the-fittest capitalism.
This approach was well suited to early America: its vast tracts of land were ripe for the establishment of a Protestant Ethic paradise, the ideal suggested in Wilson’s statement. The march of families across the unsettled United States and its untamed wilderness required a faith that stressed a hard, resilient type of mind-set, and indeed Presbyterianism (a Calvinistic denomination) was the main religion of the frontier. Americans became convinced that “survival of the fittest” was a good philosophy, as it implied God’s supposed guidance. Progress – particularly progress that involved financial gain – was the goal of life. It is no coincidence the that phrase “the almighty dollar” was coined just shortly after our country was founded – and by Washington Irving, son of a Presbyterian deacon. Just a few years earlier, Adam Smith’s The Wealth of Nations had been published, with its praise of laissez-faire capitalism.
To give it its due, this economic approach seemed to work for about two centuries. We had a vast country with millions of acres of arable land, in which people who were ambitious and a bit stoic could succeed mainly by a strong drive and hard work. When the days of the frontier ended, we had the Industrial Revolution, and – bypassing twelve years of Depression – a post WWII period of no economic competition, as the two world wars had bankrupted all of our competitors. From 1948 to 1973, nearly every other country was poor or rebuilding itself, and for America, making money was like going hunting in a zoo.
Then the 1980s came. Getting rich at any cost became the fashion, though there was a problem: we now had competition. The Japanese were there, the Germans were back, and the American corporate world asked itself, How can we become richer than ever, despite having competitors? Shareholders became less patient and more demanding, and corporations intensified their focus on pleasing the shareholder.
The result of the above is seen now, in 2019. The modern MBA student is taught to only concentrate on the results of the next quarter – not the long term. At the same time, we have entered the age of the corporate giant, which buys or lobbies out smaller competition.
Which brings us to why I think a few socialistic elements may now be necessary. To start, I will be the first to say that pure socialism doesn’t work. We have plenty examples of its ineptitude, in Cuba, Russia, and North Korea. China is socialistic politically, but not in its economic practices. (Shanghai is New York City on steroids.)
Nevertheless, we cannot deny that pure capitalism — the type that our Protestant Ethic ancestors in the US upheld — is no longer working. Its accomplice, supply-side or “trickle-down” economics, is a failure. If it did work, it would have done so by now. The American philosophies of survival of the fittest, Social Darwinism, laissez-faire capitalism, and rugged individualism are extreme philosophies – not at all humanitarian – and are no longer relevant if we want to remain a happy nation with a high standard of living.
I refer specifically to certain issues: rising economic inequality, healthcare, and crumbling infrastructure, to name a few. What is disturbing is that the rich are blind to these — so much so, that they still uphold their survival-of-the-fittest philosophy with passion. In a recent panel discussion at the Davos World Economic Forum, Rutger Bregman, a historian, stated that raising taxes on the wealthy was a key way (rather than philanthropy) of relieving inequality. As Winnie Byanyima, an executive director for Oxfam, was expounding on that point, an ex-Yahoo CFO stood up to challenge them both, saying that unemployment was low and people were being raised out of poverty, and that therefore higher taxes weren’t necessary. Rather than make a good case for the rich, his statement highlighted that the rich are so out of touch with reality that they actually believe they are saving the world. Byanyima’s logical and moving response is worth watching.
Socialism indeed involves higher taxes for the rich, but in America, socialism is still regarded as the “S” word. I was recently telling an American executive about labor laws in the Philippines, which are highly protective of employees. It is illegal there for a company to demote an employee or to reduce his salary. Were this not the case, employers would take merciless advantage of their workers. Yet the executive described this as “socialistic”. Concurrently, there is a trend among American companies of promoting employees without raising their salaries. One can just imagine the conversation: “Jim, we know you’ve been working hard and want some more responsibility, so we’re going to promote you. Unfortunately, right now, with the company’s finances the way they are, we can’t give you a raise. But you’re okay with that, right?” What employee is going to say No, knowing that it would destroy his chances of getting the position, while the position is offered to someone else? A related trend is that of unpaid internships. The white-collar employee of today is becoming as abused as the factory worker of the 19th century.
The above are all cases of capitalism having run riot. However, the prevailing – or loudest – American ethos continues to be one of deifying success and money at all costs. This is seen in the fact that the majority of Americans still oppose the inheritance tax. The tax is currently only applicable to those with over $11 million, and only affects 0.1% of the population, so it’s not likely to affect the average person. But the intoxication of hope, of “That could be me someday” – induced by the Protestant Ethic in our culture – causes people to make a decision which actually does not help them or the public.
Part of the issue is communication. The proponents of the inheritance tax could present their case more convincingly. For example, if Americans were told that inheritance tax revenues could go directly to underfunded schools, infrastructure, or healthcare – and if this was completely transparent — more people would be on board.
Politics is also a problem. Bernie Sanders attempted to run as a quasi-socialist candidate in 2016. His campaign was quashed by Hilary Clinton, though even if he’d gotten the nomination, it’s not certain that he would have won, largely due to the stance of the Democratic Party itself: as a whole, it decided to demonize white Christian straight males, thereby alienating millions of the middle and lower-middle classes. Looking at who the Democrats are putting up for presidential nominations for 2020 — someone as smug as Kamala Harris – I worry that again the party risks repelling potential voters by its attitude.
It is indeed a pity. The staunch resistance of the rich against any type of tax increase shows an apathy to the health of the country as a whole. They worship money – and as with anything that is worshipped, no one wants to give it away, so it must be taken from them in the form of taxes. The happiest countries in the world, mostly from northern Europe, have elements of socialism that benefit their citizens: affordable healthcare for all, pension systems that serve as a safety net, better pay for teachers, and tax systems that do not favour the rich. Their economies are not purely socialistic, and Sweden, for example, continues to produce companies that lead the world in their respective industries.
Hence we are looking for a new type of capitalism in America – “capitalism with some socialistic characteristics”. The survival-of-the-fittest type of capitalism is simply no longer relevant to our economic conditions. It is an obsolete philosophy, which from the beginning was incompatible with any concern for fellow men, any reading of the New Testament, but which miraculously worked for 200 years. Nonetheless, it’s time has come. The consequences of it are disenfranchisement and feudalism, both of which would make our Founding Fathers turn over in their graves. Our Declaration of Independence talks about the pursuit of happiness — not the pursuit of wealth.
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