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Capitalism's Existential Crisis

By Critical Thinking FOXBusiness

Corporate America is facing an existential crisis. The rise of a socialist Democrat like Bernie Sanders would seem to prove that decades of financial meltdowns, corporate fraud, crony capitalism and an ever-growing wealth gap have seriously tarnished the image of big businesses and the bosses who run them.

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Although the overwhelming majority of executives and business leaders may have done nothing wrong but fight their way to the American Dream, the scorching anti-business rhetoric coming from the left – the relentless pounding on the “fat cat millionaires and billionaires” – has nevertheless taken its toll.   

Whichever side of that growing divide you come down on, nobody would argue that it isn’t easy being a CEO these days. And the sad fact that probably half of you would respond to that statement with “no sympathy for the devil” cynicism demonstrates that a growing segment of the populace thinks capitalism stands for greed and corruption.

While some may be inclined to write this off as nothing more than a crisis of perception that will simply right itself when the political pendulum inevitably swings back from left to right, that would be a mistake for two reasons. First, that may be a long way off, and second, don’t be so sure. This trend may be here for a while. And therein lies the rub.

Whether this crisis is real or perceived is entirely irrelevant. At the point where perception causes real effects in the real world, perception is reality. And let me tell you, that’s exactly what’s happening. We are indeed seeing all sorts of dysfunctional dynamics in the U.S. economy as a result.

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Corporate executives will tell you they can’t find the talent they need. But everywhere you hear people saying there are no jobs. Well, which is it?

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The unemployment rate is just 4.7%, and yet the labor force participation rate is at its lowest in 40 years … and the economy is sluggish.

If you buy into all the business books, blogs and media hype, we’re living in a bona fide entrepreneurial renaissance. But new business creation has been falling for decades.

Workers complain that corporations no longer offer job security while at the same time saying they want freedom and flexibility. Do they want to be empowered to rule their own destinies or not?

I could go on, but you get the point. And all these contradictions begin to make a little sense once you understand the common thread running through them: the growing wedge between corporate America and its workforce.

The truth is, it’s no longer cool to work for the man, and that new reality is sending shockwaves through the corporate world … and our economy.

To grow their business in an increasingly competitive global market, executives and business leaders must attract and retain the very best talent. But the labor pool is shrinking as more and more would-be employees opt for self-employment, non-profit causes and social welfare. And that troubling trend will only continue.

If you’re waiting for a pitch on behalf of the 1%, don’t hold your breath. They’re not the ones this will hurt the most. While the crisis affects all of us, it disproportionately hurts those who can least afford it: the middle class. The rich will still be rich, the poor will still get their handouts, and as usual, those in the middle will get stuck with the burden. 

The solution is a federal government that understands that waging war on corporate America is biting the only hand that feeds it. We need leaders in Washington who get basic economics: that companies create jobs, GDP, personal income and taxes that fund the government, not the other way around.

There’s a very important reason why the word “freedom” describes both Democracy and free market capitalism. They go hand in hand. They only work if they work together. The more government tries to put the screws to business, the more it hurts its own constituents and, inevitably, itself. 

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