Anne Bradley is an Acton affiliate scholar, the vice president of academic affairs at The Fund for American Studies, and professor of economics at The Institute of World Politics.
There’s much talk about “common good capitalism” these days, especially from the New Right. Is this long overdue, that a hyper-individualism be beaten back, or is it merely cover for increasing state control of the economy?
Let me begin by saying that I hate “capitalism with adjectives” in general. This allows people to use the word as an abusive epithet rather than as a description of how an economic system allocates scarce resources. The New Right and the left both disdain capitalism, which can best be described as an economic system characterized by private property rights or private ownership of the means of production. Individuals and firms decide how best to use and invest those resources and are directed by prices, profits, and losses.
The New Right doesn’t like this system because some argue that we’ve traded virtue for growth and that we can use the administrative state to correct market failings and restore community. Another of their arguments is that we’ve become atomistic individuals—robotic automatons, or homo economicus if you will—and we are just walking spreadsheets doing cost-benefit analysis everywhere we go, without purpose and humanity. The left also uses some of those arguments; they reject inequality and individuals who have “too much wealth” and want to level the playing field.
Both of these arguments miss the mark, and it’s a hard argument that they sell—“Let’s return to the 1950s when everything was simple and families could survive on one income.” Making that claim takes a great deal of privilege and gross economic error. The 1950s weren’t better for minorities or women, for starters. Living in 2023 is far better because we have more legal equality and are materially far better off; this is not despite capitalism but because of it.
I think some of this is human nature—we tend to have a romantic view of some aspects of the past, as it reminds us of our youth. Some of this is just gross misrepresentation of the data, which are easily available and understandable. For example, since 1979, for every three jobs destroyed, four were created. This means the economy is growing! In 1940, about 30% of Americans worked in agriculture; today, that’s under 5%, meaning everyone has higher-skilled and better-paying jobs. The time-cost of almost all goods and services has plummeted in the past 50 years. In 1950, it took about 50 minutes of labor to buy a 3-pound chicken; today it takes about 12 minutes.
If you don’t start saving until midlife, you’re in trouble.
Capitalism brings us the goods, and no one wants to give them up, but it’s not just about materialism. To get the “stuff,” we must cooperate, we require the rule of law, we must respect the dignity of other people, and we must only be paid for productive labor that serves others. Ask anyone in North Korea or Venezuela today if they would love to come to a capitalist country and give life a try. This is why America has always attracted immigrants and has been known as a melting pot—it has historically celebrated capitalism. We don’t need capitalism with adjectives, we need unconstrained markets—that is what best serves the common good, and we have 200 years of empirical data to prove that it works.
We have an aging population and so the sustainability of Social Security and Medicare are hot topics of debate. Given that most people don’t make the best financial decisions, especially when they’re young, and emergencies, especially health crises, can wipe out savings, many pushing 70 have little more than Social Security and Medicare to rely on. Is this system fixable? Should it be replaced by something else?
I was in the store yesterday and saw, for the first time, a “Happy 100th Birthday” card. It’s truly remarkable how far we’ve extended the boundaries of life expectancy, a trend that can continue. However, no one can work when they’re 100 years old; I’ll be lucky if I can feed myself at that age, right? So, we can’t just push the boundaries of life expectancy without rethinking the policies around elder care.
You’re right to point out that, when we’re young, we sometimes make reckless financial choices that can follow us for a while. If you don’t start saving until midlife, you’re in trouble. One of the issues is the incentives around household savings. Social security, to some extent, disincentivizes private savings because we’ve believed for a long time that as we pay into that system, the system will pay us as we get older. After all, Social Security is your money, not government charity or welfare. This is failing because the government doesn’t have the incentive, over the course of our working lives, to be a trusted steward of that money; quite the opposite—they have the incentive to spend the money.
