TED Conversations

Luke Hutchison

TED Fellow,

TEDCRED 50+

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Is capitalism sustainable?

Bono stated in his TED2013 talk that the numbers show that we can eradicate all poverty worldwide by 2030. While I really hope that is true, it begs the question: Is capitalism sustainable? Is it possible to have a rich and middle class without a poor class? The sad reality of capitalism is that if there is an exponentially small number of people with exponentially large wealth, there has to be an exponentially long tail of much poorer people who are each contributing to that wealth. Not that we necessarily need an exponentially small number of people with exponentially large wealth, but would the world keep running without capitalistic incentives that increase the separation between rich and poor? Can we eradicate all poverty without the rich sharing their riches? What happens to civilization when nobody is willing to work in the factories and orchards, or build roads?

(Please don't take this question the wrong way! Personally I wish that nobody had to work menial jobs. I just don't understand how we can eradicate poverty when so many jobs will always translate into low-paid labor.)

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  • Mar 26 2013: Before you predict the demise of capitalism, ask yourself what is going to replace it? All of the major communist countries retained the dictator or oligarchy government of communism, but shifted their economic engines to the private sector in the 20th Century. Why? Because government-controlled economies produce mediocre or worse results. There have been a few notable exceptions. E.g., the U.S. race to the moon. However, in general,more government control equals increasingly lackluster results. You are about to see a very clear example of this in the U.S. with Obamacare.

    Some redistribution at the very top within capitalism is needed. However, what most "reformers" outside of business (i.e., in government and academia) overlook is that capitalism increases total wealth. Therefore, the question is not , "Does the young person on the bottom have a menial job?" Rather, the question should be, "Does that young person have a menial starter job that coupled with education and a basic living standard affords him or her the beginning for upward mobility over his or her lifetime?" I can tell you that, early in my life, my jobs included, paperboy, busboy, dishwasher, and entry-level steel worker. However, these jobs supported me while I obtained an education.

    This is the recipe (also known as the "American Dream") that afforded and continues to afford millions of Americans, many of them immigrants, upward mobility. We should be very hesitant to throw out this model for something unproven, particularly if offered by political and other leaders with little or no private sector experience.

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