Is Capitalism Broken?

I get so many headaches every month. It could be chronic migraine, 15 or more headache days a month, each lasting four hours or more. Botox on a botchaline mtoxin A prevents headaches and adults with chronic migraine. It's not for those who have 14 or fewer headache days a month. Prescription Botox is injected by your doctor. Effects of Botox may spread hours to weeks after injection causing serious symptoms. A lurcher doctor right away as difficulty swallowing, speaking, breathing, eye problems or muscle weakness can be signs of a life-threatening condition. Patients with these conditions before injection are at highest risk. Side effects may include allergic reactions, neck and injection site pain, fatigue and headache. A lurchic reactions can include rash, welts, asthma symptoms and dizziness. Don't receive Botox if there's a skin infection. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lou Gehrig's disease, myostheniographis, or Lambert Eaton syndrome, and medications, including botchaline mtoxins, as these may increase the risk of serious side effects. Why wait, ask your doctor, visit botoxchronicmygrain.com or call 1-800-44 Botox to learn more. There are plenty, plenty, plenty, plenty of low-road operators who rip their customers off, rip their employees off, and prosper. You're just going to pass a law and say every American company now needs to be nice. No! That's going to be your law. No, no, no, I'm not. Like that's just a ludicrous, ludicrous, naive idea about how a company functions. America's economy runs by capitalism. That is a fact that some celebrate and others lament. But now, even some fans of capitalism are looking at how it's working in the U.S. and they are asking, is capitalism broken? I'm John Don Van, this is open to debate, and that's the question we're going to argue. Are debaters Nick Hanauer, an entrepreneur, an investor, a thinker, who made billions under capitalism, and Jason Furman, an economist, a professor, also a thinker, who helped guide economic decision-making during the Obama administration? Nick and Jason, welcome to open to debate. Thank you so much. I want to say now to anybody who is listening. Do not assume that you know who is taking which side because you're probably going to be surprised. Nick Hanauer, Nick Hanauer, you who have done so very well under capitalism. I have. You are the one here arguing that capitalism is broken. The floor is yours, Nick, to bring us your opening. Thank you, John. Let me start by saying that markets are the greatest social technology ever created for creating prosperity. Nothing else comes close. I've founded, funded, or managed over 40 companies creating tens of billions of market capitalization. I feel very confident I understand them. So let's be precise about what's actually on trial today. It's not markets. It's capitalism. Markets are a technology for solving human problems. Market capitalism is an ideology defining who that technology serves. And it's right there in the name, capitalism. Capitalism is an ism, a belief system, an ideology that is taught in every school that's written to our tax code, labor laws, trade agreements, that is long defined our norms and expectations about who gets what and why. The textbook definition of capitalism isn't what's being debated today. What is worth debating is what is happening in the real world and what the capitalists believe, the rich and powerful people who capitalism serves and what they want all of us to believe but how markets really work. If you take them at their word, capitalists believe that the sole purpose of the corporation is to maximize returns to shareholders, not to customers, not to workers, not to the community or the country. Capitalists believe that people earn exactly what they're worth, that market outcomes however unequal or absurd are always both moral and efficient. Capitalists believe that regulating corporations kills growth, that raising wages kills jobs and that cutting taxes on the rich creates prosperity for everyone. Of course, there is no empiric evidence for any of this. Yet this is the capitalism that has guided our nation's policies more than 50 years, a half-century over which the bottom 90% of Americans lost 79 trillion dollars to rising inequality, 3.9 trillion in 2023 alone, enough to give every American worker a $32,000 year raise. In the 1970s, wages were about 51% of this economy. Today, they're about 41, the lowest share ever recorded. Corporate profits went the other direction rising from 6% to 12.4%. And what are we doing with those profits? This year, Americans corporations will spend roughly a trillion and a half dollars, 4.5% of GDP buying their own stock back, which was illegal until 1982. Americans are now 79 trillion dollars poor, less secure, and less resilient than they would have been, had capitalism, not concentrated wealth at the very top. For example, in 1985, it took a typical American 40 weeks of work a year to afford housing, healthcare, transportation, food, education, and the other essentials of the middle-class life. By 2022, it took 62 weeks. Last time I checked, there are still only 52 weeks in a year. So it should come as no surprise that 65% of American voters now say the system is rigged against them, or that only 12% think our democracy is working well. This is not an economic system with some policy problems. This is a failed ideology that is taking our republic down with it. So as market capitalism failed, of course it has, but don't let Jason or anybody else tell you that the only alternative is socialism. I'm here to argue that markets can be built to sort of human beings, not just capital and capitalists. I'm here to argue for a paradigm shift, what I and my colleague, Oxford University economist Eric Bynarch and I call, market humanism, the emerging new economic science that teaches that the more people we fully include in the economy, the faster and more prosperous and more innovative it grows. Market humanism was what you get when you build an economy around the proposition that the purpose of the economy is human flourishing, not returns to capital. And all of the evidence suggests that when we do that, the economy grows faster and under democracy grows stronger. Thank you. Thank you, Nick. Jason, now it's your turn to convince us capitalism is not, in fact, broken. So it's great to be with you again. It's great to be with my friend Nick. I actually agreed with an awful lot of what he said and we'll try to come to some of that. But I want to start by talking about housing. That's an issue that is important to every American, to every person in the world. Everyone needs housing. Let's look at what's happened to housing over the last 50 years. We've gone from a situation in which the typical family had fewer rooms than people to one in which it has more rooms than people. Indoor plumbing has become universal. Air conditioning almost entirely universal. Extreme overcrowding is almost entirely a thing of the past. And you even look at the last 10 or 20 years and there are more children that have their own bedroom today rather than having to share than was the case even 10 or 20 years ago. More square feet per person than 10 or 20 years ago and better and more appliances. In one sense, housing tells the story of the success that we've had. Notwithstanding every bit of negativity, Nick said, from a material perspective, if you had a choice to be living in the year 2026 or the year 2020 or the year 2010 or the year 1970, pick your number, 2026 would be the year you would choose. It's the year in which you have far and away the most material abundance. And that's true not just for the wealthiest