Capitalism's discontents
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Photo Illustration: Sarah Grillo/Axios. Photos: Spencer Platt/Getty Images, Scott Olson/Getty Images, and Erik McGregor/LightRocket via Getty Images
More voters than ever oppose capitalism. That fact has profound implications for the 2020 presidential election, but also for the future of the entire U.S. and global economy.
By the numbers: A Harris poll for "Axios on HBO" finds that socialism is gaining popularity: Four in 10 Americans — and 55% of women between 18 and 54 — say they would prefer to live in a socialist country over a capitalist one.
Why it matters: When it comes to economic policy, both Republicans and Democrats have moved to the left. Just four years ago, Barack Obama was president and a neoliberal consensus prevailed that was terrified of the economic implications of a Trump victory.
- Trump's win didn't cause the expected stock-market crash, but it did usher in an era of trade wars and declining global growth.
- Trump rejects the core economic concept of comparative advantage, which says more trade causes broad welfare gains, even for countries that run trade deficits.
- With the possible exception of Mike Bloomberg, none of the leading Democratic candidates — not even Joe Biden — would embrace the trade deals Obama was keen to adopt.
- It’s not that all 2020 Democrats are calling for socialism. Indeed, several shun that label. But they’re presenting differing views on a progressive iteration of democratic capitalism.
- Talk of a Green New Deal reflects Democrats' combined concerns about income disparity and the environment.
What they mean: When Americans say they want to live in a socialist country, they don't mean they want to live in a Marxist command economy. Rather, they mean that they want universal health care, tuition-free education, and a decent day's wage for a decent day's work.
- "Socialism" is best understood as a term that evinces a deep dissatisfaction with the way that capitalism has played out in America, more than as a clearly-defined ideology.
"Today’s younger generations simply do not accept that companies should pursue profits at the expense of broader environmental and social well-being."— Klaus Schwab, the founder of the most capitalist conference in the world, writing in Foreign Affairs
Capitalism has delivered mostly for the rich. A major new report, Life Experiences and Income Inequality in the United States, concludes that "adults in the top 1% highest income bracket have dramatically different life experiences than those with middle- and lower-incomes when it comes to financial problems, health care, life satisfaction, and problems with prescription drug costs."
- The middle classes feel that capitalism has left them behind, reporting dissatisfaction with everything from employment to housing and educational attainment.
- A recent GAO report found that "economic mobility in the United States is limited," and that as much as two-thirds of economic status is passed down from parents to children.
Inequality has become impossible to ignore both economically and politically, especially now that the U.S. is led by a billionaire president.
- The 2019 Wealth-X billionaire census found the U.S. was the only major country to see an increase in the number of billionaires last year. It now has more than 700 billionaires — more than the next four countries (China, Germany, Russia, and the U.K.) combined.
Among the 2020 Democrats, Bernie Sanders is the only self-avowed Democratic socialist. But if he or Elizabeth Warren became president, the capitalist system could face significant overhaul. Under their visions:
- Health care would be largely run by the government and private insurance eliminated.
- The richest Americans would face higher taxes. Warren would impose a 2% tax on households with $50 million in net worth, and an additional 4% annual tax on amounts above $1 billion.
- Sanders' plan has more tax brackets than Warren's proposal, ranging from a 1% tax on wealth over $32 million to an 8% tax on wealth over $10 billion.
- They'd offer tuition-free college and cancel student loan debt. The big difference: Warren released a plan that would eliminate debt via executive action, so she could bypass Congress. Sanders introduced legislation in the Senate that would eliminate all of the student loan debt (about $1.6 trillion).
- Biden and Pete Buttigieg are more likely to call for fixing the system rather than overhauling it and replacing it with a new one.
- This WaPo report breaks down the spending disparity between the two camps.
The bottom line: Capitalism has failed most Americans in recent decades. Instead, it has created an economy which feels — and is — deeply unfair. Tapping into that wellspring of resentment will be a major source of political support for all successful candidates in 2020.