Social Security is expected to become insolvent in 2034, and Medicare insolvency is expected in 2028—that’s in five years! Meanwhile, the federal government continues to recklessly spend beyond its means, indicating they have no money to support these systems in the future. What I find ironic is that people get very upset about this, rightly so, but then they vote for politicians who are big spenders both on the left and the right. We can’t fix these systems unless we dismantle them and start over or find massive cash infusions for them.
As Medicare becomes insolvent, benefits will immediately decrease by 10%; for Social Security, that decrease will be 20%. We also talk about the “sandwich generation”: people my age are both raising young kids and caring for elderly relatives, which adds to the financial pressure that working adults face. So what to do? I’d move to a privatized system wherein we grandfather in current beneficiaries. We can do this, but it means we have to alter our attitudes about these types of investments when we’re young. It also requires a revamping of the healthcare system, which is bloated and expensive. So if I were president for a day, I would almost entirely dismantle the FDA, which makes the drug-approval process lengthy and expensive, but worse—it withholds life-saving drugs and medical inventions from the market with over-testing and burdensome regulations. To do this, we need courageous politicians. But we cannot get those without first having the political will for big reforms within the citizenry.
You wrote a book that focused on a biblical answer to poverty. If you could correct one misunderstanding about free market economics, especially for Christians who have a dominical command to care for the poor, what would it be?
That market economies are the most essential part of the solution. They are more important than humanitarian aid. It’s not that we should not care for our brothers and sisters in poverty by supporting their immediate needs. If you’re going to die of starvation today, and I can help by giving you food and water, I should do so. But often our aid within churches, missions, and government organizations focuses only on short-term needs and not long-term solutions. The goal is to help such that your help is no longer needed after a while—and it can take a long time for that to happen. We want poor people to become prosperous, not to be dependent on our charity forever. If we do our job well, the humanitarian aid is temporary and goes away.
The 1950s weren’t better for minorities or women. Living in 2023 is far better.
Think about poverty in America, which differs from poverty in Syria. The United States has an extensive public welfare system and a large private philanthropic sector. Americans are the most generous, giving about $485 billion last year to various charities, much of which occurs through church giving. We are a very rich country, so there is a great deal of money and willingness to help the poor domestically and globally. So why do we see the persistence of poverty in American cities? Today in Seattle, Portland, and L.A., we see cities deteriorating and increasing homelessness. We can’t simply slap a Band-Aid on this; we must get to the bottom of American poverty, which has varied causes, including mental health issues, bad residential zoning policies, and high minimum wages, which make finding work and shelter very difficult. Some of it is due to broken families and drug addiction. To help, we must get into relationships with people to understand how they got here. They may need medical attention, food, shelter, etc. We are good at that part; where we need to improve is to move away from destructive policies that generate more poverty. More economic freedom is the answer—in Los Angeles and Syria—but significant institutional differences exist in these places, so our approach must be different depending on where we are.
If you could blow up one public building, à la Howard Roark in The Fountainhead, without endangering life or risking imprisonment, which one would it be?
I remember having these conversations in graduate school, but they went something like “If you were president for one day, what would you do?” And then we’d talk about what agencies we would eliminate. In some ways, not to overthink this, but no matter what I choose, it would be a temporary move, even though it would be satisfying. That’s because if you destroy a building, the government will quickly get to work building it back bigger and “better” and surely with a larger budget. I will say I’m torn between the IRS and the Department of Homeland Security. In my perfect hypothetical world, we could blow up the IRS and then move right to a flat tax requiring far fewer employees; it would make the tax code transparent and eliminate the need for armies of CPAs. It also fundamentally alters what the government can do—in other words, it would restrict government spending—but they always find a way. So something far worse would come in its stead.
So maybe I’ll go with the DHS. Born in the wake of 9/11, it’s a disaster. It has a budget of $178 billion, and as far as I can tell, it does not affect terrorism other than to make it worse across the globe. It makes air travel for non-terrorists, which is over 99% of the global population, insufferable, and they have vast powers to restrict civil liberties, which they freely use. I’d happily take that $178 billion and give it to the bottom 10% of Americans in cash. At least we could say we were making people better off with that money.
