Second Quarter Investment Outlook
Young People and CapitalismBy: Lynn Hamilton
Wednesday, July 5, 2017
Recently the Wall Street Journal published an interesting article: “Why Do the Young Reject Capitalism?” Young being defined as people aged 18 to 29. Harvard’s Institute of Politics has conducted a survey that indicates more than half of young Americans do not support capitalism. One-third support socialism. In contrast to the Harvard survey, the Pew Research Center’s recent international survey in both the developing and advanced countries had a 66% positive view of capitalism. The WSJ article did not really explain the strange views of the young. Letters to the editor suggested three potential reasons; first, the high cost of college resulting in large debt for graduates, the second reason refers to “anti-capitalism is what they have been taught”. (We have noticed that the current ratio of left to right professors is about 24 to 1.) and third, that it is a combination of a generation where “everyone gets a trophy” combined with it is what they have been taught.
Interestingly the WSJ article noted that in the Harvard study, young people, while rejecting capitalism and free markets “celebrate entrepreneurs and free enterprise”. Given that excessive government had a big role in causing the “Great Recession” and also in the very low growth rates following it, makes this odd. Entrepreneurs need Capital.
Another article about this Harvard poll on ForeignPolicy.com by Sara Kendzior, cites the economic events that this age group has seen for the mistrust of capitalism. She included the housing collapse leading to the Great Recession, the burden of high student loan debts used to finance that college diploma that didn’t result in a high income job, and some of this group may have seen their parents lose their jobs as the local factory closed down. She does point out that the pole results were 42% support capitalism (51% reject it) and only 33% support Socialism - far from a ringing endorsement of Socialism. The young’s strong recent support of candidate Bernie Sanders raises the same concern as the poll does.
We are concerned that the historical success of the American market system is not well appreciated. We believe that many of our economic problems have been caused by Government’s heavy hand rather than a failing of capitalism, as we have discussed in past Investment Outlooks.
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