Americans but for people in the middle class. It's also true for the poor. Now the system we have is very far from perfect and housing is a very good example of that as well. Housing is still too expensive. It's something too many families struggle with. It was I believe one of the essentials that Nick listed that it now takes you 60 weeks or whatever it was a year to get to. And an awful lot of why that is is because we haven't given capitalism in the housing sector a fair shot. We pass laws that limit and ban building of larger houses, of apartment buildings, building houses closer to each other. We have a permitting process that makes it take forever to build new construction. And then in some of our cities we're increasingly saying that we're going to do things like rent control when the evidence is overwhelming that that leads to less building and higher prices overall and less supply in the long run. And so on this very fundamental core area of the economy, first of all today is the best time ever to live. But second of all if we want to continue to make more progress it's going to be with that institution that Nick cited which is markets and we could even call it capitalism. One thing that I don't think capitalism does is guarantee that you share income in the way that you would like. It pays people something roughly related to their marginal product, what they produced. That's an economic fact, but not a moral one. And the way to solve that is not with punishment, not with trying to undo and counterman markets, but is with a more progressive tax and transfer system. That's one we've successfully built up over the last 100 years in the United States and one that we can do more to build going forward. Thank you very much, Jason. So we're going to get to the back and forth in a moment, but before we do, let's share with our audience a little bit more about your journeys to this point and why you're thinking about this question in the way that you do. Nick, you are, I want to say first, the returning debater to the program, so welcome back. Thank you. You advocate for things like raising the minimum wage, taxing the wealthy with your organization Civic Ventures. You have a book that's about to be released called Market Spilt for Humans, which you co-authored with Eric Beinhocker. You have a podcast, you have a newsletter called Pitch Work Economics. You're also, as I alluded to, a very successful entrepreneur and venture capitalist with some pretty impressive credentials over your under a belt, including a Qantiv, which you sold to Microsoft in 2007 for $6.4 billion, and even before that, way back, you were an early investor and advisor to Amazon in the first non-family investor, yeah. So that worked out. My question to you is considering that the system has worked for you so well, how often does the question come up? Are you asked, are you a trader to your class? Do you get that question a lot, and how do you respond to it? I do. So I am continually called that, but I don't think it's fair. I think that what we are witnessing in the United States right now is capitalism eating itself. I mean, the rising inequality that it characterizes our economy isn't, I think this is the most important point, isn't merely an economic inconvenience for the people that it affects. It is most insidiously what shreds the reciprocity norms that make social cohesion possible and enhance democracy, and that's the thing that is so dangerous. Jason, I think this is actually your seventh debate with us going back several years. Could that be right? So we're ready to have you back again. Just a good debater. You're not managing expectations very well here, but go on. You worked under President Clinton. As I said, you were an economic advisor to President Obama. You were chairman of the Council of Economic Advisors. You played a big role in shaping his economic agenda, including the response to the recession and the stimulus package. Currently, you teach economics at Harvard. You're defending capitalism for us, and I'm wondering, are you surprised that that question is even on the table to being asked to defend capitalism nowadays? I'm surprised by the growth of that question, and I do think there's different reasons that we could explore for why it's grown. One model is the one that Nick is implicitly arguing, which is that for 50 years, living standards have stagnated, inequality has increased, and so people are becoming growingly discontent. I think that doesn't exactly fit the facts. If you look at after taxes and transfer, inequality rose a lot through the year 2000, but it's pretty much leveled off since then. If you look at wage inequality, the largest wage gains have been for workers at the 10th and 20th percentile, not workers at the 80th and 90th, if you look over the last 10 or 15 years. So there's actually been a narrow one of wage inequality. I think part of the discontent people have is we had a horrible financial crisis, then we had a horrible bout of inflation. And historically, when you see that, and I live through both of those, as we all did, in my case as a policy maker for one, a policy commentator and the other. And so I think we're going through a moment in our country where the fallout for that has all sorts of collateral damage for the way people are thinking about the world. All right. Thank you. We're going to get to the back and forth portion of the program right after this break. I'm John Donovan. This is open to debate, and we'll be right back. I get so many headaches every month, it could be chronic migraine, 15 or more headache days a month, each lasting four hours or more. Alert your doctor right away as difficulty swallowing, speaking, breathing, eye problems or muscle weakness can be signs of a life-threatening condition. Applications with these conditions before injection are at highest risk. Allergic reactions can include rash, welts, asthma symptoms and dizziness. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lugaric's disease, Myasthenia Gravis or Lambert Eaton Syndrome, and medications, including botchaline Mtoxins, as these may increase the risk of serious side effects. Why wait? Dr. Visit BotoxCronicMigraine.com or call 1-800-44 Botox to learn more. Welcome back to Open to Debate. I'm John Donovan. We're debating the question is capitalism broken with Nick Hanover and Jason Furman. We've heard both of them make their cases. I want to just tell you what I'm hearing in terms of your opening arguments. Nick, and before I even say that, I want to be clear, both of you are capitalists. You believe in capitalism. You both support a well-functioning capitalism. This debate right now is whether capitalism in the U.S. functions in a mostly desirable way. Nick, you're arguing it absolutely does not, that the assumed priorities of capitalism is it now functions of letting markets and the drive for efficiency decide what investment should be made, what wages should be, even what moral choices prevail, has led us to what you're describing as a woeful place of extreme concentrations of wealth and power. As a consequence of a broken American spirit, Jason, you acknowledge that things are not perfect. You even say they're far from perfect, but you still were describing a concept of capitalism as the greatest economic driver of human flourishing the world has ever seen. You make an example of housing. You say, look at how big houses are now, how many more rooms they have, how much, how technologically sophisticated they are that at any time in the past, you credit capitalism with that. You also point out that capitalism can be hobbled and has been in the case of solving the housing problem by wrong headed