Today’s education topic was capital flight (also known as a capital strike).
Capitalism is not democratic, and the best example of this is the minimum wage.
Our readings show that a massive majority of Americans supports a small minimum wage increase. Recent polling shows that 91% of Democrats, 76% of independents, and 58% of Republicans report they would support increasing the minimum wage to $9/hour, or a $1.75 increase. Just over 3/4 of the country supports this small minimum wage increase. If a super majority of Americans want to raise the minimum wage, why don’t we do it?
If we zoom in on Milwaukee, which is overwhelmingly Democratic, support for a minimum wage increase would probably be closer 90%. So if 9 out of 10 people want to increase the minimum wage, why doesn’t it happen?
The answer is capital flight. Capital flight occurs when owners of corporations pack up their companies and leave. If Milwaukee were considering a minimum wage increase, capital owners could threaten to move their companies elsewhere, leaving tens of thousands unemployed, food pantries empty, social services overwhelmed, tax revenues collapsed–basically, they could leave the city in ruins.
In practice, capitalism is not democratic because the owners of large corporations–under 1% of the population–have the power to leave entire cities in ruins, and that means that they can veto any decision by the political system they disagree with. Even if 99% of people supported an idea, if the 1% of people who own major corporations disagree, that 1% will get their way because they have the power to destroy the well being of so many people.
Progressive solutions cannot solve this problem. Public financing of elections cannot prevent capital flight. A public agency tasked with drafting legislation (so corporations cannot write our laws) cannot prevent capital flight. Capitalism, no matter how progressive, can never be democratic because a tiny sliver of the population has so much power over everyone else.