“America will never be a socialist country,” President Trump said as he launched his bid for re-election last week.
That declaration was an effort to frighten Americans and undermine growing support for expanding Medicare and Social Security—two popular programs that have long been derided as “socialist.” Mr. Trump’s declaration hypocritically ignores that he and his Republican colleagues are the nation’s leading purveyors of an insidious form of corporate socialism, which uses government power and taxpayer resources to enrich Mr. Trump and his billionaire friends.
When we defeat Mr. Trump in this election, we are going to end his corporate socialism and use those resources to create a 21st Century Economic Bill of Rights that benefits all people.
Consider the corporate socialism we’ve seen on Wall Street, where the high priests of unfettered capitalism reign. As you will recall, Wall Street’s deification of “free markets” went out the window in 2008 as they watched the financial crisis caused by their own greed and illegal behavior threaten the existence of some of the largest financial institutions in the country. Suddenly, Wall Street became strong supporters of big-government socialism.
They begged the federal government for unprecedented taxpayer assistance, and Congress provided them with the largest bailout in history. The major banks received some $700 billion from the Treasury and trillions in low-interest loans from the Federal Reserve.
Meanwhile, working people all across the country lost their jobs, their homes and their life savings. The most vulnerable were hit the hardest, with the African-American community losing half its wealth.
That was not an aberration. The norm across the corporate world is what the Rev. Martin Luther King Jr. called “socialism for the rich, and rugged free enterprise capitalism for the poor.”
If you are a fossil-fuel company, whose carbon emissions are destroying the planet, Mr. Trump and congressional Republicans offer billions in government subsidies, including special tax breaks, royalty relief and funding for research and development. But if you are struggling to pay your utility bill, you get the free market—higher and higher electric bills.
If you are a pharmaceutical company, you make huge profits on patent rights for medicines that were developed with taxpayer-funded research. But if you are a taxpayer, you get the free market and pay the highest prices in the world for prescription drugs—and in some cases you die because you cannot afford the medication you need.
If you are a monopoly like Amazon, owned by the wealthiest person in the U.S., you get hundreds of millions of dollars in economic incentives from taxpayers to build warehouses, yet you end up paying not one penny in federal income taxes. But if you are a small business that falls behind on your store’s rent, you get the free market—which means you get an eviction notice.
If you are the billionaire Walton family, state and local governments grant you free land and subsidies and build infrastructure for your stores, even as Walmart ’s tax-avoidance schemes drain local towns of public revenues. But if you are a Walmart worker, you get the free market—which means starvation wages.
If you are the Trump family, you got $885 million worth of tax breaks and subsidies for your family’s housing empire, which was built on racial discrimination. But if you are a homeowner struggling to pay your mortgage, you get the free market—which means foreclosure.
The time is long overdue for the U.S. to end corporate socialism for Mr. Trump and the rest of the billionaire class. Instead, those resources should be put to work to ensure shared prosperity by enhancing Social Security and Medicare and investing in roads and bridges, public schools, clean water and clean air.
Mr. Trump believes in corporate socialism to protect the wealth and power of the rich. I believe the U.S. must end corporate socialism and instead fulfill President Franklin D. Roosevelt’s vision of enshrining basic economic rights for all Americans. These include the rights to health care, a living wage, a decent job, a quality education, a secure retirement, affordable housing and a clean environment. We can make this 21st Century Economic Bill of Rights a reality with initiatives like Medicare for All, a $15 minimum wage, a Green New Deal, student-debt cancellation and legislation to expand Social Security.
I recognize that this agenda will face enormous opposition from corporate America and the 1%. They have a vested interest in protecting the corporate socialism that has enriched and empowered them. The wealthiest three families now own more wealth than the bottom half of the country, and they will do everything they can to block our agenda.
But more Americans are noticing the contradiction between coddled socialism for the rich and the destruction of opportunity for everyone else. I am confident that we will be able to build a grass-roots movement that will not only defeat Donald Trump in this election but finally create a government that works for all people, not just the billionaire class.
Mr. Sanders, an independent, is a U.S. senator from Vermont and a candidate for the Democratic presidential nomination.
Robert Reich explain how the wealthy and corporations receive billions in corporate welfare.
James Dimon and Ray Dalio are among the most successful capitalists in the U.S. today. So when they worry aloud about the future of capitalism, it’s worth listening.
“I believe that all good things taken to an extreme become self-destructive and that everything must evolve or die. This is now true for capitalism,” Mr. Dalio, founder of hedge-fund manager Bridgewater Associates, writes on LinkedIn.
Mr. Dimon, chief executive of JPMorgan Chase & Co., writes in his annual letter to shareholders: “In many ways and without ill intent, many companies were able to avoid—almost literally drive by—many of society’s problems.”
