Thomas Jefferson believed that constitutions should be designed anew by successive generations in order to keep pace with the needs and concerns of the citizens of the day. Our own time in history is such a ‘constitutional moment.’ Unless a plausible alternative system can be developed, fleshed out via research and debate, and ultimately embraced and implemented by theorists, practitioners, policymakers, activists, and citizens at all levels, the current downward trajectory of pain and decay will likely continue.
The quote comes from the initial report of The Next System Project. Initiatives like The Next System Project co-founded by Gar Alperovitz and Gus Speth appeal to folks like me, who feel the cultural and economic outcomes of excessive consumerism and runaway financial capitalism have failed. More stuff has not made stuff-owners more satisfied. Further, the economics of more stuff has left many stuff-owners in a mess of debt and left stuff-producers in a mess of injustice, even while the financiers of the system are increasingly rewarded.
David Brooks of the New York Times suggests a fun debate is brewing. Brooks juxtaposes his view of capitalism which “has brought about the greatest reduction of poverty in human history” with his colleague Anand Giridharadas’s view. Anand says, “The winners of our age…may be helping society with their foundations, but in their business enterprises, the main occupation of their life, they are doing serious harm.” Brooks goes on to summarize the debate, which of course is underway already, as The Next System Project typifies.
The coming debate about capitalism will be between those who want to restructure the underlying system and those who want to help people take advantage of its rough intensity. It will be between people who think you need strong government to defeat oligarchy and those who think you need open competition.
It was not really a debate, but I did talk with my cabbie about Uber. Though I have the Uber app on my iPhone, I confess I enjoy cabs. On the way from Midway Airport to my hotel in downtown Chicago, my cabbie did not say a word. On the way back to the airport, me and another cabbie chatted it up. He was Romanian. He had worked as an HVAC technician until an on-the-job injury sent him to hospital where a doctor discovered a heart condition; he could no longer work hard labor. (He cannot play soccer anymore, either, which really made him sad.) Driving was an obvious work solution to his new health restraints. He tried Uber for a couple of weeks and netted about $400. That is when he got a job as a cabbie.
We covered all the usual Uber vs. cabs talk. Health insurance, vehicle insurance, suburbanite Uber drivers earning their Nordstrom shopping money on the side while putting vocational cabbies out of work, and more. But there was something else.
I asked him how much a taxi medallion costs in Chicago. According to my cabbie, no one is selling right now. A few years ago, a taxi medallion cost over $200,000. Today, no one knows how to price them. Guess why?
It strikes me that needing $200,000 or even $500,000 in initial investment capital to start a small business is a sign of healthy capitalism. That kind of investment is not trivial. To obtain that kind of capital an aspiring small business owner would need to work hard and save; demonstrate competence in the operations of his business; earn the trust of bankers and insurers; and be willing to take risk. Moreover, that kind of investment does not come out of nowhere. It is important to realize there are economic and social structures in place which support the need for cabbies and the value of taxi medallions as a viable business.
Uber has its outlier stories of drivers making loads of money. Under the surface of the headlines, however, is a narrative of investors getting richer, Uber drivers not making a living, and cabbies looking for new work.
According to David Brooks, “Everybody knows that capitalism’s creative destruction can be rough.” The demise of taxi driver as a vocation is part of what Brooks labels “the rough intensity” of capitalism. The trendier verbiage these days is “disruption.” Uber is disrupting the taxi industry.
What often surprises me is how willingly people dismiss the implications of this disruption with the unsubstantiated belief that the disruption is a good thing. Details?
I want to follow up this post with another soon. The argument Brooks makes that capitalism has done more to alleviate poverty than anything else in human history is a claim we should not take a face value.