The dirty secret of capitalism — and a new way forward

27.09.2019 - TED: Ideas worth spreading

The dirty secret of capitalism — and a new way forward
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Nick Hanauer is a rich guy, an unrepentant capitalist — and he has something to say to his fellow plutocrats: Wake up! Growing inequality is about to push our societies into conditions resembling pre-revolutionary France. Hear his argument about why a dramatic increase in minimum wage could grow the middle class, deliver economic prosperity … and prevent a revolution.

08:58

We plutocrats need to get this trickle-down economics thing behind us, this idea that the better we do, the better everyone else will do. It’s not true. How could it be? I earn 1,000 times the median wage, but I do not buy 1,000 times as much stuff, do I? I actually bought two pairs of these pants, what my partner Mike calls my manager pants. I could have bought 2,000 pairs, but what would I do with them? (Laughter) How many haircuts can I get? How often can I go out to dinner? No matter how wealthy a few plutocrats get, we can never drive a great national economy. Only a thriving middle class can do that. There’s nothing to be done, my plutocrat friends might say. Henry Ford was in a different time. Maybe we can’t do some things. Maybe we can do some things. June 19, 2013, Bloomberg published an article I wrote called “The Capitalist’s Case for a $15 Minimum Wage.” The good people at Forbes magazine, among my biggest admirers, called it “Nick Hanauer’s near-insane proposal.” And yet, just 350 days after that article was published, Seattle’s Mayor Ed Murray signed into law an ordinance raising the minimum wage in Seattle to 15 dollars an hour, more than double what the prevailing federal $7.25 rate is. How did this happen, reasonable people might ask. It happened because a group of us reminded the middle class that they are the source of growth and prosperity in capitalist economies. We reminded them that when workers have more money, businesses have more customers, and need more employees. We reminded them that when businesses pay workers a living wage, taxpayers are relieved of the burden of funding the poverty programs like food stamps and medical assistance and rent assistance that those workers need. We reminded them that low-wage workers make terrible taxpayers, and that when you raise the minimum wage for all businesses, all businesses benefit yet all can compete.

15:34

So here’s an idea for a new kind of economics, a new kind of politics that I call new capitalism. Let’s acknowledge that capitalism beats the alternatives, but also that the more people we include, both as entrepreneurs and as customers, the better it works. Let’s by all means shrink the size of government, but not by slashing the poverty programs, but by ensuring that workers are paid enough so that they actually don’t need those programs. Let’s invest enough in the middle class to make our economy fairer and more inclusive, and by fairer, more truly competitive, and by more truly competitive, more able to generate the solutions to human problems that are the true drivers of growth and prosperity. Capitalism is the greatest social technology ever invented for creating prosperity in human societies, if it is well managed, but capitalism, because of the fundamental multiplicative dynamics of complex systems, tends towards, inexorably, inequality, concentration and collapse. The work of democracies is to maximize the inclusion of the many in order to create prosperity, not to enable the few to accumulate money. Government does create prosperity and growth, by creating the conditions that allow both entrepreneurs and their customers to thrive. Balancing the power of capitalists like me and workers isn’t bad for capitalism. It’s essential to it. Programs like a reasonable minimum wage, affordable healthcare, paid sick leave, and the progressive taxation necessary to pay for the important infrastructure necessary for the middle class like education, R and D, these are indispensable tools shrewd capitalists should embrace to drive growth, because no one benefits from it like us.

20:09
20:11
Categories: Economics, International, Opinions
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