More Lipstick for the Pig

            James Penthokoukis of the American Enterprise Institute thinks that capitalism could use some rebranding.  He’s reacting to the results of the Harvard Institute of Politics Spring 2016 poll of America’s 18-29 year olds in which just 19% of the respondents were willing to identify themselves as “capitalists” and only 42% were willing to say that they supported capitalism.

            For Penthokoukis, that’s better than the scant 16% of respondents who identified as “socialists” and the 33% who said that they supported socialism.

            He finds it odd that despite the skepticism the survey implies about capitalism, many of the respondents nevertheless hold views “similar to those of any Ayn Rand-loving free marketeer.  For example less than a third believe government should play a large role in regulating the economy, reducing income inequality, or stimulating economic growth.”

            There’s nothing odd about the survey results.  What’s odd is why a smart guy like Penthokoukis feels he needs to distort his description of the results and ultimately defend a label that doesn’t have a popularly agreed meaning or connotation. 

            Most people—and particularly young people—simply don’t understand what capitalism and socialism are.  Sixty years of scientific political science and public opinion research tell us that most people do not have coherent political or economic ideologies.  They self identify with political, social or economic labels for reasons that often have little to do with a formal or thorough understanding of what the labels mean.

            What matters are the kinds of policies people support, not the labels they apply to those policies.

            Penthokoukis is absolutely correct about how respondents felt about whether the government should play a “large” role in regulating the economy, reducing income inequality or stimulating economic growth.”  The problem is that he didn’t tell the whole story.

            The poll allowed respondents to choose one of four responses to survey questions about the proper role of government in the economic sphere.  Table 1 gives a more complete report of the survey results.

Table 1

	Regulating the Economy	Regulating Wall Street	Reducing Income Inequality	Delivering  Health Care	Providing Access to Higher Education
Large	27%	30%	30%	32%	35%
Moderate	42%	37%	34%	34%	35%
Minimal	18%	18%	19%	18%	16%
No Role	9%	10%	13%	13%	11%
Decline to answer	4%	4%	5%	4%	4%

            The true “Randian free marketeer” position on all of these items would be “No Role.”  These results show that no more than 14% of the respondents took that position.  In fact, more than 60% of the respondents thought that the government ought to play at least a moderate role in managing each of these economic matters.

            The question about stimulating the economy was one of several “agree or disagree questions about government activities.  I’ve summarized the responses to the ones relevant to economic policy in Table 2.

Table 2

	Agree	Disagree	Neither Agree Nor Disagree	Decline to Answer
Tax cuts are a good way to increase economic growth	35%	23%	38%	4%
Government spending is an effective way to increase economic growth	26%	26%	44%	3%
Basic health insurance is a right	48%	21%	28%	4%
Government should spend more to reduce poverty	45%	20%	31%	3%
Basic necessities such as food and shelter are a right	47%	20%	30%	3%

Less than a third of the respondents agreed that tax cuts or increased spending would increase economic growth.  But, in both cases, the percentage of respondents who took a middle course or declined to answer exceeded the percentages of respondents who chose to take a pro or con position.  And the percentage of respondents who thought that the government should provide health insurance, basic necessities and otherwise increase spending to reduce poverty was at least double the percentage of respondents who thought government should not do these things.

            This is hardly a snapshot of a group solidly devoted to free market principles. So, yeah Jim, a large number of them are feeling the Bern.

            Penthokoukis speculates that the reason many of these survey respondents aren’t positively glowing about capitalism, “the deep magic that has made America the richest, most powerful nation on Earth,” is that it evokes the distastefulness of the “aftermath of the Great Recession and Wall Street bailout.”

            That probably does have something to do with it.  But judging from the responses to the other questions, I’m guessing that the reason the survey respondents were wary of adopting the capitalist label and supporting the capitalist system in general was the fact that capitalism, as we know it, has been subverted and used to exploit the many for the benefit of the few.

            None of my liberal brethren are longing for the gray and dysfunctional Soviet economic system or the disastrous five year plans of China’s Maoists of old.  We all understand that a functional market system is the most efficient engine for growing prosperity that has ever been invented.  And nobody disagrees with the idea that capitalism has lifted billions of people out of poverty or that even the poor have more creature comforts than they would have had without capitalism. So please stop trotting out those scarecrows.

           The real debate is about the extent to which the community has the right to impose rules upon the marketplace for the greater good.  Nobody has any objection to innovation or entrepreneurialism, nor does anyone begrudge anyone else the right to make a fair profit for creating or doing something that makes the world a better place.

            But we do object to “capitalists” who create large market distortions that lead to huge imbalances enabling the owners of capital to exploit others, become rent collectors, or impose negative externalities on the rest of us.

            There’s no need to put lipstick on the pig that this version of capitalism has become.  What you really need is a more equitable, transparent, and humane form of capitalism.