Friday, March 23, 2018
Help us raise $15k to stay online and ad-free through April: DONATE HERE
$1,302/$15,000 raised. Donations are tax-deductible.

Capitalism, American style; a failing system, no longer a model for the world

As more and more money is acquired by those at the top, the more consumer purchasing power suffers and, with it, the economy.

NationofChange is a nonprofit organization, and this website is funded by readers like you. Please support our work. Donate or give monthly.

Capitalism has worked well in various countries over time; in fact, we can say that it once worked quite well in America. But those days are coming to an end and we can conclude that the form of capitalism currently practiced in America is no longer working in the best interests of this country and a large portion of its people.

However, it still works beautifully for those at the top of the income spectrum; the powerful Corporatists who we might say “manage” it and use their power to acquire more and more personal income and wealth. Americans watch with a sense of trepidation as the lion’s share of new income generated flows to those at the top, and an increasing number of the American people no longer receive their fair share.

Capitalism; a Love Story, was a hilarious, very cynical portrayal of America’s system of capitalism. I thoroughly enjoyed how Michael Moore portrayed the masters of Corporatism. But what was portrayed in that movie is no laughing matter for the many millions of Americans whose quality of life has been greatly diminished over decades because of the way this system has been rigged to work against them.

“American workers need not apply. But be sure you keep buying our products.”

The beginning of the transformation of the U.S. manufacturing sector from one that utilized the skills of American workers to one now greatly dependent on foreign workers had its roots in the late 1970’s and early 1980’s when huge corporations such as GE began to move jobs overseas.

GE’s CEO Jack Welch strongly argued that corporations owed their primary allegiance to stockholders and not to employees; and that companies needed to seek lower labor costs and maximize their profits wherever such labor was the cheapest. His corporate colleagues quickly embraced that management philosophy.

2018 Peace Calendars are here!


Mr. Welch showed he had no allegiance to U.S. workers but he still wanted those same workers to be loyal to him and buy the products that GE was producing in other countries. Nothing like being a complete hypocrite is there? That trend in outsourcing jobs continued to escalate in the 1990’s and really took off when America made the turn into the 21st Century. America’s world-class manufacturing system was decimated and has never been the same.

At this point in time, Corporate America and the U.S. system of capitalism are doing a fabulous job of providing jobs for foreign workers all over the world. Corporations are sending out this message about jobs in this country: “American workers need not apply. But be sure you keep buying our products.”

There are those who totally dismiss the premise that American capitalism no longer works and that is a failing system. They maintain that it is still the most successful economic system in the world and still a model for the rest of the world’s developed nations.

Well, unfortunately that belief is wrong, wrong and totally wrong. Model for the rest of the world? If we really want to see the system of capitalism that, based on the time-honored principles of true capitalism, and how it should work for the good of a country and its people, we must look to another nation.

That model of a truly effective system of capitalism can be found in the nation of Germany. Talk about success and effectiveness; let’s take a look at the successes of the German system works and why it deserves the great amount of respect and admiration it receives from other countries.

There are many reasons why Germany’s manufacturing sector and economy are so strong but it’s mainly because that country’s corporations and government fully realize that it’s the nation’s workers that deserve the most credit. American CEOs would find it very difficult to understand how Germany has been able to create a manufacturing atmosphere in which unions, management, and government are able to work closely together in meeting common objectives.

There is one group that has greatly benefited from what has happened and that is the CEOs and their outrageous salaries.

In America as capitalism has undergone this transformation, thousands of plants have been closed, millions of U.S workers have lost their jobs, but there is one group that has greatly benefited from what has happened and that is the CEOs and their outrageous salaries.

In a 2016 Bloomberg survey of CEO pay around the world the average salary of a U.S. CEO was $16.95 million. In contrast, those in Germany earned about half that, $8.36 million, and Japan was at $2.4 million. So it looks like the CEOs in America are in a class by themselves; and the next question should be why in the world do they deserve so much more in salary; for outsourcing jobs?

Here’s one of many articles that one can find all over the internet which extols the virtues of the German system, why it works so well for most everyone in that country. Its system of capitalism is very similar to the one that once was practiced in America. Here’s more evidence of why it is considered to one of the very best, if not the best, in the world.

While the U.S. trade deficit with other nations of the world reached $502.3 billion in 2016 and the deficit with China was $347 billion of that total, Germany has no deficit. In 2016 it had a record-setting trade surplus of $270 billion and its trade surplus with the U.S. was $65 billion.

Germany has refused to follow the way of the U.S. in transferring most of its manufacturing to China. It values its workers, provides them with new skills, and pays them well. Its trade with China is very substantial; it has become China’s largest trading partner, replacing the U.S. and France. Neither Germany nor China dominates this mutual trade arrangement and both are doing quite well because of it.

Capitalism, American style is, without question, the primary root cause of much of the inequality and inequity of wealth and income that is present in America.

How about this for strength in manufacturing? Germany, with a population much smaller than that of America is the 3rd largest export economy in the world, exporting $1.24 trillion to other nations in 2015.

Capitalism, American style is, without question, the primary root cause of much of the inequality and inequity of wealth and income that is present in America; here’s why: let’s take $1 billion dollars and illustrate the distinctly different effects it would have on the economy under two different scenarios.

In the first scenario let’s take just one individual or household that possesses $1 billion in total assets. How much of that huge amount of money is going to enter into the economy? I’d say the largest share will never be spent on household essentials and various other consumer products. And, in fact, a lot of it will likely be invested in the stocks of those major corporations who greatly profit from cheap foreign labor; how ironic is that?

Now, take that same $1 billion and let it be distributed among American workers in a scenario in which they still have good paying jobs and get decent increases. How would the largest share of that amount be spent? Well, I’d guess that not much of it would be spent on stock market investments but, rather, most would be spent on food, clothing and other essentials; appliances, electronics, autos and houses.

So as more and more money is acquired by those at the top, the more consumer purchasing power suffers and, with it, the economy. That’s exactly why the America brand of capitalism is failing and capitalism, German style, should now be considered as the model for the world; the way true capitalism should be practiced.

Get news the mainstream media doesn't want you to see

Michael Payne
Michael Payne is an independent progressive activist. His writings deal with social, economic, political and foreign policy issues; and especially with the great dangers involved with the proliferation of perpetual war, the associated defense industry, and the massive control that Corporate America holds over this government and our election process; all which are leading this nation down the road to eventual financial ruin if the conditions are not reversed. He is a graduate of Northwestern University, Evanston, Illinois and a U.S. Army veteran.
Previous articleTrump delays Paris climate agreement
Next articleFear strikes AT, not OUT!

NationofChange is a nonprofit organization that provides an online magazine, daily newsletter, and activist platform – all free to the public.

It's hard, expensive work, and our daily operations are funded entirely by donations from readers like you.

If you value the work that we’re doing, please take a moment to make a 100% tax-deductible donation to NationofChange.

Make a donation → Become a Sustaining Member →