government intervention. Implicitly I think jumping ahead to where Nick might be going with some of his arguments. That's what I'm hearing from the beginning. There's a lot for us to dig into as you've already both started doing. I want to take this to you, Jason, we heard Nick make the argument that markets, great, great engine, but under the current system, they are not there to serve human beings that they once did and they should again, but that they're not serving human flourishing with references to things like health and security and dignity, purpose and work, functioning economy, a healthy world, healthy environment that markets aren't making those decisions in the right way about those issues and that an economy should be geared towards that. That's where capitalism is. It's now practiced fails. What's your response to that? My response to that is at its core, markets are about a voluntary transaction. One person has something, the other person has something else and they trade. Maybe it's time, maybe it's money, maybe it's products, maybe it's some combination of those. As a strong presumption, not a universal one and I'll talk about some important exceptions, we should think of that as probably likely to make both sides better off and thus most likely to make the world better off. For an awful lot of things, what type of music I listen to, what type of cookies I eat, what type of clothing I wear, letting people make those choices, having markets serve them, produce the variety, produce the things they like is a wonderful thing. There's certain important exceptions to that. Markets produce too much carbon and that's why we need policies with respect to that. Markets produce goods that are overly addictive. We need things related to that but my starting presumption would be that in most spheres, they let people do what they want and provide enormous variety catering to the enormous variety of our tastes in a way that it's hard to imagine any other system could possibly accomplish. Nick, do you feel your argument has just been refuted? No, so I am in violent agreement with the proposition that markets as a social technology are the best thing humans have ever devised to generate prosperity, novelty and innovation. There's nothing that comes close but markets are not what we are debating here. We are debating capitalism and markets can be arranged in a million different ways and the form of markets that we have adoption. the capitalism has clearly failed, the majority of citizens. Now, is it a better alternative than communism? Of course it is. And has capitalism generally served the world well? I would acknowledge that it has. But we have outgrown capitalism because it is an ideological framework that intrinsically makes it difficult to address things like inequality, things like climate, and things like a functioning democracy. And I believe that we can do better. And what Jason said reflects this very orthodox way of understanding what markets do. What markets are is institutional arrangements that enable cooperation, which is humanity's superpower. There's this idea that markets work because they allow competition. It's not true. Lions are very competitive, but lions cannot build guitars. The reason markets are an unmatched social technology is that they are evolutionary systems that enable groups of people to cooperate at scale. Because prosperity in human societies isn't GDP or money, it is the accumulation of solutions to human problems. And that is why markets are the unmatched social technology. And when you understand it thus, it becomes very, very clear that you want to organize markets in ways that promote human flourishing, not capital appreciation. And I would suggest that all of the empirical evidence suggests that when we organize markets to benefit the broad, the broad, the typical citizen, not only does the typical citizen do better, but the economy grows twice as fast as well. - I want to get to competition. For me, there's two models of the world you could have. One is we would like corporations to be nice. We'd like corporations to look after people. We'd like corporations to do the right thing. And I heard Nick talking about that in the opening. I confess I'm extremely cynical about it. And no amount of talking about socially conscious corporations is going to change them very much. So what will change corporations to be a competition? It's just competition. So a corporation would love to pay someone $15 an hour. But if the business next door is going to pay them $16 an hour, then they have to pay them $16. If the one next door is going to pay them $17, they're going to have to pay them $17. How high will they go? Well, basically, if you have proper competition in the labor market and we can talk about where we do and where we don't, but if you have proper competition in the labor market, you're going to end up having to pay someone as much as they produce for you as a company. Otherwise, you're going to lose them to the business next door. So for me, competition is absolutely central. And then we can ask, where do we not have enough competition? Where do we need to architect things so that we can have more? So for example, in labor markets, we might have right now occupational licensing. To be a florist, you need to get some occupational license to prove you're not going to harm somebody through your floristry. I support occupational licensing for surgeons. I don't support it for florists and interior decorators. And so letting things that get in the way of competition go down having more competition is to me basically being realistic about what companies are like rather than basing your policy on a pipe dream. OK, but look, look, what Jason says is, in theory, true, with perfect competition, you get better outcomes. But what is the barrier to more competition in our markets? Capitalists, like the one thing capitalists hate more than anything is competition. Like, why don't we have, why have our industries consolidated? Why are wages so low? Why is inequality so high? Capitalists, lobbying, organizing the society to make it harder to achieve those goals. This is the problem. Like, our entire society is organized around this outrageously observed proposition that the only legitimate purpose of the corporation is to enrich shareholders. This is nuts. This is craziness. And the problem is-- Let me jump in. Is that nuts, Jason? Is that nuts? It's crazy. I mean, I'd say several different things. There's so many things at me once. I don't know which one to take off. That's my strategy, man. I mean, first of all, I think it was very telling that he started talking about capitalists, because there I agree. My favorite economics book title is a book by Roger Rajan and Luigi Zengales with the-- it's an excellent book, too, but the title is Outstanding, which is saving capitalism from the capitalists. And it is true. You look at large CEOs. They don't like competition. Moreover, they run their businesses internally, a little bit like Soviet central planning. Yes. And so I love capitalism. I don't think every capitalist loves capitalism quite as much as I do. And that gets to all my examples of ways in which people engage in rent seeking and try to rig the government to stop competition and to stop markets and why I think we need more capitalism and more markets. When it comes to inequality, though, I don't think-- Nick has a very good model as to why it's increased. There's been an awful lot of empirical research on this. And the majority of the increase in inequality is well explained by a combination of technological changes and educational changes. We reduced the number of people getting college