I frequently quote Nick Hanauer, the billionaire who regularly warns other super-rich titans that unless they change their ways, ordinary Americans will be coming for them with pitchforks. Hanauer understands something that far too many apologists for our distorted capitalism don’t–that their continued affluence depends upon replacing today’s neoliberal corporatism with a properly understood and properly regulated market capitalism.
Hanauer was one of the first to point out that, far from depressing job creation, increasing the minimum wage and putting discretionary dollars in more pockets increases employment. (If no one has enough money to buy your widgets, you aren’t likely to hire more folks to produce them.)
What I particularly appreciate about Hanauer’s substacks is his defense of actual capitalism, and his recognition how very far today’s corporatism/crony capitalism has departed from that economic model. A recent essay is a good example; he begins by attributing the emerging popularity of the DSA–Democratic Socialists of America–to the widespread rejection of America’s current economic performance.
Hanauer is not making an argument for the DSA. As he writes,
Anyone familiar with my resume will be unsurprised to learn that I don’t believe socialism is the answer to cure our economic ills. But what all these centrist pundits miss is that the real risk to markets isn’t the rise of DSA candidates, it’s the failure of the policies centrists are still clinging to for dear life. It wasn’t socialism that expanded income inequality by stealing nearly $80 trillion from worker paychecks and handing it off to my fellow plutocrats over the last 50 years—it was a different kind of economic redistribution, commonly known as trickle-down economics.
As Hanauer argues–and as survey research confirms–the American people know the economy isn’t working for them, and many attribute that economic failure to capitalism, not recognizing how far America has departed from a properly regulated and taxed market economy. Gallup recently found that the percentage of the American public holding a positive view of capitalism is 54 percent—an all-time low.
There’s a reason for that. During the past 50 years, the bottom 90 percent of wage earners have lost $3.9 trillion out of their paychecks to the top 10 percent– mostly the top .01 percent.
Had that $80 trillion loss been distributed the way it was before 1975, median incomes today would be nearly double what they are. That’s the scale of what’s been taken from most Americans—not through bad luck, or the hard work of a handful of wealthy CEOs, but through deliberate policy choices made by both Democratic and Republican leaders since the 1970s that purposefully concentrated wealth and power at the very top….
When you exclude the bottom 90 percent from the gains of economic growth, you don’t just impoverish them. You hollow out the consumer demand that drives innovation, you shrink the market that businesses depend on, and you eventually destabilize the entire system.
Hanauer rejects the standard “Econ 101” argument that markets are important because they’re efficient at allocating scarce resources. He argues that what really makes markets valuable is “their unrivaled ability to evolve innovative solutions to human problems. And the more people you include in that process—as entrepreneurs, innovators, well-paid workers, and robust consumers—the faster and more prosperously the whole economy grows.”
State capitalism with MAGA characteristics is no answer to this crisis. Neither is democratic socialism. And neither, frankly, is the tired orthodoxy of the past fifty years that produced this crisis in the first place.
Asking pundits to abandon the economic framework that has structured political debate for half a century is like asking a fish to question water. But here’s the thing: if you truly believe that market capitalism cannot deliver the kind of economy the American people say they want—rising wages, affordable housing, healthcare, education, economic security for their kids—then you’re not the right person to defend market capitalism. If you insist that we cannot possibly afford to raise wages, reduce inequality, and adequately address the basic needs of every American—because economics—then either you need to embrace a new economics, or you need to step aside and let a new generation of pundits and policymakers use the tools that can actually solve these problems.
Those pitchforks that I warned about over a decade ago have been sharpened. The only way to stop people from putting them to use is to give them a genuine reason to believe that market economies can actually work for them. Ignoring the problem—and thinly disguised panic over a few DSA candidates—simply isn’t going to cut it.
I couldn’t agree more.
American has enjoyed the prosperity afforded by economic policies that constantly moved toward a better balance between capitalist and socialist ideals. The capitalist ideal is that those who provide the greatest worth gain the greatest rewards. The socialist ideal is that even the poorest and weakest among us deserve a decent standard of living, i.e., no one deserves to be left behind or discarded or exploited.
The issue should not be which system is best, but how to better balance the two. Many capitalists refuse to recognize the benefits of the socialist ideal and many socialists refuse to recognize the benefits of the capitalist ideal. To the extent that they keep trying to eliminate each other, we will have the benefits of neither.
“Market economics” is a theory that collapses in the face of reality. In this country, we socialize the risks and privatize the profits. There are examples of this in every industry.
