How to Save Capitalism
As the global economic Âcrisis enters its fourth excruciating year, just about everybody who can be blamed for the downturn has been blamed. Irresponsible bankers. Greedy corporate executives. Incompetent regulators. Bickering politicians. Underpaid Chinese workers. Overpaid Greek workers. George W. Bush. Ben Bernanke. Angela Merkel. Credit-rating agencies. The euro. Spendthrift American consumers. After the worst financial disaster since the Great Depression of the 1930s, there has been no shortage of vilification to go around. With another grim year likely ahead and no ready solutions in sight, a new target has arisen in the publicâs crosshairs: capitalism itself.
Itâs easy to see why. As jobs remain scarce and the welfare of middle-class American and European families has come under strain, capitalism, as it functions today, seems to have failed to do what it is supposed to do: provide economic opportunity and a better future for all. Weâre taught in school that capitalism is a meritocracy that rewards the hardworking and talented. In the wake of the 2008 financial crisis, however, capitalism often appears to benefit only the connected and privileged. To many, Wall Street Âfinanciers remain unreformed and unrepentant; theyâre still getting rich off the same sort of risky shenanigans that caused the U.S. economy to tank in the first place. Bankers evict families from their homes only to tear those homes down. Greek, Spanish and Portuguese citizens suffer through budget cuts and tax hikes to appease impatient bondholders and bankers. CEOs pocket multimillion-dollar bonuses while laying off thousands.
The roots of discontent with capitalism run much deeper than the current slump. Over the past three decades, as capitalism has become freer and more globalized, the rich have benefited enormously while the many have often been left with the crumbs. The gap between rich and poor has been widening just about everywhere. In a 2011 report, the Organisation for Economic Co-operation and Development figured that the level of income inequality in the 22 member nations it studied increased by 10% since the mid-1980s, with conditions deteriorating in 17 of them. Free-trade-led globalization has forged an international labor market that pits Indian and American college students against one another, pushing those who canât compete to the sidelines. Factories are shuttered in the U.S. and Europe, only to reopen in China, costing the West millions of manufacturing jobs.
Those still on the payroll in the U.S. donât gain as much from todayâs capitalism as their bosses do. A recent report by the Institute for Policy Studies, a Washington-based think tank, found that CEOs at large U.S. firms earned, on average, $10.8Â million in 2010, a 28% increase from the year before, while the average worker took home $33,121, a mere 3% more. At that level, CEOsâ paychecks are 325 times bigger than their employeesâ. In the 1970s, CEO pay rarely topped 30 times more. âA lot of people say capitalism doesnât work,â says Kaylee Dedrick, an Occupy Wall Street protester. âWe want to see Âcapitalism used to create more, not consolidate power into one small subset, where the rest of America isÂ saying, âWhereâs our slice?ââ