degrees or the pace at which it was increasing. The same time, technological changing. There was also a role for-- Not for-- --other factors. There's role for other factors like monopsony. But if you look at the consensus of hundreds and hundreds of economics papers, there's lots of different causes of the rise in inequality, but the majority of it is related to just old-fashioned technology and education. And by the way, that says we can solve it. We can solve it with education. But Jason, we're going away from the statement that Nick made that the purpose of a corporation being seen as increasing the value to shareholders is crazy. Do corporations have any other functions, roles, responsibilities? I think it's completely unrealistic to believe a corporation is going to do anything other than that. So in some sense, I agree with Milton Friedman. That's what a company is going to do. Whether you want to think they're going to or not, that is what they are going to do. So then what do you need to do? You need to use the tax system, for example, have a carbon tax so that as they pursue their profits, they don't emit too much carbon. You need a corporate tax so that as they're producing the profits, some of those benefits get shared more broadly than their own shareholders. So you need regulations and taxes. And then you need to accept that after the fact and then you need to accept that you are going to create a system such that when they pursue their shareholder interest, 90% of what they're going to do by pursuing their shareholder interest is good. Amazon's created trillions and trillions of dollars of benefits for consumers. But-- And can help millions of jobs. Our unemployment rate is the lowest now that it's been in the last 60 years. Over the last decade, the average unemployment rate is the lowest it's been in the last 60 years. So Amazon created jobs and it destroyed jobs. But that's silly to think of it as losing jobs. The Fed is in charge of the unemployment rate. Here's the thing. When you formally, when you basically commit yourself as a society to making the purpose of the corporation shareholder value maximization, you permit all kinds of behaviors that just aren't good for the society at large, like lobbying Congress with the money you make to make it ever harder to raise wages to impose standards on corporations. And this has just become a runaway effect, which is allowed a huge amount of corporate consolidation. It has allowed corporate profits to rise from 6% of the economy to 12, while wages have diminished by almost exactly the same amount. That is nothing to do with economics. That has nothing to do with education or technology. It is simply a consequence of a change in how much power workers used to have relative to capitalists. Power is what defines who gets what and why. Not some magical-- not some magical economic theory. But I think you had this fundamental premise that somehow left to their own devices. Corporations just do really bad stuff. Well, I think that's all men in the case. That is sometimes the case. And that's why-- But that's why we're having this conversation. But here we are, sitting in the year 2026, with the lowest unemployment rate our country has had in 60 years. And where do all these jobs come from? They come from the private sector. Why do companies hire people? They don't hire people as a charity product. project because they want to be nice. They hire people because their shareholders benefit from them hiring those people. And that's a system that has worked a whole lot better than any other dream you could sort of put together on a whiteboard that's either untested or counterproductive when it's met with, you know, the realities of the real world. So I'd say start with people as they are. And then yes, absolutely, use things like taxes to help channel the outcomes you want. But fundamentally, the gains from trade are positive enough that most of the time it's going to be a good thing. Again, markets are fantastic, but the purpose of the corporation should not merely be to enrich shareholders. The purpose of the corporation in a democratic society should be to solve human problems in a reasonably fair and sustainable way. And profit is the reward for doing that. And if you cannot, for example, run a large enterprise while paying your workers enough to live in dignity without government assistance, then maybe you should find a different job. This is a place where we violently disagree. I get government assistance. The government gives me tax subsidies for my retirement savings. It gives me tax subsidies for my health care. The idea that we would think it's an dignity that somebody else might get government assistance for food or for housing, that's basically buying into what was a traditionally very anti-government, anti-social welfare premise. I'd like to have a capitalism that looks a lot more like Denmark, a country that doesn't interfere very much in labor markets, doesn't interfere very much in product markets, but doesn't view it as an indignity that people pay into a system, in their case, through things like a value-added tax, and then they get supported through that same system and moving to that type of thing rather than treating it as an indignity to get something from the government. That's almost offensive and playing into the hands of the people that are constantly trying to do things, like put back on nutritional assistance. Jason, in Denmark, no one has paid so little that they can't afford to live in dignity. The minimum wage is like $26 an hour. They have organized their societies so their businesses pay people enough to get by without food stamps. Look, here's the thing. You either believe in capitalism and markets or you don't. It cannot simultaneously be true that we have a great system and that it will come tumbling down if capitalists are required to pay their workers enough for them to get by without government assistance. That's because not everyone produces. You seem to think not everyone produces enough that for what they should get and I don't think they should be penalized for that. I don't think they should be hurt for that. I think that's why there's an incredibly important role for the government. So I believe in markets, but I don't believe that I use them to think markets can solve every problem. No, I don't think they can. I believe in a robust social safety net and don't think we should be denigrating that as somehow undermining people's pride. And that's not the way people think. No one who gets things like social security, gets Medicare, feels as if some indignity has happened. Why don't the companies keep paying people through 80? Why don't they give them a large enough pension for the rest of their life? They're not going to do that. That's why we think it's important for the government to do that. But you seem to think you want to put this all the hands of companies. But Jason, Jason, corporate profits have doubled from 6% to 12%. Should we let them rise from 12% to 18% while the percentage of the economy that goes to wages falls from 51 to 41% to 30%. Like, what kind of economic system is that? It's ludicrous. Like, adjusted for inflation. That extra 6% isn't profit because it needs to be or should be or has to be. That 6% extra in profit is profit because powerful people manipulated the system to create that outcome. That 6% could be wages today and once was. We're spending 4.5% of GDP this year on stock buybacks. This is nuts. I think it's crazy to not want stock buybacks when the alternative is the companies would just get bigger and bigger by buying other companies. You don't get to decide what they do with their money. They're