“Middle class incomes have been stagnant for years. Income inequality has gotten worse. Forty percent of American workers earn less than $15 an hour, and about 5 percent of full-time American workers earn the minimum wage or less, which is certainly not a living wage. In addition, 40 percent of Americans don’t have $400 to deal with unexpected expenses …”
The above reads like a speech from a left-leaning Democratic presidential candidate, an inconveniently accurate think-tank report, or even something I’ve written more than once. But it comes from the latest letter to shareholders by JPMorgan Chase CEO Jamie Dimon.
Some capitalists are growing worried, according to new stories in what are hardly Marxist rags, Financial Times and The Washington Post. The Post’s headline read, “Capitalism in crisis: U.S. billionaires worry about the survival of the system that made them rich.”
On the surface, it’s an odd time for such soul-searching. The official national unemployment rate was 3.8 percent in March, lowest since the 1960s. By this summer, the expansion will become the longest on record. Growth is decent and inflation is low. President Trump said, “Wages are rising at the fastest pace in decades.” Not surprisingly, this is not true, but pay has seen a modest bump as employment has risen.
Yet a Gallup poll last year found that only 47 percent of Democratic and Democratic-leaning voters viewed capitalism favorably, compared with 56 percent in 2016. Last year, 57 percent of this same cohort had a positive view of socialism.
In some ways, we’ve been here before and better days came. The Gilded Age was swept aside by Progressive elements of both parties, with trust busting and the establishment of business regulation, the national income tax and Federal Reserve.
Capitalism faced its greatest crisis with the Depression, when communism or fascism seemed for many inevitable alternatives to a discredited system. The hard left never forgave Franklin Roosevelt for saving capitalism through tough regulation and unprecedented federal intervention in markets.
This was the capitalism that gave us the zenith of the middle class, until the consensus broke down in the late 1970s and a long binge of financialization and deregulation set us up for the crisis of a decade ago.
Worried about capitalism
President Barack Obama and a well-led Federal Reserve saved us from a second Great Depression. But mistakes were made. The rule of law was not brought to Wall Street. The banksters got away with it. Inequality and the accumulation of wealth by the investor class increased.
Commentator Barry Ritholtz writes, “Not this time around. Instead, we have Popularism, grifters, and other carnival barkers. It is not surprising the electorate is angry; it is disappointing they have not found their champion — yet.”
Millennials are too young to remember successful regulated capitalism before the oligarchs amassed such financial, monopolistic and political power. They are too young to recall the failure of real socialism in the Communist bloc during much of the 20th century. Even many billionaires worried about capitalism are supporters of today’s highly consolidated industries, busted unions and lapdog regulators.
But run a Democratic “socialist” in 2020, add in voter suppression, Kremlin mischief and the self-interested spending of the rich not as enlightened as Dimon, and we have Trump for another four years.
Jon Talton writes about economics for The Seattle Times: jtalton@seattletimes.com.
