The Capitalism Debate

Let’s say you are president in a time of a long sustained economic slowdown. You initiated a series of big policies that you thought were going to turn economy around, but they didn’t work, either because they were insufficient or ineffective. How do you run for re-election under these circumstances? Do you spend entire campaign saying that things would have been even worse if you hadn’t acted the way you did? No. That would be pathetic. You go on the attack. Instead of defending your economic policies, you attack modern capitalism as it now exists. You blame the system for the economy. You do this with double ferocity if your opponent happens to be the embodiment of that system. (NYTimes – 17/07/2012)

This is what the Obama campaign appears to have done in recent months. Instead of defending the policies of the last four years, the campaign has begun a series of attacks on the things people don’t like about modern capitalism. They don’t like the way unsuccessful firms go bust. Obama hit that with ads about a steel plant closure a few months ago. They don’t like CEO salaries. President Obama hits regularly. They don’t like financial shenanigans. Obama hits that. They don’t like outsourcing and offshoring. This week, Obama has been hitting that. President is now running an ad showing Mitt Romney tunelessly singing “America the Beautiful,” while the text on screen blasts him for shipping jobs to China, India and Mexico. The accuracy of the ad has been questioned by the various fact-checking outfits. That need not detain us. It’s safest to assume that all the ads you see this year will be at least somewhat inaccurate because the ad-makers now take dishonesty as a mark of their professional toughness. What matters is the ideology behind the ad: the assumption that Bain Capital, the private-equity firm founded by Romney, should not have invested in companies that hired workers abroad; the assumption that hiring Mexican or Indian workers is unpatriotic; the assumption that no worthy person would do what most global business leaders have been doing for the past half-century. This ad, and the rhetoric the campaign is using around it, challenges entire logic of capitalism as it has existed over several decades. It’s part of a comprehensive attack on the economic system Romney personifies. This shift of focus has been audacious. Over the years of his presidency, Obama has not been a critic of globalization. There’s no real evidence that, when he’s off campaign trail, he has any problem with outsourcing and offshoring. He has lavishly praised people like Steve Jobs who were prominent practitioners. He has hired people like Jeffrey Immelt, chief executive of General Electric, whose company embodies upsides of globalization. His economic advisers have touted the benefits of globalization even as they worked to help those who are hurt by its downsides.

But, politically, this aggressive tactic has worked. It has shifted the focus of the race from being about big government, which Obama represents, to being about capitalism, which Romney represents. Just as the Republicans spent years promising voters that they could have tax cuts forever, now Democrats are promising voters they can have all the benefits of capitalism without the downsides, like plant closures, rich C.E.O.’s and outsourcing. Just as Republicans used to force Democrats into the eat-your-spinach posture (you need high taxes if you want your programs), now Democrats are casting Republicans into the eat-your-spinach posture (you need to accept outsourcing and the pains of creative destruction if you want your prosperity). The Romney campaign doesn’t seem to know how to respond. For centuries, business leaders have been inept when writers, intellectuals and politicians attacked capitalism, and, so far, the Romney campaign is continuing that streak. One thing is for sure. As Arthur Brooks of American Enterprise Institute has said again and again, it’s not enough to say that capitalism will make you money. You can’t fight what is essentially a moral critique with economics. Romney is going to have to define a vision of modern capitalism. He’s going to have to separate his vision from the scandals and excesses we’ve seen over the last few years. He needs to define the kind of capitalist he is and why the country needs his virtues. Let’s face it, he’s not a heroic entrepreneur. He’s an efficiency expert. It has been the business of his life to take companies that were mediocre and sclerotic and try to make them efficient and dynamic. It has been his job to be corporate version of a personal trainer: take people who are puffy and self-indulgent and whip them into shape. That’s his selling point: rigor and productivity. If he can build a capitalist vision around that, he’ll thrive. If not, he’s a punching bag. 


Acerca de ignaciocovelo
Consultor Internacional

One Response to The Capitalism Debate

  1. Professor Uziel Nogueira says: David writes the best piece on the fundamental issue of November election. The shortcomings of the US economic system and the strategy taken by the two presidential candidates. Obama is on the offensive while Romney plays defense and is off balance. Obama’s strategy is clever i.e., to deconstruct Romney’s image of a successful businessman, a creator of jobs. The GOP’s candidate image is being shaped as THE symbol of everything that is wrong with the economy and the role played by the 1% rich: money kept in offshore bank accounts, domestic jobs being exported overseas and not paying their fair share of taxes. Romney is being defined as part of the PROBLEM and not the SOLUTION for the challenges facing the US economy. David gives a mission impossible to Romney’s political strategists: to define a vision of modern capitalism and how Romney is going to separate his vision from the scandals and excesses we’ve seen over the last few years. They need to define the kind of capitalist Romney is and why the country needs his virtues. A tall order for a non-thinker politician that as David points out ” let’s face it, he’s not a heroic entrepreneur. He’s an efficiency expert. It has been his job to be the corporate version of a personal trainer: take people who are puffy and self-indulgent and whip them into shape. Mitt Romney has been outsmarted and outplayed by Barack Obama. As Bob Dylan lyrics say, you don’t need a weather man to know which way the wind blows.


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