going to decide what they do with their money. You absolutely get to decide what they do with their money because we live in a democracy and we can constrain these organizations in ways that make them pro-social. That $1.5 trillion could very easily be spent on wages. Instead, it's spent on lining the pockets of Wall Street and the executives who are doing those stock buybacks by the way to wash out the stock incentives that the delusion created by the stock incentives that they get. I have done stock buybacks. I doubt you have. I know why people do them. They're not doing the for any social reason. Of course they're not the economic reason. It's selfish feeling and it was illegal until 1982 and it is one of the canonical examples of why the system we have adopted is broken. That $1.5 trillion should be wages and if it was, the economy would be growing faster or a democracy would be stronger and everyone in the country would be happier. That is an option. I mean, if you look at the highest wages adjusted for inflation, the highest wages we've ever had in American history were in February of this year. They've gone down a bit since then because the Iran war and gasoline prices have spiked. The second highest wages we had in this country's history adjusted for inflation was in 2025. The third highest was in the year 2024. They've been rising faster for people at the 10th and 20th percentile than they have for people at the 80th and 90th percentile. And awful lot is working in our economy, Nick. Nick and Jason, hang on. I have never had less work to do in a debate. The two of you are doing very well together. But I do have this question because of the implications that you made at the beginning, Nick, that the public is losing faith in capitalism. I just want to get your take both of you on the recent apparent rise in some areas of the concepts of socialism. And whether you think, you know, how do you process what's going on in that regard? Why don't you go first on that, Jason? I mean, this gets back to what I was talking about in the beginning, which is people are very, a lot of discontent right now. One theory of the discontent is 50 years of economic problems and they're fed up and they want to change it. I think that's Nick's theory. Don't think that matches the evidence. To me, those things like the rise of social media have changed the way people see the world, have increased polarization, have magnified certain voices. And there's the fact that we've always seen coming out of things like financial crises and inflation and pandemics. And we've had all three of those in the last 15 years, all sorts of dislocation and discontent in our society. And then finally, Nick and I both understand how horrific communism was as an economic system. And he hasn't disputed that. And I'm not accusing him of trying to install communism in America. But for a lot of people who are younger, that memory has just faded increasingly over time. So I broadly think that that's where things are. So I have great sympathy for people who are talking about, or at least some of the people are talking about socialism because I strongly disagree with Jason about the reality on the ground. You know, I think it's pretty common for fancy economists to look at the numbers and say, this is fine. You should be happy with this. The beatings will continue until morale improves. You know, some. You should absolutely not be fine with it. You just shouldn't want solutions that throw the baby out the bathwater. But God. Socialism is, I mean, if you take the word seriously, and it is akin to communism, it's state ownership of private enterprise. That's a terrible idea. But all what socialism does is it's very good at more fairly, more fairly sharing existing prosperity. But it has nothing to say about how you create more prosperity in the future. And that's its great Achilles heel, which is why we should move beyond the version of markets that we have adopted, which we now call capitalism. We should reject socialism. And we should move on to what my co author and I call market humanism, which is a market based, which is a market based system that is devoted to human flourishing and organized around that proposition. And if you do that, you'll have more economic growth, more innovation, and a much more stable, secure, and happy society. Okay, we're coming up to another quick break. I'm John Donovan. Alertive reactions can include rash, welts, asthma symptoms and dizziness. Tell your doctor your medical history, muscle or nerve conditions, including ALS Lou Gehrig's disease, myasthenia gravis or Lambert Eaton syndrome and medications, including botulinum toxins as these may increase the risk of serious side effects. Why wait? Ask your doctor. Visit BotoxCronicMyGreen.com or call 1-800-44 Botox to learn more. Welcome back to Open to Debate, I'm John Donovan and I'm joined by Nick Hanauer of Civic Ventures and Economist Jason Furman and now we're going to bring in some other voices to ask some expert questions of our debaters. We've had some people who know the topic or think about the topic, joining us and we have asked them to think, to gauge where we are in the conversation and come in with some questions. And the first person I'd like to welcome is journalist, financial journalist and writer Mary Childs. Mary, thank you so much for joining us. You were a co-host of NPR's Planet Money for nearly seven years so I'm thinking people are going to recognize your voice. You now have your own podcast, it's called Mary in America where you grill interesting people. So you're an interesting person and this is an interesting debate so we're delighted to have you here. Please come in and with your question. Thank you so much. I'm so excited to be here and it is an honor to get to girls such interesting people. I have been thinking. If it's curling, can you do Nick first? Yeah. No, for sure. You're the ringer, right? That's the dynamic that's established. Well, I'm curious because Nick, I think you've been so rhetorically successful in building a lot of these points and identifying where people are upset. But what I'm failing to hear is what you would actually do about it. I think I'm confused about the forcing mechanism because as far as I know, it's market response and government and that's kind of it. So you can regulate, you can legislate, you can tax, you can use the tools of government to cause a corporation to act in a way or another. Now, consumers can pressure corporations to act in a way or another. But we seem to not quite be doing those, I mean, it's like not working. So to your point, for the conditions to be- Because of capitalism. Okay. But what do you mean? Like, how do you change it? You profoundly change how you see economic cause and effect. So we are living in a paradigm that describes how the world works, which I think is profoundly mistaken. Like if it was true, the economy was a parade of optimal equilibrium, then it would be true by definition that when you raise wages, it killed jobs. The problem is that is not what the economy actually is. It is an ecology, it's an ecosystem, it's a complex adaptive system, it's characterized by increasing returns, not decreasing returns. So claiming that when wages rise, jobs fall would be like claiming that when plants grow, animals shrink, that is just not how the system works. And as a consequence of that paradigm, we have organized ourselves in ways that has slowed economic growth, concentrated wealth at the top, threatens the democracy and makes it very difficult to address other existential challenges. And I could go on and on about the way in which that paradigm has shaped us. But for example, the