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The dirty secret of capitalism and a new way forward

The dirty secret of capitalism and a new way forward

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I’m a capitalist and after a 30-year career in capitalism standing three dozen companies generating tens of billions of dollars in market value on not just in the top 1% I’m in the top .01% of all learners today I’ve come to share the secrets of our success because Rich capitalist like me have never been richer so the question is how do we do it how do we manage to grab an ever-increasing share of the economic pie every year is it the rich people are smarter than we were 30 years ago is it that we’re working harder than we once did are we taller better looking sadly no it all comes down to just one thing economics the tears the dirty Secret there was a time in which the economics profession worked in the public interest for everyone but in the neoliberal era today they work only for big corporations and billionaires and that is creating a little bit of a problem we could choose to enact economic policies that raise taxes on the rich regulate powerful corporations or raise wages for workers we have done it before

But neoliberal economist’s would warn that all of these policies would be a terrible mistake cuz raising taxes always kills economic growth in any form of government regulation is inefficient and raising wages always kills jobs what was the consequence of that thinking over the last 30 years in the USA alone the top 1% has grown 21 trillion dollars richer while the bottom 50% have grown 900 billion dollars for a pattern of widening in a quality that is largely repeated itself across the world and yet as middle-class family struggle to get by on wages that have not budged in about 40 years neoliberal Economist continue to warn that the only reasonable response to the painful dislocations of austerity and globalization is even more austerity and globalization so what is a society to do well it’s super clear to me what we need to do we need a new economics economics has been described as the Dismal science and for good reason because as much as it is taught today it isn’t a science at all in spite of all of the dazzling mathematics back to Growing

Number of academics and practitioners have concluded that neoliberal economic theory is dangerously wrong and that today is growing crisis is a rising inequality and growing political instability are the direct result of Decades of bad economic theory what we now know is that the economics that made me so rich isn’t just wrong it’s backwards because it turns out it isn’t Capital that creates economic growth its people and it isn’t self-interest that promotes the public good it’s reciprocity and it isn’t competition the produces our prosperity its cooperation but we can now see is that an economics that is neither just nor inclusive can never sustain the high levels of so social cooperation necessary to enable a modern society to thrive so where did we go wrong well it turns out it has become painfully obvious that the fundamental assumptions that undergird neoliberal economic theory or just objectively false sense of the day first I want to take you through some of those mistaken assumptions and then after describe where the science suggests Prosperity actually comes from so neoliberal economic assumption number one is that the market is an efficient equilibrium system which basically means that if one thing in the economy

Like wages goes up another thing in the economy like jobs must go down so for example in Seattle where I live when in 2014 we passed our nation’s first $15 minimum wage the needle liberals over their precious equilibrium did you raise the price of Labor they warned businesses will purchase less of it thousands of low-wage workers who lose their jobs restaurants will close except they didn’t the unemployment rate fell dramatically the restaurant business in Seattle boomed why because there is no equilibrium because raising wages doesn’t kill jobs that creates them because for instance when restaurant owners are suddenly required to pay restaurant workers enough so that now even they can afford a restaurant doesn’t shrink the restaurant business it grows it obviously the second assumption that the price of something is always equal to its value which basically means that if you earn $50,000 a year and I earned 50 million dollars a year that’s because I produce a thousand times as much value as you now

It mean it will not surprise you to learn that this is a very comforting assumption if you were a CEO pay yourself 50 million dollars a year but you’re playing your workers poverty wages but please take it from somebody who’s run dozens of businesses this is nonsense people are not paid with their worth they are paid what they have the power to negotiate wages falling share of GDP is not because workers have become less productive but because employers have become more powerful and and by pretending that the giant imbalance in power between capital and labor doesn’t exist neoliberal economic theory became essentially a protection racket for the rich the reception is by far the most pernicious is a behavioral model that describes human beings as something called homo economicus which basically means that we are all perfectly perfectly rational and relentlessly self maximizing but just ask yourself is it plausible that every single time for your tire life when you did something nice for somebody else all you were doing was maximizing your own utility is it possible that when a soldier jumps on a grenade to defend fellow soldiers

