Is Faith in Capitalism Fading?

In a recent article in the Wall Street Journal, Times of London columnist and senior fellow of the Legatum Institute Tim Montgomerie reports on a survey of more than 1,000 adults in each of seven countries by a market research firm retained by the Legatum Institute to get responses to the proposition that “the next generation will probably be richer, safer and healthier than the last”.  The positive responses in European and Asian countries ranged from a high of 50% in India to 15% in Germany, but the most pessimistic response was a positive of 14% in America, with 52% in disagreement.  Montgomerie then cites a trajectory of metrics for the world that clearly doesn’t justify this pessimism.  There were other responses in America equally disturbing, such as 55% who think the rich get richer and the poor get poorer, 65% who think most big businesses have dodged taxes, bought favors, or polluted, and 58% who want restrictions on the import of manufactured goods.  Still, 49% think free enterprise is better at lifting people out of poverty than government and only 18% disagree, but the drift of the responses underscore the degree to which people think that capitalism is a dirty business.  So what’s going on?

I think it’s pretty simple.  We have spent the last seven years listening to our national leaders and their fellow travelers in the mainstream media blaming the last recession on unregulated capitalists and the sins of globalized markets while burdening the engine of capitalism with more taxes and more regulation, which has crippled job growth and resulted in the slowest recovery from a recession since World War II.  This condition, along with the underlying and not unjustified feeling that they are not being treated fairly in an environment of government-sponsored crony capitalism, has demoralized large numbers of people to the extent that they feel, rightly or wrongly, that we are a nation in decline.  And as Jay Cost has noted, this unrest “amounts to a comprehensive assault on the political dispensation of the past half century.  Many Americans aren’t just frustrated over slow growth but now doubt the core assumptions of the postwar consensus”.  As I have said many times, the postwar social contract is obsolete and must be rewritten.

The explanation might be simple, but as I described a couple of months ago, the solution will be elusive until we find the comprehensive political leadership to bring the country together.  Is it possible that the frustration and anger that is being demonstrated in this election cycle will be productive of that outcome?  I’m hopeful, but wish I could be more optimistic.