Captains of industry have always opined on the issues of the day. Still, these latest missives are noteworthy for three reasons.
- First, the authors: Mr. Dalio anticipated the financial crisis; his systematic management and investment style has made Bridgewater the world’s largest hedge-fund manager. Mr. Dimon is arguably the country’s most successful banker, having steered J.P. Morgan clear of the subprime mortgage disaster to become the country’s most valuable financial institution.
- Second, the timing: They are speaking out at a time when the free-market capitalism that has served them so well is questioned by many Americans, including prominent Democrats.
- Third, the content. Mr. Dalio and Mr. Dimon love capitalism and aren’t apologizing for it. But they recognize the system isn’t working for everyone, and they have ideas for fixing it, some of which might require rich people like themselves to pay more tax. Yet they fear the federal government is hamstrung by intensifying partisanship. So they are putting their money and reputations where their mouths are by speaking out, backing local initiatives and hoping like-minded business leaders join them. In effect, they are breathing life into the shrinking nonpartisan center.
In an interview, Mr. Dalio says many business leaders “don’t want to get into the argument. I can understand that. I say to myself, Should I get in? I do think if everyone keeps quiet, we’re going to continue to behave as we’re behaving, and it’s going to tear us apart.”
Mr. Dalio’s essay was inspired by a longstanding interest in the parallels between the 1930s and the present:
- the growth of debt and
- the relative impotence of central banks, the
- widening of inequality and the
- rise of populism.
Capitalism, he says, is now in a “self-reinforcing feedback loop”:
- companies develop labor-saving technologies that enrich their owners while displacing workers.
- The haves spend more on child care and education, widening their lead over the have-nots,
- whose predicament is compounded by underperforming schools,
- the decline of two-parent families, and
- rising incarceration.
Mr. Dalio thinks inequality has fueled populism and ideological extremism, which he fears means capitalism will be either abandoned or left unreformed.
But, like Mr. Dalio, he worries partisanship has crippled the country’s ability to enact basic reforms that elevate economic growth and strengthen the safety net, such as
- improving high schools and community colleges’ provision of useful skills,
- more cost-effective health care,
- faster infrastructure approval,
- more skilled immigrants coupled with legalizing illegal immigrants, and
- requiring fewer licenses to start a small businesses.
“Can you imagine me saying, I can do a better job for the Chase customer if I don’t get involved in details, the products, the services, the prices, how we treat people, how call centers work?” Mr. Dimon asks in an interview. “Policy has too often become disconnected from the analytics; we got slogans instead. It’s driving people apart.”
There’s a chicken-and-egg problem with these well-intentioned calls for nonpartisan problem solving: It requires a level of nonpartisanship that doesn’t exist; otherwise the problems would, presumably, have been solved.
If business leaders can’t persuade with words, they may by example. Mr. Dalio and his wife, Barbara, have donated $100 million to the state of Connecticut, to be matched by the state and other philanthropists, to create a $300 million partnership devoted to reducing dropout rates and promoting entrepreneurship in underserved schools and communities.
For its part, J.P. Morgan has under Mr. Dimon combined commercial and philanthropic resources to finance affordable housing, small business and infrastructure and job training in Detroit, announced $600 million in workforce development grants since 2013, and boosted salaries for lower-end employees. Mr. Dimon, in his shareholder letter, called on fellow CEOs to “take positions on public policy that they think are good for the country.”
It doesn’t always work. The Business Roundtable, which Mr. Dimon chairs, successfully pressed Congress and President Trump for lower business taxes, but unsuccessfully for more infrastructure and legalizing illegal immigrants. Says Mr. Dimon: “We should give it the best shot we’ve got.”
Today, American Democrats have a more positive view of socialism than capitalism, and less than half of young adults have a positive view of capitalism. But the debate isn’t merely between left-wing socialists and right-wing capitalists. Even President Trump argues that capitalism generates prosperity abroad at the expense of American workers. Years of wage stagnation and diminished economic prospects have soured many Americans on the system that made the U.S. the world’s largest economy.
Compared with faster-growing economies in the developing world, America feels older, and not only because the elderly will soon outnumber children. Important parts of the economy, from smartphones and cellular carriers to airlines, resemble sluggish oligopolies more than dynamic marketplaces. Ever more sectors of the economy look like heavily regulated utilities that are at reduced risk of disruption or innovation. In health care, hospitals, physician groups and insurance companies are getting bigger and in some cases driving out competitors.
The problem isn’t market dynamics, but the increased government intervention in the economy that discourages competition. Rather than relying on innovation, many companies often now seek to exploit licensing arbitrage opportunities and engage in other rent-seeking behaviors. They try to beat competitors through regulatory capture and crony capitalism rather than making better products for less.