Too Many Rich and Successful People Are the True Socialists.

I cannot help but weigh-in on all the commentary in the media about socialism.  I’m a capitalist by nature.  But the idea that either party can somehow lay claim to capitalist principles makes me laugh.  Capitalism is no more at risk as a result of government spending or taxation than it has been under the last 50 years of incentives that seemed to reward everything except talent. Taxes can be debated as fair or unfair forever.  But the notion that an average talented American will decide not to work as hard next year because of a 3% tax increase, or stay home because they just received a 3% tax cut, is ridiculous.  Talented people wake up in the morning to achieve, not to count their pennies.  Penny counters are typically the ones who never earned the money the have in the first place.

I have worked with some of the most successful executives in the world. I have sat across attorneys and general counsel who are considered by our traditional notions of capitalism – i.e. their paycheck and net worth – to be at the very top.   And I have to laugh at the suggestion that capitalism – the system of incentives in place these last many decades – comes close to hitting the mark of true capitalism which can drive an economy. It surprises me how many of the people crying that our system of capitalism is under attack stop to wonder whether the reason our economic system has collapsed is because we have been engaging in an economic system of risks and rewards which has the wrong incentives. The version of our economy that collapsed is NOT a version worth saving. It has failed. And no amount of government money can ever make it work.

So, the question really is what version of capitalism will rise from the ashes.   Who will succeed in this new system and who will fail?  There is a great power shift occurring.  Can you feel it?  The people with money and power are losing both.  The people with motivation and talent no longer need to sell their souls to large corporations in order to succeed.  The people with talent are gaining power. And it must scare the living ____ out of the fat cats whose ability to assemble power, social and political connections and monetize other people’s talents.

We have all met the captains of industry.  We see them at the tops of law firms, at the top management positions at all of the large corporations currently going under.  They make millions, tens of millions and hundreds of millions of dollars per year.  But one question that never gets considered is “did they actually earn that money?”  Perhaps the more important question is “what were the capitalistic incentives that were rewarded?”

Many of the people screaming the loudest are now should be scared.  They are little more than a joke when it comes to measuring their objective value using metrics which we should be promoting in our capitalistic system – metrics such as talent, ideas, innovation, and work ethic.  I have been to the best private clubs in the world.  I have jetted around with some of the wealthiest people, the best symbols of capitalism we have to offer.  These clubs are filled with ‘pretenders’ – people who claim title to the word ‘capitalism’ even though they could not compete on any of the incentives which will move our economy forward. 

Too many people making the most money did not “earn it” under any rational notion of economic incentives which a thoughtful capitalistic society would drive for. Sure, they now want to preserve it because – in a true socialistic spirit –they feel that they are entitled in ways not much different that those without a job seeking extended unemployment benefits. 

In my perfect world, talent gets rewarded in the marketplace a level above power, social networks, size, or pure momentum. A true capitalist would have no problem starting from scratch tomorrow.  They would know that their ‘talent’ would move them right back to where they belong on the food chain. They would revel in the opportunity to prove their success. 

The current economic turmoil will move us more quickly towards a form of capitalism closer to its ideal. The Internet and technology have already removed barriers to competition which have insulated too many executives and too many companies from any real competition both internally within their companies and in the marketplace.  Many people are complaining about the socialism of extended unemployment benefits or public works projects. Me – I am more worried that the money will continue to preserve the status of those who never earned the right to the money they now clutch too in the first place.  One of the benefits of complete economic meltdown is what I refer to as the ‘great leveling’ where everyone ends up back close to the starting line. I am ready to compete.  Are you?