Morning Commentary
For any system to remain in place, it must be challenged from time to time from within and outside of its realm. That goes for great nations, sports teams, and economic concepts. So, this is that moment in time when capitalism once again is being attacked in part to a greater attack on the preeminence of America. Part of this is natural, seeking new and better ways that open doors to failed ideas of the past, having another chance to prevail.
It’s capitalism versus socialism and it’s the real underlining focus of the 2016 run for the White House.
With the recent spate of global recessions, massive bailouts, and government stimulus, people are wondering if it’s time to take control of the economy from the private sector to mitigate reckless risk-taking and the unfair distribution of wealth. Of course, anyone that thinks any government is so disciplined that it would watch or care about the bottom line has not been paying attention. In fact, the use of funds and freebies to purchase votes and to retain power is the most destructive financial time- bomb strapped to the planet, especially America.
Governments around the world have run up public debt to $60.9 trillion and counting. In America, our public debt exceeds the annual gross domestic product (GDP), which amounts to $154,590 per taxpayer. The next largest economies are not in any better shape (Japan is actually worse off).
Global Debt Crisis |
Total Public Debt* |
Debt Per Citizen |
GDP (T$) |
United States |
$18,184,000,000 |
$56,745 |
$17.45 |
Global Debt Crisis |
Total Public Debt* |
Debt Per Citizen |
GDP (T$) |
China |
$5.29 trillion |
$3,906 |
$8.24 |
Global Debt Crisis |
Total Public Debt* |
Debt Per Citizen |
GDP (T$) |
Japan |
$10.17 trillion |
$79,959 |
$5.08 |
*debt clocks never stop running
Pope Francis & Capitalism
Still, the attack on capitalism and its uneven distribution of wealth isn’t going away. It will not be diminished because governments are poor stewards of wealth and poor managers of risk. Some of the strongest voices of influence around the planet have made it clear that they have little faith in the role of capitalism. Today, Pope Francis brings his message to New York City – the financial capital of the world.
The Pontiff hasn’t made it a secret that he thinks capitalism has a lot of flaws. His views are not new as he authored “Dialogues between John Paul II and Fidel Castro” ten years ago with these scathing observations about capitalism:
“…spirit that capitalism has encouraged utilizing capital to subject and oppress the man.”
“…develops with characteristics of individuality in a life where man look for their own good and not the common good.”
However, it is disappointing when capitalism is sold short after all the great things that have happened to mankind since the dawn of the industrial age and modern capitalism. Even today, capitalism continues to lift people out of poverty; most recently, women in Bangladesh are making tens of dollars a month in the burgeoning textile industry that once had existed where they never earned a penny or the respect that comes with spending power.
In America, we celebrate individualism because it’s the building block of the collective. Consider your basic math equation for why we should celebrate and encourage individual greatness and the rewards that come with it.
When a group average is 50, adding in a single 100 lifts it higher. Add in more single 100s over and over, you not only numerically lift the average, but also in real-life, you lift the people at and below the average.
I think the Pope conflates egoism and egotism. The former is all about the individual, but not at the expense of everyone else. The egoist will work to make his or her life better through a kind of determination that could never be matched when the yield from such effort could be shared among the masses. Why go through the pain, sacrifice, and hurdles?
I understand that we should all have a degree of humility, but it doesn’t mean that we should achieve less than our potential or be ashamed when we exceed expectations.
As for what we do with our prosperity or what each person should consider excess of their own needs has to remain with the individual, not religious organizations, and certainly not with governments. This is a different issue as there are wealthy people in socialism, communism, and monarchies nations, although it’s a much smaller pool and it does not generate from the trade of services and goods and risk-takers (unless you consider coups and birthrights).
This is a recent tweet from Pope Francis:
@Pontifex “inequality is the root of all evil”
There is a lot of truth in his tweet when we talk about the inequality of opportunity. Capitalism is the only system in the world where the have-nots can find ways to create or acquire the opportunities of the haves. Everything else promises equality of outcomes; those outcomes could be anything but great, so we are talking shared misery at best.
Pontifex means ‘greatest bridge-builder’ and to be sure, this Pope is a ‘rock star,’ but I wish he would see that the greatest wealth-builder should be embraced and sold around the world…not scorned.
Big Corporations, Capitalism Worst Actors
Of course, Pope Francis timing on capitalism could not have come at a better time. The drug price-gouging, peanuts with salmonella, and the Volkswagen scandal make for great fodder in calls for a major tweak or perhaps a different system entirely.
Then, there’s Total (TOT), the French oil giant that followed in the footsteps of major oil companies around the world to announce project cuts in order to preserve its quarterly dividend payout. Capital expenditures, which peaked at $28 billion in 2013, will be cut back this year, and going forward.
This will generate $60 billion in cash flow to pay the dividend through that time frame. It’s obvious that cap ex reductions means worker reductions. Should shareholders come before workers; is that fair? There’s a major movement with major players saying the answer is “no.”
Moreover, I think shareholders should be rewarded for the risks they take. However, understand that this will not sell on Main Street, unless there’s a great and very successful pillar of business explaining how and why it works this way.
The Market
Yesterday, the market meandered a bit and while it was something of a moral victory, the Dow finished lower and major indices are nudging down toward important support points. Perhaps the greatest fireworks will come after the close as Janet Yellen is giving a speech at 5PM that could determine bringing back buyers or sending more investors sulking on the sidelines.