Unlike Sheila, I happen to believe the DSA is the right path against the corporate fascism we are experiencing. Mamdani’s tax on millionaires and billionaires is getting the usual suspects to run ads against it, claiming it is socialism and communism. They would have been better off putting the money they’ve spent on ads into their savings accounts to pay for the tax that improves all New Yorkers’ lives. Marx and Einstein said something about greed and its culmination. Pitchforks and guillotines. I’m ready to go now.
Once Americans get a whiff of the scheme cooked up by Bessent, Lutnick and sons, and Trump and sons, the pitchforks might have extra-sharp points. Bessent’s so-called flipping of our debt from long-term to short-term is a closed financial loop that benefits them personally and puts way too much wealth in the pockets of Tether — a company formed in the BVI and headquartered in El Salvador. It pays no federal taxes, but as a stablecoin issuer, it must maintain a portfolio of short-term treasuries equal to every dollar received from stablecoin purchases. They have quietly surpassed most countries in ownership of our debt. Guess who the custodian for all those treasuries is? Cantor Fitzgerald, or Lutnick’s sons’ company, since Lutnick “divested from it.” By the way, when Howard divested, Tether loaned his sons the money to buy him out.
It’s one financial scheme after another with these Epstein guys. Wait until the Genius Act passes. I really don’t see how Trump and the GOP allow a large swath of Democrats to take seats in Congress. It will be an existential threat in early January 2027.
I think Sharon nailed it.
I don’t know everything that Hanauer believes, but when he contrasts MAGA and DSA, as if they are the two extremes, he seems to be creating a false dichotomy so popular among those who moved the Overton Window. MAGA is 100% wrong and DSA is 80% right (to approximate numbers). DSA is a little to the left of FDR’s New Deal 2.0 which is where the proper balance that Sharon seeks probably lies.
Just my two nickels worth (since we no longer have pennies)
I think Sharon nailed it.
I don’t know everything that Hanauer believes, but when he contrasts MAGA and DSA, as if they are the two extremes, he seems to be creating a false dichotomy so popular among those who moved the Overton Window. MAGA is 100% wrong and DSA is 80% right (to approximate numbers). DSA is a little to the left of FDR’s New Deal 2.0 which is where the proper balance that Sharon seeks probably lies.
Just my two nickels worth (since we no longer have pennies)
I like the emphasis that Hanauer presents. Trickle down was always a lie.
I agree with Sharon’s comment.
You should see the commercials the Republicans are running against Angie Nixon in Florida. If anyone is gullible enough to believe them (here in Florida that’s about 75% of the population) they believe that the DSA is intent on burning down everything, turning all little boys into little girls, and leaving us without an army or a police force.
What is the most basic right we have? This is going to sound weird coming from me, but it’s the right to life. Not right winged nuttery life, but life that isn’t cut short by lack of health care, or food, or shelter. Think Maslow! If we want an effective economy that empowers creativity we need to guarantee those three things. Call it socialism, if you like. I call it human decency.
BTW, I’m certainly glad that Hanauer has apparently rediscovered John Maynard Keynes. He was responsible for most of the New Deal. It seemed like he had been forgotten in trickle down times. He wrote that the way out of depression was spending, because it put money in the pockets of people who would, of necessity, spend it.
Here’s a hint to the Democrats. If you are as tired as I am of Orange Jesus laying the blame for the economy we are currently experiencing at the feet of Joe Biden, please make commercials showing guys like Jaime Diamond saying how great the recovery had been under Biden. I seem to recall many top financial players and economists saying whoever won in 2024 would inherit the world’s strongest economy. (Keynes?)
THINK,
VOTE!!!!!!
As Sharon notes, the Capitalist ideal is, the one providing the most benefit, gets the biggest rewards. Who decides if it is a benefit?
Shelia,
In keeping with this subject (capitalism) I would suggest readers for those who have access to Prime considering viewing the program “Requiem of the American Dream” it is an eye opener! I assume it’s possible to search it on other platforms.
Peggy, it seems that the GOPic ads in Florididia are all cut from the same inane cloth.
At the heart of inequity, is the mental attitude of those with the resources. Generationally, the wealthy have been indoctrinated in the belief they are blessed of God and deserve more, while the rest of us, obviously not blessed are getting more than we deserve. To this special class, we are sub-humans who are using up their resources and should be grateful for the crumbs that fall from their glorious tables. They hold us in contempt.
Trickle down is rich man speak for, “Piss on their heads.”