It’s the Fed’s Fault

And in fact, this notion about the evils of capitalism is, in all likelihood, a very American phenomenon…

Because if you look around the world, you’re gonna be hard-pressed to find evidence that capitalism is pushing more and more people into poverty. In fact, the exact opposite is happening.

• In 1990 — just 28 years ago — the global population was 5.2 billion people. And 1.85 billion lived in extreme poverty. That’s 35% of the world’s population.

• In 2015 (the last year for which I could find stats), the World Bank says there were 753 million people living in extreme poverty, while the global population grew to 7.3 billion. That would put the extreme poverty rate at about 10%.

• In just two years (between 2013 and 2015), 26 million people in East Asia and the Pacific, 9 million in the Middle East and North Africa, and 50 million in South Asia rose out of extreme poverty.

This is what capitalism does. It brings economic opportunity to people. Because capitalism is about ownership. It’s about commerce and trade. It’s about innovation and efficiency. Once a government decides to protect the people’s right to ownership, the good times roll. Just look at China since Deng Xiaoping announced that Mao’s top-down communist Cultural Revolution was officially over in 1978:

We need large numbers of pathbreakers who dare to think, explore new ways and generate new ideas… Otherwise, we won’t be able to rid our country of poverty and backwardness or to catch up with—still less surpass—the advanced countries.

In 1981, 90% of Chinese people were subsistence farmers living in extreme poverty. In 2015, it was 2%. And the U.S. helped. We dropped trade barriers and encouraged the flow of goods and technology, and growth took off. Same with post-Soviet Russia.

A Level Playing Field

I’m going to tell you something that many Americans simply don’t want to hear.

Before China opened up and the Berlin Wall came down, America was basically the world’s top economic dog. But it wasn’t because we were better than other people; we just had a great head start. Half of Europe’s best economy was still under Soviet rule. Europe lost a decade to rebuilding after WWII. Same with Japan. Central and South America were just emerging from decades of post-colonial U.S. influence.

But today, Americans are competing with Japanese, Chinese, Russians, and Mexicans. The world is a more level playing field. And frankly, we don’t like it.

The reason is simple: America doesn’t enjoy the structural economic advantages we once did. Technology and skill have migrated around the world to the point that the best electric trucks and telecom equipment come from China. Toyota is the biggest car company in the world, followed by Volkswagen. Software engineers from India, entrepreneurs from Mexico…

Sure, you can try and build a wall to protect a physical border. But there’s nothing that’s gonna protect Americans from competing with people from around the world.

So now, after bringing capitalism to the world, the U.S. is going to be the first to abandon it, vote for a socialist agenda, and basically hide behind our nanny state’s skirts?

An Honest Discussion

Bernie Sanders told us it was the elites’ fault, and he could fix it with free college. Trump told us it was Mexico’s fault, and he could fix it with a wall and some tariffs. Alexandria Ocasio-Cortez is now telling us that it’s the billionaires’ faults, and she can fix it with punitive taxes.

These are all lies, designed to appeal to people’s need to blame somebody for their troubles, to say it’s all unfair, the game is rigged…

I think it’s time for a truly honest conversation about where America is in the world. It’s time we talked about the real challenges we face and stop resting fat and happy on our laurels, complaining that life ain’t fair, while we lose ground to people and countries that are busting ass to make a better life for themselves and their families.

We need to talk about automation that is going to take as much as 30% of low-skill U.S. jobs in the next 10 years.

We need to talk about an education system that is saddling our kids with obscene amounts of debt. (Hint: Have unlimited government loans encouraged colleges to lower or raise tuition?)

We need to talk about merger and acquisition activity that leads to nothing but thousands of layoffs and huge payoffs to investment banks and private equity firms.

And we really need to talk about a Federal Reserve system that runs unchecked and will always favor big money over the average American.

Look at what Bernanke did in the wake of the financial crisis. A crisis like that is supposed to be a reset, a time when those who have gone to excess get their due. Bernanke and his QE did the opposite.

He saved the banks and Wall Street’s precious bonuses, while the average American saw his most valuable asset — the home — plunge in value. Average people got fired, got foreclosed on, or had to raid retirement savings to pay the bills.

The wealthy got a 10-year head start while the S&P 500 tripled in value. The average American is just now getting back to where he or she was 10 years ago. 

It is simply no wonder that income disparity has gotten worse. How could it not?

The problem is not capitalism. Corruption and crony capitalism are what got us here. Anybody got the stones to tell the truth?