Doing Well Is Doing Good
“Doing well is the result of doing good. That’s what capitalism is all about.”
– Ralph Waldo Emerson
There is little doubt Emerson’s statement is being challenged. A recent Axios poll found four in 10 Americans would prefer to live in a socialist country over a capitalist one.
Emerson probably would not mind this challenge. Like the free flow of goods, capitalism embraces the free flow of opinion.
It will not surprise MSCI members that I side with Emerson. While acknowledging (and abhorring) capitalism’s excesses, I am an unabashed proponent. Many of MSCI’s member companies started out as family-owned operations. Many still are. There are few other places in the world where a mother or father, from any station in society, can build in this way.
A recent Wall Street Journal insert examining “the transformational story of American capitalism” and its effects on the world since The Journal was first published in 1889 also demonstrates why I side with Emerson.
In 14 pages of headlines, capitalism’s drawbacks are evident, but so is its “good.” For consumers the benefits are substantial. The development of technicolor film in 1935, “bus-like air carriers” that enabled longer travel in 1947, the home computer and the iPhone in 2007 are a few.
A headline that ran two days after Pearl Harbor in December 1941 explained industry’s ability to meet global threats. World War II would “channel the production of American factories, mines, farms and forests,” the article said.
The Journal‘s insert also heralded record automaker profits in 1956 that resulted in higher employment. A single car company added 47,000 new jobs in 1955 alone. Another story noted development of restaurant franchises enabled more than 20,000 Americans to start their own businesses in a single year, 1960.
Another headline, this one from November 1972, marked the moment the Dow Jones Industrial Average topped 1,000 for the first time. Two years later – and something not mentioned by The Journal – Congress made changes to the tax code allowing Americans to take advantage of a new product called the Individual Retirement Account (IRA). Another savings device, the 401k, came four years later and, today, nearly one-third of U.S. households have an IRA and more than 55 million Americans have 401ks that allow them to benefit a stock market now bouncing around record highs.
The Journal could not hail every innovation, of course. There is no headline noting almost 50,000 Americans now earn their living by developing smartphone applications, for example, or that, in just the last 30 years, we have cut in half the number of people worldwide living on less than $2 a day. The headlines did not mention invention of the dishwasher, refrigerator or air conditioner – even though each one improved quality of life.
The Journal also did not mention life expectancy, but The New York Times did so back in 2006. Richard Suzman from the National Institute on Aging told The Times, “Life expectancy increased only very slowly for two millennia, and then almost doubled since 1800.” The reason for that rapid increase, ThinkAdvisor explains, is development of antibiotics and immunizations and other new health care services. Capitalism allows for innovation. In particular, U.S. capitalism does. Between 2001 and 2010, more than 57 percent of the new drugs produced worldwide took shape in U.S. laboratories.
The Journal headlines also did not mention business philanthropy from both private and public companies. According to The Giving Institute, U.S. corporations made more than $20 billion in direct donations in 2018, a nearly six percent increase from the year before. Ernst & Young has said philanthropy contributes to the staying power of family-owned businesses. According to a survey conducted with Kennesaw State University, worldwide 81 percent of large family businesses practice philanthropy.
I am also enormously proud that, over the last decade, MSCI chapters have given 3,300 scholarships worth more than $7 million to the children of metals industry workers. We are part of a strong tradition of giving.
Restoring faith in capitalism will require more than dollars. This article offers advice for how business leaders can illustrate the benefits of free markets. My favorite piece is that we should become “economic mentors.” In our interactions with our daughters and sons or nieces and nephews, interns, employees, the media and lawmakers, we should look for “teaching moments” that bring capitalism’s “good” to life.
For those who think the Axios poll indicates this cause is lost, I offer another survey. According to an even more recent Pew Research Center poll, 65 percent of Americans have a positive view of capitalism. Far fewer hold a positive view of socialism.
We should have a debate about how to address capitalism’s excesses, but before we do, we should acknowledge the good it has wrought. This advice is not really different than what now-presidential candidate Bernie Sanders offered in 2009. In a surprising TV interview, Sen. Sanders argued capitalism should not be unfettered, but he also acknowledged, “Capitalism does a number of things very well: it helps create an entrepreneurial spirit, it gets people motivated to come up with new ideas..” He said that’s “a good thing.”
Indeed it is.