The Capitalists Trying to Fix Capitalism

Billionaires are the apex predators of the modern economy.

They tear up governments, buy politicians, and wreck the planet with carbon-spewing yachts. They control the news and what’s in our feeds. They spend $55 million on lavish weddings while the rest of us struggle to buy groceries and gas.

No wonder then, that billionaire backlash is growing. A majority of California voters, for instance, say they support the “billionaire tax” on the ballot in November. New York City’s mayor is a democratic socialist. Many Americans have begun to question the merits of capitalism; Gallup finds that just 54 percent of Americans see capitalism favorably.

But can capitalism yet be saved? And is it worth saving?

Two ambitious reformers argue yes—provided there’s a radical makeover of what a capitalist economy should achieve.

Nick Hanauer and Eric Beinhocker advocate a philosophy they call “market humanism,” and they’re the subjects of this preview edition of the Monthly podcast, which you can watch below.

Hanauer and Beinhocker don’t want the end of capitalism, or the end of markets. What they’d like to see is better market organization of markets to produce outcomes that benefit humanity (i.e., not more billionaires). It’s a bold, optimistic idea: to elevate “human flourishing” over “efficiency.”

As Beinhocker points out, “activities in the economy that cure cancer versus cause cancer would be treated the same way in GDP, but those two things have a very different impact on human well-being.” Market humanists want markets to reward outcomes that lead to better well-being. “Markets are not natural constructions,” says Hanauer. “They are human built constructions. And the question is not, ‘Are they optimal?’ but ‘Who are they optimal for?’”

Hanauer’s and Beinhocker’s backgrounds are as interesting as their theories. Capitalism has, in fact, been very good to both of them, which makes their about-face on the current system even more intriguing. Hanauer is arguably one of America’s most successful entrepreneurs. He was the first non-family investor in Amazon and the founder of multiple firms, one of which he sold to Microsoft for $6.4 billion. Beinhocker, now a professor at Oxford University, was a McKinsey & Company partner for 18 years.

But they both now see serious flaws in the current structure of the U.S. economy and want to fix it from within. “Markets left to their own devices don’t naturally lead to a healthy middle class,” Beinhocker says.

Nevertheless, is their theory of “market humanism” realistic? Is it feasible? Can companies and other capitalists really let go of the idea that “greed is good”?

Beinhocker and Hanauer make their case in a new treatise, Markets Built for Humans, which I asked about in our interview. They also offer a fuller critique of the current economic paradigm—the so-called “neoliberal consensus”—and describe the kinds of policies that a “market humanist” system would produce.

Let us know if you’re convinced!

New at the Monthly…

Worse than Watergate. Among the many felons pardoned by President Donald Trump so far was former Honduran President Juan Orlando Hernández, sentenced to 45 years in a federal prison for charges related to drug trafficking. If you’ve wondered why Hernández was pardoned, we may now have the answer, thanks to a dedicated—and fearless—group of anonymous Honduran journalists. According to Politics Editor Bill Scher, Trump’s pardon of Hernández was part of an extraordinary plot to undermine left-wing governments in Mexico and Colombia. Hernández’s role, according to these journalists, was to spearhead a propaganda operation sanctioned by Trump to discredit these governments. If true, Hondurasgate makes Watergate look like shoplifting by comparison. Learn the details here.

Undervalued and underpaid. The wages of the nation’s childcare workers are so slow that the cost of attaining credentials to do this work far outweighs the return on investment. The ROI is so low, in fact, that child care credentials would run afoul of new federal earnings tests meant to weed out low-quality programs, says Benazir Rowe, founder of Opportunity Data. But the problem isn’t program quality—it’s the structure of the childcare labor force. And the answer isn’t to carve out childcare programs from these new accountability standards—it’s to raise wages. Read here.

The real reason Spirit Airlines failed. No, it’s not because Joe Biden’s administration blocked a proposed merger with JetBlue, argues Ganesh Sitaraman, the author of Why Flying Is Miserable. Rather, the airline industry’s competitive dynamics make it impossible for smaller airlines to succeed. “It’s time to admit that the industry is more like a public utility than a competitive market,” he writes. “We will not have a stable, reliable airline industry without either taking over the airlines or regulating them like public utilities.” Read here.

Sanitizing death and destruction. During the Iraq War in the early 2000s, the late journalist and etymologist William Safire often called out the Bush administration’s use and abuse of euphemism to hide military failures and sanitize violence. (A retreat, for instance, was a “retrograde movement.”) Journalist James North points out that the Trump administration is engaging in the same kind of linguistic hide-the-ball to downplay the Iran War and pacify the public—something the commentariat seems content to go along with. “Let’s start with the benign-sounding expression took them out to describe what the U.S. and Israel have been doing to Iran’s leaders—when, in fact, our air forces were ‘killing’ them,” he writes. James has plenty more examples of this Orwellian obfuscation. Read here.

Plus…

• Watch a film adaptation of Mark Twain’s “The War Prayer,” directed by our Publisher Emeritus Markos Kounalakis. Twain wrote this piece to protest the jingoism of the Spanish-American War, Markos writes, but it’s as fresh as ever today as the Trump administration calls for its own “crusades” around the world.
• Russell Lemle of the Veterans Healthcare Policy Institute offers four ideas for boosting safety at Veterans Administration community clinics, which have lately become a target for violence.
• Former CBS correspondent Marvin Kalb shares intriguing details of his investigation into the attempted assassination of Pope John Paul II in 1981—and whether the Kremlin was behind the plot (courtesy Compass).
• Contributing writer James Zirin writes that former FBI Director James Comey need not fear being convicted for threatening to kill the president—though the case might just make it to trial.
• Journalist Merrill Goozner shows how soaring hospital prices are driving medical inflation.
• Contributing writer David Masciotra interviews the CEO of EveryLibrary, a nonprofit dedicated to defending public libraries.
• In his Friday column, Bill Scher calls for a truce in the three-way Michigan Senate Democratic primary—lest their internecine fighting paves the way for a GOP victory.

And introducing….

The Washington Monthly has long been a think tank in magazine form. We publish deeply reported content that surfaces promising policy solutions to the country’s greatest problems, but as essays and feature stories, not white papers.

There are times, however, when our reporting and policy ideas are best conveyed on a bigger canvas. That’s why we’re pleased to announce the launch of our new in-house think tank, The Washington Monthly Institute, and the publication of our first research report: AI and the Future of Independent Journalism: The promise and peril of privately controlled data marketplaces for media content.

You’ve made it through another week, and we’re almost a third of the way through Trump’s second term.

As always, thanks for reading, sharing, and subscribing.

See you next Sunday.

Anne Kim, Senior Editor