The market opened and is a sea of red. The news from Caterpillar that it will lay off up to 5000 people between now and 2016 as part of a corporate restructure of $1.5b, is adding to the selloff. Caterpillar also lowered its 2015 revenue guidance, and is yet another company to cite global weakness. Caterpillar and all those in its sector are getting hit, and Caterpillar’s stock is at its lowest price since August of 2010.
We also received the latest weekly reading on unemployment benefits which rose slightly by 3000 to a seasonally adjusted 267,000, and the four week average declined to 271,750. Overall, applications for unemployment are at low levels, which implies that companies are feeling more confident about the economy and retaining staff.
Comments |
Regarding unemployment figures, could it be that companies have finally cut all the way to the bone? Jay on 9/24/2015 9:59:08 AM |
Thank you, Charles, for defending freedom and capitalism. Not PC these days. I hope the Pope knows that the US is the world's largest charitable giver by a large margin. Dick Nicholson on 9/24/2015 10:26:32 AM |
Great insight Charles. Thank you for seeing through the haze of PC and having the boldness to address the reality of the Popes comments and sentiments. Sometimes its hard not to agree with Thomas Sowell that we are beyond the point of no return. Nick on 9/24/2015 10:34:24 AM |
People LIKE uneven distribution of wealth. They just don't admit it. Last year Americans spent a total of $70.15 billion on lottery tickets Fred Leffingwell on 9/24/2015 10:38:24 AM |
Good morning Mr. Payne, If socialism is so great then way is Argentina, the Pope's home, in such terrible shape today? In 1920's Argentina was one of the richest most vibrant economies in the world. Also, look at what has happened in Europe over the last 30 or so years. Socialism only works for the few at the top who control all aspects of a countries economy. Once these leaders run out of everyone else's money the country collapes. There are plenty of examples of these cases if people will only study history and educate themselves. Most Americans unfortunately don't take the time to do this, but blindly accept what pundits and politicians blather. I love Pope Francis but he should stick to the teachings of Jesus and spread His truth to everyone including Obama. I am a conservative Irish Catholic who is really concerned about the direction of America in both the lack of moral ethics and fiscal responsibility both public and private. We must make better, smarter choices as a nation or the consequences will not be pretty and it's the poor that will really suffer. Gregory Sheehy on 9/24/2015 12:19:22 PM |
The individual is the driving element of society, innovation and progress. The Pope's twisting of the cause of ills in this world is typical of every politician on the planet - point fingers at something else to distract away from their own failings. Capitalism produces the most wealth bar none, and its up to the individual to decide what to do with that wealth. If individuals are void of good morals, ethics and charity, then the church has failed. This is where the Pope should focus, not political bantering that he is thoroughly unqualified to be talking about. Scott Orren on 9/24/2015 1:31:53 PM |
Charles, You've always been a defender of capitalism. Thank you for that and now with this article. One other note. Thank you Gregory Sheehy for your comment Rusty on 9/24/2015 1:51:28 PM |
I fervently pray that the Pope refrains from further political preaching and confines his preaching to his flock. BTW, we are not all migrants, as he suggests. Carol Gallagher on 9/24/2015 4:20:05 PM |
Capitalism is the way to go, that's why there's no other country like the USA, as an example, a mexican-american immigrant like myself, can make a 6 figure decent living in the USA while I would probably be begging for work on the streets of my socialist/corrupt/imperialist Mexico. Don’t get me wrong, I’m proud of my origins, but I have evolved into something better than life itself. Say NO to democrats (Obama/Hillary/Bernie) and YES to progress and growth (Capitalism). marco sanchez on 9/24/2015 4:31:59 PM |
Cuba has free housing, food, medical, education-college....and it is in ruins. Nothing is made or created there save cigars and rum. This pope is a dope. David Goodwin on 9/25/2015 1:38:15 AM |
Tweet |
3/28/2024 1:39 PM | Fruitful Quarter |
3/28/2024 9:50 AM | LISTEN TO THE MARKET |
3/27/2024 1:40 PM | Mostly Higher |
3/27/2024 9:32 AM | U-TURN? |
3/26/2024 1:08 PM | Everything Is Up |
3/26/2024 9:42 AM | TAPPED OUT (I HOPE YOU AT LEAST GOT A T-SHIRT) |
3/25/2024 1:33 PM | Not A Mutiny |
3/25/2024 9:35 AM | STAYING THE COURSE…BEYOND TECH |
3/22/2024 12:56 PM | Toll on Americans |
3/22/2024 9:38 AM | A TAD TIRED |
3/21/2024 1:55 PM | Building on Gains |
3/21/2024 9:30 AM | A COMFORTING FED |
3/20/2024 1:33 PM | Pivotal Moment |
3/20/2024 10:00 AM | HERE COMES THE FED |
3/19/2024 1:33 PM | Picking Up Steam |
3/19/2024 9:35 AM | RUMBLINGS IN THE BOND MARKET |
3/18/2024 1:48 PM | Mag 7 is Back |
3/18/2024 9:39 AM | THE PARTY IN SAN JOSE WILL BE LIT |
3/15/2024 1:38 PM | Realtors Settle |
3/15/2024 9:33 AM | AN UNEASY PAUSE |
3/14/2024 1:43 PM | Sticky Inflation |
3/14/2024 9:48 AM | GOING TO A GO-GO |
3/13/2024 2:16 PM | Taking a Breather |
3/13/2024 9:51 AM | ALL SO EPIC |
3/12/2024 1:42 PM | Marching Higher |
More commentary archives |
Home |
Products & Services |
Education |
In The Media |
Help |
About Us |
Disclaimer | Privacy Policy | Terms of Use | All Rights Reserved.
|