idea of home economics, the idea that people are reliably selfish. If that was true, then it would be true by definition that selfishness is the cause of our prosperity. And that is not true because we are homo sapiens. We are reliably, reliably relational, moral and cooperative. And what that means is that cooperation is the cause of our prosperity. And if you think that, then you organize the society in a very different way. And so, yes, we have to use the power of government, democratic governance to reorganize how we purpose markets, how we can strain them, and how we ensure that they work to better the society, not simply make a few people richer. I teach an introductory economics class where we teach ways in which people are rational, ways in which people are so-called behavioral or psychological and differ from the textbook model. The thing you might assume is the textbook model but no longer actually is the textbook model. We talk about the ways in which people are prosocial and trust matters. But fundamentally, I'd say for the most important decisions we make, if you have the option of buying things at two different stores, you're going to buy it at the cheaper store. If you have two similar jobs, you're going to take the one that pays more. If you, as a corporation, have two business plans and one has a higher profit and one has a lower profit, you're going to adopt a higher profit one. And so, when it comes to the economics fear, the majority of the choices that people make as consumers, as workers, and as businesses actually are financially motivated, we can lament that. We can think it's bad. I think a lot of good things have come out of it. But to some degree, I don't think you can actually fundamentally change human nature. Instead, you have to work with it and channel it. And that's what markets and competition do. And that's what a backstop of things like government policy and taxation does. And I would finally say, in some sense, I think Nick didn't really answer the question because I've still heard a lot of rhetoric about what we'd like a better world to look like with almost nothing resembling a specific as to how his government take over of corporate financial policy is going to work. I was basically just seeking to, like, it sounds like a hearts and minds campaign. Is that right now? No, no, no, no, no, no, no, no, no, no, no, no, no, I agree with Jason, you can't change human behavior. Humans are what humans are. But what they are not is reliably selfish and rational and expecting the world to operate in that way. If you expect the world to operate in that way, both, you're misapprehending what's actually going on. You know, again, markets are an incredibly powerful social technology because of the ways in which they enable us to cooperate. But I think you're asking, you're trying, I think you're asking a sort of a harder question, which is, what would I do? Is that what you, okay, so the first thing I would do is I would change the stated purpose of the corporation from Justin Riching shareholders to solving human problems in adjustments sustained in a fair and sustainable way. But what is that mattering? Yeah. How would you do that? Well, I mean, you would impose it by law. Now, what does it mean? And we could spend hours and hours debating what that means? Does that create a utopia? Absolutely not. Absolutely not. And are there still going to be tons and tons of people who operate in a way that rejects that or ignores that? Of course, of course, of course. But we want to create norms in our society that we want to create expectations for people. I mean, I think just, I think it's really sad that you think that the best we can do is humans, is just assume the worst of one another. The problem, the thing I dislike most about this sort of capitalism and neoliberalism is the way in which it confers at a strategic advantage on the worst people, right? If you really truly do not care about other human beings, about your customers, about the future in your society, you're going to have a business that's not true. That is not true. No, no, no. You're more about this than you do. Okay. Nick, you know what? You're right. You're right. You don't know more about this. You can keep asserting. You know more about this. No. But that is a pompous move. And you can invoke it all you want. But I'm not going to take it. I'm just not going to. So let me just say you think, okay, so here's my question for you, Nick. Two models of a company. One company is ripping people off, selling them substandard stuff. The other is making wonderful products, selling them at a low price. Do you think we're in a world where the first one makes huge profits, but we should force them to be like the second, or do you think what you said before of all good things go together? And if you do the right thing, you'll have more innovation and more growth, which sounded an awful lot like the second company would do better. My view is companies that develop a reputation for treating their customers badly, for treating their workers badly can actually end up being punished in the market point. In some cases, that's true. And in some cases, it's not true. But there are plenty, plenty, plenty, plenty of low-road operators who rip their customers off, rip their employees off, and prosper. And some of our biggest and most successful companies actually haven't behaved that way. They've been companies that, for example, have reliably delivered lower prices, greater variety, and better products. That's why Amazon is the way it is, not because it's cut every single corner. It could possibly cut, and you should know that better because you're one of the people that invented that company. But you're just going to pass a law and say every American company now needs to be nice. No. No, no, no. I'm not. Like that's just a ludicrous, ludicrous and naive idea about how a company fucks. All right. Time out. Mary, I want to thank you for your question. Thank you. Sorry. Thank you for joining us. I just, I want to say this that I, one of my goals is to encourage mutual respect among our debaters. And I think some hackles were raised just now. And can we? I'm sorry Jason. So thank you. Apology accepted. So I do like you now. Thank you. Thank you. Let's move on. I want to welcome into the conversation now, Inda Curran, who is from Bloomberg News in Washington. Inda, thank you for joining the conversation and for listening in. You cover and report on the US and global economy, which gives you really a great perspective for this conversation and debate. So thank you for joining us and please come in with your question. Thank you all, John. It's a great debate. I'm going to join it. Jason, just in terms of tangible examples following up on Mary's questions. If you had public support and congressional support, could you elaborate just what more you would do to boost completion in the US, please? And a similar question to you in terms of, you know, your dream law would be to stop corporations from enriching themselves as you describe it. Could you just say, how would you, I don't want to paraphrase you, sorry, but how would you sell that to both the public and executives to get that across the line, please? Thank you. Yeah. So one issue in competition is corporate concentration and large businesses. I think antitrust got too permissive for a while. I think it went too far in the other direction and actually became overly strict. And the goal should be about protecting competition, not protecting competitors. So for me, the goal of competition policy is not to have lots of small businesses, but it's to have great, great things for consumers and great things for