Capitalism’s Standard Bearer

I work in the unique cross-section of 2 very different politically-inclined industries: Venture Capital and Investment Management. In the wake of Election 2016, it felt a bit like a passing of the pain-torch. In 2008, Investment Management was the center of economic attention: AIG Financial Products, Prop Trading, GS’s ‘shitty deal’ — Wall Street was getting whipped. And to some extent, it was warranted.

In 2016, Silicon Valley drew the shit stick— Peter Thiel aside, most tech titans were vocally against DJT’s campaign, and some (Chris Sacca, Jeff Bezos, Mark Cuban) took to Twitter to wage their battle. And they lost. Badly. They, as most of us, fell for the critical error of taking Trump literally but not seriously, while the electoral majority took him seriously but not literally.

Post-election, Silicon Valley is now undergoing a long overdue self-evaluation, well-documented in this piece by Chamath Palihapitiya. Silicon Valley has realized that the innovation bubble they live in, a bubble where hype often outstrips performance and where innovation capital is often laser-focused on useless endeavors, is unsustainable.

As the Valley undergoes their self-analysis, the financial services industry has emerged from theirs — and it is emboldened. The election of Donald Trump has kicked off a deregulatory Woodstock: Mnuchin, Ross, Tillerson, DeVos...these are just a few of the multi-millionaire cabinet names extolling the virtues of private sector experience, and the evils of government power, in their respective departments. And between Scaramucci, Barron, Kushner, or his children, the President with no government experience will be surrounded by an advisory team that, on the majority, has none either.

An Awkward Boon

As such, Trump’s election has yielded an awkward boon to capitalists. The largest-ever experiment of Capitalism-in-American-government will begin. Ray Dalio wrote about this when he forecast an imminent ideological shift, with Trump, on how government policy is run. This is undoubtedly a great opportunity for innovation, competition, and efficiency to right some long-standing wrongs in government. And in fact, the shock-and-awe of reduced government experience might have its benefits; our last President lacked a long government career prior to his elevation, and he still navigated the 2008 financial crisis pretty damn well.

Peter Thiel described Wall Street’s about-face on Trump well when he said:

There were hedge fund people I spoke to about a week after the election. They hadn’t supported Trump. But all of a sudden, they sort of changed their minds. The stock market went up, and they were like, ‘Yes, actually, I don’t understand why I was against him all year long.’

I don’t understand why I was against him all year long.

This is when my puff piece on capitalism ends, and the real criticism begins.

If Trump is the real standard-bearer for capitalists, then he seems to lack a major part of what makes American “capitalism” unique from, say, Chinese or Russian “capitalism”: Empathy.

American capitalism does focus on profits and returns, but lives within a world where a conscience also resides. Some businesses lack a conscience (Turing Pharmaceuticals), others affix a conscience directly as a goal (Toms Shoes). If a company falls to far from a conscience, regulations and/or penalties kick in to prevent such a company from harming society in its quest for profits (Turing/Shkreli provides a helpful example).

Yes, Corporate America has definitely had episodes of low (or no) conscience, but over the course of history I strongly believe in American capitalism’s ultimate positive effects on society, especially when companies are encouraged to focus not just on shareholders, but on stakeholders.

Some may say this concern about empathy is political correctness gone awry, that I need to grow up and either “produce or get out.” That it’s PC doesn’t mean it’s bad — and if being a decent person is “politically correct,” fine.

If someone believes empathy, social conscience, and delivering a positive message are irrelevant to American capitalism, then I have to ask why? Why is it irrelevant? If capitalism represents the triumph of the best, why wouldn’t we want to infuse decency within that competition? I encourage anyone who believes this to open up a debate, I’d be curious to hear such thoughts.

In the same article quoted above, Peter Thiel displays a bewildering ability to treat offensiveness as a mere abstraction: “Even if there are aspects of Trump that are retro and that seem to be going back to the past, I think a lot of people want to go back to a past that was futuristic — ‘The Jetsons,’ ‘Star Trek.’ They’re dated but futuristic.”

The Jetsons? What? Capitalists should not be belittling offensiveness either as attempts to retrieve past glory days, or as necessary shocks to the system — if someone’s treating someone else badly, they should stop. If someone’s saying stupid things, they should stop. This isn’t rocket science: just stop being a douche. America does not become great when it loses its conscience.

So?

I want to be careful to judge Trump not just by words but by actions. But sometimes, his job is to be nuanced. His job is to communicate to the country his thoughts, his reasoning, and his positions. It’s understandable that a Presidential candidate will use bombastic, shocking language in a campaign; but a President-Elect is now building his administration’s message. His words are no longer meaningless, and therefore in lieu of actual policies, his words drive my judgment of him.

As I write this I get frustrated because in theory I should be happy that such an administration is coming in to fix the government-based problems that exist. But what bothers me, more than anything else in the world, is that this will be a blown chance for capitalism to do some actual good in government. The Presidency is a chance to display what’s best in one’s own self, as well as in one’s own nation. Once you’re the POTUS, there’s nothing else to run for. Nothing else to win. Your job is to perform, and to do the most to help the most.

With President Trump, I fear capitalism will move away from this tenet, because it will embrace a future replete with profits but bereft of empathy. While that may line the pockets of some, it will harden the disparities that have driven many to choose a candidate who so powerfully offends so many. Only next time, the shock-and-awe candidate may not be so friendly to capitalism itself.