Populism And Changing Opinions!

Occupy, you put the name of the city in here, is a Populist movement. Zingales, in his book “A Capitalism for the People,” discusses Populism and the changing climate in the United States. It appears that we don’t want to work hard anymore, we want someone to give us what we need. I don’t know if this is pervasive as he is alluding to, but I think it should be mentioned and discussed. Zingales argues that populism is rising in reaction to promarket forces that lead to a meritocratic society. He argues this results from “globalization, a telecom revolution, and a widening income gap.” I think Zingales is right, but the Occupy movement, which seems to have died on the vine, is symptomatic of populist sentiment towards redistribution and egalitarianism. We want things to be fair. This is not necessarily a bad thing, but if we focus on redistribution and not hard work we diffuse the required energy to maintain our standard of living.

As I have written before in this blog, post WWII the United States enjoyed a huge competitive advantage over Europe and Asia. The European infrastructure was devastated by the war, and Japan was economically destroyed. China was not practicing Capitalism at the time, so we were the only game in town. US GDP grew on an average of 3.7% per year. Due to the economic growth and the many jobs available income distribution narrowed, the middle class grew, and we were all happy.

Zingales describes what has happened since. “The good news is that, over the last sixty-five years, American values have spread across the globe. Most communist countries and autocracies have become democracies [huge generalization]. Today, 55 percent of people in the world live in democracies.” With this gain in democratic philosophy the desire for free market principles have grown too, as well as the desire for education. Thus the world is catching up. Instead of stepping up our game, we have moved in an opposite direction.

In fact, an entitlement mentality is growing in our country. In 1998, 74% of Americans agreed that “Most people who want to get ahead can make it if they are willing to work hard.” That same question was asked in 2011, the number of Americans who agree has dropped to 58%. Obviously that reflects hard economic times, but it also demonstrates our changing focus. In a time when we need to roll up our sleeves and work hard, we are looking for others to blame. We are crying out that big brother owes us, instead of grabbing our bootstraps and working hard to earn success. I am concerned about this.

I agree with Stuart Hart when he says that Capitalism is at a crossroads. The philosophy hasn’t changed, but we the people have. Hart argues that the world has merged into three different economies: the money economy, traditional economy, and nature’s economy. With these three economies there is opportunity. I think he is on to something.

The money economy is centered within multinational business. Emerging and developed economics are at the forefront. Organizations that have the resources can discuss and solve major problems resulting from the money economy, as well as make some money along the way. Pollution, poverty, and urban issues can lead to opportunities for these multinationals. All one has to do is read the work of CK Prahalad to observe this in action.

The traditional economy involves entrepreneurship. Hart argues for the traditional economy to thrive the village needs to create opportunities for small entrepreneurs. I agree with this.

Nature’s economy involves green methods for doing business. This is nothing more than a triple bottom-line for sustainability. As much as we lament for the old days of American dominance, we should expend the same energy for exploring the new opportunities of competition.

Americans, the world has changed. We cannot rest on our laurels. WE are innovative and can work. Let’s not forget that. Partisanship will not get the synergy we need to compete with the rest of the world, and we need to work, not blame.

And that is my thought for the day!


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