workers. The biggest places where I see lack of competition in a consequential place in the economy are places like the health sector where to open up a hospital, you might need a certificate of need. To become a doctor, you need to be recognized and certified in certain types of ways. Residency slots are limited. The way in which a European trained doctor can practice in the United States is limited. Housing, I went through all the ways in which you can't build. So for me, occupational licensing, we need a license to do different types of jobs. So I think there's some traditional antitrust that plays a role here, but there's a lot of other markets that are insufficiently competitive because basically the government has gone in, done the types of things Nick wants it to do, which is it knows better about X, Y and Z, and does that basically to enrich people and the incumbents rather than to benefit competition in the future. I mostly agree with Jason. But can you just rephrase what you. It was basically Nick, how would you sell your idea about stopping corporations from enriching themselves? I mean, how would you. So just to be clear, I'm not arguing against corporations enriching themselves. I'm just saying it's ludicrous to think that we should grant limited liability as the public to organizations that don't serve a social purpose. And the social purpose of the corporation should be to solve human problems and they should do it in a way that benefits the society broadly. And if they can do that, they should earn profit. And that's it. That's just. It's a common sense proposition. Nick, is it ever happened? Has it ever happened? Well, I mean, not in history, but, you know, again, civilization is a verb. I don't think we need to look back in history to find the answers to all our problems. One of the things that we can do is that we can hold ourselves in our society to successively higher standards. I am arguing for that. I'm not saying that capitalism over the last 100 years has been a disaster. It hasn't. In many ways, it has produced. As Jason has pointed out, it, you know, created more prosperity than anyone has ever seen in human society. But it has outlasted its usefulness and we can do better. And the existing form is clearly broken. And so, yeah, we should dedicate ourselves to solving one another's problems. We should organize our standards in ways that requires companies to pay people enough so that they don't need government assistance. We should find ways to make sure that corporations make money, but that some of it goes back into workers' profits. Again, just look at the trend line, right? And 51 to 41, is it okay if it goes to 31? How about 21? How about 10? How about zero? Right? Like, at what point do you say, enough is enough guys. You know, corporations were very successful, grew very, very fast when their profits were 6% of GDP. And by the way, GDP was twice as high when profits were 6% of GDP. Why? So much more of the money went into workers' profits, went into workers' pockets, which generated the demand, which makes the economy go. So I don't, there are no trade-offs to growth here. There's no trade-off to innovation. There will be a group of very rich people who will be sad with this new arrangement, because it will not clearly benefit them, but the economy will do better. People will do better, the democracy will do better, earth will do better, and that is something which is available to us. We do not have to live with these 19th century ideas. And thank you very much for joining us and coming in with your question. I have a question that's coming from the audience. The question is this, do you believe we actually have capitalism in the US, given the extent to which monetary and fiscal policies have consistently favored financial sector interests over the last 50 years? For example, negative real interest rates and preferential tax rates. Do we call it capitalism? I mean, I actually disagree with the premise of that question. We have a fiscal system that is very progressive. I'd like it to be more progressive than it is, but right now, if you are a millionaire, you pay a higher tax rate than if you make $50,000 a year. And then if you look at the transfer side of the equation, what you get from the government, the things that Nick was actually has denigrated more than once in our conversation, then it's overwhelmingly progressive. So what do you give in what you get in terms of benefits like Medicaid, like nutritional assistance, like housing assistance, and the like? And this is why things like expanding the Affordable Care Act, expanding nutritional assistance, expanding the earned income tax credit, expanding the child tax credit. We've actually done that very successfully, pretty steadily for decades now. We had a setback, a big setback last year under President Trump with the so-called One Big Beautiful Bill, which cut Medicaid. But beyond that, but almost every stage these programs have actually expanded. And that's why inequality after taxes and transfers is lower now than it was 25 years ago, why we've actually made progress. I heard a slightly different question there. I think, and if the way in which I heard the question was correct, I slightly disagree with Jason. I think the question was more around, haven't we organized our capitalist economy to benefit financialization over everything else? And the answer to that is, yes, we have. And I think in many ways, we don't have a capitalist system in the pure form. We have mostly socialism for the rich. We socialize the problems in our society, and we privatize the benefits in egregious and embarrassing ways, in many cases, and I think that's a big problem. Do either of you in terms of the inequality issue and the concentration of economic power have any sympathy for the argument that CEO salaries should be, CEO compensation should be capped? I personally don't care what CEOs get paid. I care what they're taxed. Again, I'd like to have a progressive tax rate, but if Nick makes his own private company and wants to hire a CEO and wants to pay a CEO, whatever, he can do that. If a public company wants to, I think most of that money is coming at the expensive shareholders and owners, not at the expensive workers. And by the way, the difference between an extremely good CEO and the next best CEO can actually be quite large for your bottom line. You don't need the CEO of Apple to be that different in ability for it to be worth an extra $50 million to pick one person over another. So I think the whole CEO pay is a distraction. There's a grand total of 500 Fortune 500 CEOs in America. You could cut all their pay by 90% and you'd barely make a dent in any of the issues that we've talked about here. I asked the question, have it inspired by having read an article you recently published in which you, you bemoan the fact that CEOs can make 300 times what their workers make. So again, is your point that they should be capped or something else? Yeah, no, no, capping is complex. My problem with CEO pay is how corrupt it is, having been in this world and just knowing how it works. It's completely disconnected from performance and there is this racket of consultants that go around in every boardmate room in America and they do these spreadsheets which prove in every. Every single case in which they present their material that the executive team is underpaid and needs a big raise. What they never say is, "Y'all make twice as much as you should and we should cut your pay by 50 percent." And so we have adopted sort of culturally, morally and technically a set of standards and processes which create this upward ratchet on CEO pay. But there is no similar