They’re just promoting their now self-interest if you think that’s nuts contrary to any reasonable moral intuition that’s because it is and according to the latest science not true but it is this behavioral model which is at the Cold Cruel Heart of neoliberal economics and it is is it is as morally corrosive as it is scientifically wrong because if we accept at face value that humans are fundamentally selfish and then we look around the world at all of the unambiguous prosperity in it then it follows logically then it must be true by definition that billions of individual acts of selfishness magically transubstantiate into prosperity and the common good if we humans are merely selfish maximizers and selfishness is the cause of our prosperity under this economic logic greed-is-good why didn’t get a quality is efficient and the only purpose of the corporation can be to enrich shareholders because to do otherwise would be to slow economic growth and harm the economy overall and it is this Gospel of selfishness which forms the ideological Cornerstone of neoliberal

Economics a way of thinking which has produced economic policies which has enabled me and my rich buddies in the top 1% to grab virtually all of the benefits of growth over the last 40 years but if instead we accept the latest Empirical research real science which correctly describes human beings as highly cooperative reciprocal and intuitively moral creatures then it follows logically that it must be cooperation and not selfishness that is the cause of our prosperity unit isn’t our self-interest but rather are inherent reciprocity it is Humanities economic superpower is a story about ourselves that grants us permission to be our best selves and unlike the old economics this is a story that is virtuous and also has the virtue of being true now I want to emphasize that this new economics is not something I personally imagined were invented it’s theories and models are being developed and refined and universities around the world building at some of the best new research in economics complexity Theory evolutionary theory psychology and apologies other disciplines and although this new economics does not yet have its own

Textbook or even a commonly agreed-upon name in Broad Strokes its explanation of where Prosperity comes from goes something like this market capitalism is an evolutionary system in which Prosperity emerges for a positive feedback loop between increasing amounts of innovation and increasing amounts of consumer demand Innovation is the process by which we solve human problems consumer demand its mechanism through which the market selects for useful Innovations and as we solve more problems we become more prosperous as we become more prosperous our problems and solutions become more complex and this increasing technical complexity requires ever higher levels of Social and economic cooperation in order to reduce the more highly specialized products that Define a modern economy now the old economics is correct of course that competition plays a crucial role in how markets work but would it fails to see is it is largely competition between highly-qualified of groups competition between firms competition between networks of firms competition between nations and anyone who knows who’s ever run a successful business now is that building a Cooperative team by including the talents of everyone is almost always a better strategy than just a bunch of selfish jerks so how do we meet how do we leave the illiberalism behind and build a more sustainable more prosperous and more Equitable

Society the new economics suggest just five rules of thumb first is that successful economies are not jungle their Gardens which is to say that markets Lake Gardens must be tended hit the market is the greatest social technology ever invented for solving human problems but unconstrained buy social norms or Democratic regulation markets in definitely create more problems than they solve climate change the great financial crisis of 2008 R2 easy examples the second the second rule is the inclusion creates economic growth so the neoliberal idea that inclusion is this fancy luxury to be afforded if and when we have growth is both wrong and backwards the economy is people including more people in more ways is what causes economic growth in market economies the third principal is the purpose of the corporation is not merely to enrich shareholders the greatest grift in contemporary economic life is the neoliberal idea that the only purpose of the corporation and the only responsibility of Executives is to enrich

Themselves and shareholders the new economics must and can insist did the purpose of the corporation is to improve the welfare of all stakeholders customers workers community and shareholders alike before greed is not good being rapacious doesn’t make you a capitalist it makes you a sociopath and in an economy as dependent upon cooperation at scale as ours sociopathy is as bad for business as it is for society infant finally unlike the laws of physics the laws of a choice now neoliberal economic theory has sold itself to you as unchangeable natural law when in fact it’s social norms and construct a narrative based on pseudoscience if we truly want a more Equitable more prosperous and more sustainable economy if we want high functioning democracies and Civil Society we must have a new economics and here’s the good news if we want a new economics all we have to do is choose to have it thank you sir Nick I’m sure you get this question a lot if you’re so unhappy with the economic system why not just give all your money away and join the 99% so much about taxes why don’t you pay more and if you care so much about wages want you to pay more and I could do that the problem is it doesn’t make that much difference and I have discovered a strategy that works literally a hundred thousand times better which is to use my money to build narratives and a pass laws that require all the other rich people to pay taxes and pay their workers better and that affected 30 million workers so that works better thank you very much

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The dirty secret of capitalism and a new way forward
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The dirty secret of capitalism and a new way forward
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One thing economics the tears the dirty Secret there was a time in which the economics profession worked in the public interest for everyone but in the neo
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