The attendees at the Milken Institute’s annual conference in Beverly Hills are the undisputed winners in a globalized, digitized, do-more-with-less economy. Yet even many of them feel something is deeply wrong in America.
“I believe very much in free enterprise, but modern American capitalism is not working for the majority of Americans,” Democratic Sen. Mark Warner of Virginia said at the conference. “The country needs a big win.”
Such Trumpian rhetoric is surprisingly commonplace at this year’s gathering of top business, finance and political leaders, perhaps because the presidential campaigns of Republican Donald Trump and Democrat Bernie Sanders have generated glaring bipartisan evidence of how angry millions of Americans are. That may not show up in Wall Street bonuses or hedge-fund profits, but the world’s money mavens seem to be getting the message all the same.
It’s not just America, either. Britons will soon vote on whether to leave the European Union, a rebellious move that would assert national pride over an economic pact that on the whole benefits the U.K. Nationalist parties are rising in France, Germany and Spain. “We’re seeing the growth of these anti-establishment movements, and even if they don’t govern, they can paralyze the traditional parties from governing,” Mohamed El-Erian, chief economic advisor for investing firm Allianz, said at the conference. “If you run these capitalist economies at a low speed for a long time, things start to break economically, financially and politically.”
The U.S. economy is doing better than most, with strong employment gains, low inflation and low interest rates. But the growth rate is only about 2% — barely half the rate of the 1990s and 1980s. Business investing is weak, showing poor corporate confidence in the future. That in turn slows overall growth, since more business spending would create more jobs and give people more money to spend.
Washington, D.C. could help, with shrewd, aggressive policies, but it may be doing the opposite and holding the economy back. “We have a crisis,” Republican Sen. David Perdue of Georgia, a former Fortune 500 CEO, said at the conference. “The frustration of people back home is very simple. Today a lot of people are motivated by frustrations with Washington’s lack of results.” He, Warner and other politicians at the Milken conference say Washington politicians understand the problem, but are prevented from finding solutions by a handful of obstructionists and leadership that doesn’t seem interested in problem-solving.
Business could do more, too. “I get a little tired with the business community bitching about Washington but then never wanting to get their hands dirty,” Warner groused. “If you don’t engage, you turn the keys over to the extremists. That’s not going to fix it.”
There’s also plenty of discussion of solutions, such as bipartisan agreements to streamline taxes and regulations, better support for those who lose jobs to foreign workers, a longer-term corproate focus on building strong comapnies, and more corporate investment in local communities. But after all the talk and good intentions, many Milken attendees will leave Beverly Hills and go back to looking out for themselves. That may be another thing wrong with the country.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.
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- Mark Warner