force on worker pay, right? And so you end up in this circumstance, because Jason, of course, right, you can cut all CEO pay by 90 percent, won't make a bit of difference at the end of the day. But it is, it does speak to the way in which what our values are as a society and how we think about our relative contributions in the world, and it is just not true that CEOs create 500 times or 300 times as much value as the people that they employ. Any more than it is true that somebody makes $100 million a year on Wall Street, securitizing imaginary assets, is worth a million, you know, whatever it is a thousand times more than somebody who's teaching algebra in a public school. It's ludicrous and, you know, I believe that we have a right to push back on those claims. This whole idea of, you know, the marginal product is just, it's imaginary, it's cooked up in 1899, right? There's no, it's not an economic fact, I don't think Jason, it's a scam. Jason, I need you to hold on any response to that because we're now pivoting to our final round, our final round is where each of our debaters has one more opportunity to take the floor solo and make their case either the capitalism is broken or it is not. Nick, you're up first. You're closing statement on why you're saying capitalism is broken. Okay. Thanks, Sean. For most of this debate, we've been arguing about numbers, but numbers only tell some of the story because economies shape souls as well as bank accounts. My friend, Senator Chris Murphy, tells this cool story in his new book, the sun plays youth hockey, a private equity firm bought the league and bought the rinks. And then they banned parents from filming their own kids' games, not because filming hurt anybody, but because the firm had installed its own cameras and it wanted to sell you the footage back at 25 bucks a month. So now parents pay a private equity fund for the privilege of watching their kids play hockey. I think that's just insane. It's a small thing, but that's why it matters because there's nothing left in American life so ordinary, so decent, so personal that capitalism hasn't figured a way to monetize it. We now have entire industries whose business model is human suffering, who monetize humanity's deepest vulnerabilities, social media companies that earn more, the angrier and lonelier we get, betting apps, engineered to grab the compulsive gambler and never let go. Food companies that employ scientists to create products that are both poisonous and that you cannot stop eating, a drug industry that flooded our country with opioids under the banner of the free market. Private health insurers that make more money the sicker we get. Capitalism has been telling us for 50 years that this isn't just fine and normal, it's our only option. They told us greed is efficient that if someone's willing to pay for it, it must be good by definition that a market price is a moral verdict. That is nonsense. I love markets, and they are indispensable foundations of prosperity in free societies, but understanding that market's work is not the same as understanding how and why markets work or how to make them work better. Capitalism, as it is practiced today, isn't just broken, it's wrong. And market humanism, this thing that we've been working on, points the way to a better future for everyone, even so-called capitalists. If you want to learn more about that, what comes after Capitalism, download our free book, light at marketsbuildforhumans.org. Thank you, Nick, and I'm fine with the commercial. Thank you. I recommend it. Jason, you know how this works? You get the last word. Floor is yours. Money isn't everything. GDP isn't everything. Growth isn't everything. Companies aren't everything. Consumers aren't everything. But they are actually a lot, and it does matter. If you look at countries that are richer, countries that are growing faster, countries that are more innovative, you tend to have people that are happier, that are more tolerant of each other, more willing to share, have lower maternal mortality, lower child mortality, higher degrees of well-being in a whole variety of even more fundamental dimensions. The United States right now, compared to almost any rich country on the planet Earth, is doing a better job of generating economic growth. It's why we've seen real wages rising consistently for all workers across the income spectrum for the last nearly 15 years. It's why we've seen the rise of billionaires as well, and these two things to some degree have gone together. Now I don't think we need to just accept all of this, and unlike Nick, I think the government has a really, really important role to play. I don't think the government providing help with college, providing help with retirement, providing help with childcare, providing help with health care, none of that is any sort of indignity. I don't expect companies to do all of that. I expect them to do certain things to be innovative, to serve their consumers, and to treat their workers well. That's going to happen when there's more competition. I'd like to see more competition. I'd like to see more of these gains shared more broadly, but I do think we need to step back and appreciate that it really is the best point in history to have lived economically and of the rich countries the United States is among the very best to live in, and a lot of that really is because of the success of the markets, and yes, I'll call it capitalism as a system. Thank you very much, Jason, and that is a wrap on this debate. The arguments are over. After hearing what everybody had to say, we want to know which side of the debate you fall on. Please cast your vote now, go to open to debate.org/vote or scan the QR code on our screen. We will also be dropping the voting link in the episode notes in description. Voting for this live stream is going to remain open until Friday, September 4th at 4 p.m. Eastern. We will reveal the results of the vote in our sub-stack newsletter on Saturday, September 5th. Make sure to subscribe. Nick and Jason, you brought a lot of energy to this debate. We even had an apology, which I appreciate, and a forgiveness, which I appreciate. I'm sorry, Jason. It's all good, Nick. We appreciate you're showing up and arguing that the way that you did and for being thoughtful and making us all think. So, as we like to say, thank you for being open to debate. I also want to thank Mary and Enda for their questions. And finally, a big thank you to you, our audience, for tuning into this episode of Open to Debate, as a nonprofit working to combat extreme polarization through civil debate. Our work is made possible like by listeners like you, by the Rosencrantz Foundation, and by supporters of Open to Debate. Robert Rosencrantz is our chairman, our CEO is Leah Mathau, Andrew Lipson is head of production, Michelle Debra Cini is head of marketing, Alexis Pangrazi is our executive producer. The Open to Debate team also includes Gabriella Mayor, Katie Perry, Gabriella Yonacelli, Linda Scott Jacobi, and Julia Serkin, Damon Wittemore, mix this episode, our theme music is by Alex Clement. I'm John Donda. We'll see you next time on Open to Debate. This Monday.com ad was created by a team of people and AI agents. Reese, our content agent, wrote the copy based on our best practices, like mentioning Monday.com three times. So that was the second, Johnny, our coordination agent, built the timeline, and kept everyone aligned. Olivia, our human creative director, stayed in the loop because agents are great, but they don't always know when a joke lands. She had one note, tell listeners it only takes minutes to build an agent, so minutes. Create your own AI agent today on Monday.com.