According to a recent Gallup poll, a record high 59% of Americans age 18-34 now view socialism positively. This mounting desire for government to control more of our personal decisions, enterprises and outcomes comes with an asterisk, however: the same poll finds 77% of all Americans have a favorable view of free enterprise. In actual fact, most Americans want poorer Americans to get richer. Like China’s former communist leader, Deng Xiaoping, they don’t care if the cat is black or white: it just needs to catch mice.
They may be in luck. Four recently accelerating, free market trends are guaranteed to generate more wealth for more Americans. If we stay the course, America’s bottom quartile of wealth owners will be dramatically lifted up without dragging everyone else down. America’s latest dalliance with socialism would gracefully recede – without pitchforks, punitive tax rates or compromised property rights.
The first highly-promising capitalist trend well underway is funded retirement accounts. If historic stock market performance holds and they are granted $2,000 at birth, every newborn American could end up with more than $1 million in their retirement account by age 66. With the establishment of Trump’s $1,000 savings accounts and recent, generous pledges by Michael and Susie Dell and Elon Musk, we may already be three-quarters of the way towards this $2,000 goal. A few more pledges by America’s 1,000 billionaires, and nearly every American retiree could one day have more than $1 million in retirement savings. Today, only 3% do.
A second accelerating free-market trend that disproportionately benefits those with little or no savings is growing volumes of impact investment. As detailed in The Impact Capitalist, one can now find dozens of examples of private capital deployment that serve the underserved, include the excluded and generate at or above-market-rate returns. Think of low-income housing funds that generate +15% annually, or anti-human trafficking funds that generate more than +25% per year. “Doing well while doing good” is no longer just a kitschy phrase: mindful impact investors are achieving life-improving, double-bottom-line returns every day. Capitalism is being used to promote economic mobility and financial literacy, eliminating poverty and its root causes.
Homeownership has long been the primary way most American families have built wealth over time. The 21st Century ROAD to Housing bill that passed by an overwhelming bipartisan majority in both houses of Congress this summer aims to cut red tape and increase lending to thousands of longtime house renters who have been eager to buy. A third, expanding way of deploying the power of markets to multiply the number of first time home buyers and broaden American prosperity involves shared appreciation loans. In lieu of unaffordable down payments, shared appreciation loans grant first-time buyers the initial capital they need in exchange for a fair share of future home appreciation. More renters are becoming owners with private capital alone.
A fourth, proven way markets are increasingly benefitting less-well-off workers involves employee stock ownership plans. Private Equity Firm KKR and partner organization Ownership Works are but two high-profile groups demonstrating how broader-based employee ownership fosters meaningful wealth-building opportunities for employees alongside improved business performance. When employees have a direct stake in the value they help create, businesses are often more successful and worker cultures far more unified and lucrative.
While attractive in theory, no socialist economic system has ever become a paragon of wealth creation and distribution. Across Europe, Africa, South America and Asia, multiple socialist attempts have tried and failed. France is now aflame because social welfare promises long held to be inviolable have no practical chance of being paid for. Even socialist icon Sweden recently returned to free market ideals to provide more for all instead of less for most.
America can achieve the laudable aspiration of “greater wealth for all” by leaning further into four proven, free market initiatives that are already underway. If we want more people to become wealthy, let’s give them the same tools affluent folks have long used so successfully.
