Baltimore Left Behind by Capitalism

05/19/2015 11:09 am ET | Updated May 19, 2016

In the aftermath of the Baltimore riots, our politicians unfortunately have failed to articulate any big vision about the underlying cause of the problem and the existence of a poor underclass in America.

So why do we have a poor underclass? Why does a poor underclass exist in our society?

It is not due to single moms. It is not because schools are substandard in poor neighborhoods. It is not the product of white racism against black people. It is not a result of police officers shooting black citizens without justification.

While these various issues may exist and may warrant mitigation, this is not what created such a large underclass. Solving these various issues, while important, will not solve the overall problem. Even if all illegal police violence were magically ended this instant, the underclass would still exist, and it would still be plagued with all the same problems of poverty, crime, blight, and lack of opportunity. The current focus on police misconduct is merely treating a symptom of the disease while ignoring the cause.

If we wish to get serious about helping the poor underclass instead of just policing it, then we must be honest about what is causing it. We must be willing to face our own imperfections as a society. It's time. And we can handle it.

So let's face facts and call a spade a spade. The problem is, in fact, "systemic." It is not just a little wrinkle here or there that can be quickly ironed out. The problem is that we have a very serious flaw in our overall system.

Our beloved economic system of free-market capitalism based upon competition leaves a significant number of people behind.

Yes, it's true. And it is plain to see. Now, this is not to say that we should scrap our entire economic system and start over from scratch. No. Our system has plenty of positive aspects so let's not throw out the baby with the bath. But we must stop pretending that our system is a model of perfection that offers equal opportunity to everyone. It does not. Instead, we need to openly address the critical flaw in our system and begin a national discussion about solutions, particularly during this upcoming presidential campaign.

The essential problem is that our entire economic system is based upon the massive underlying assumption that whatever activities earn the most money, will also deliver the greatest benefit to society. While this may have been largely the case a couple hundred years ago when our system was established, it is hardly the case today. We now know full well that highly profitable activities can inflict enormous damage upon society, like polluting the environment, engaging in monopolistic practices, selling cigarettes and on and on.

Today, corporations have hit upon a new bonanza for increasing their profits, which is to cut expenses from the workers. It is like a modern day gold rush. And who could blame them? After all, they are just doing what corporations are supposed to do. Namely, make more money. This is what our system incentivizes them to do. As a result, the corporate shareholders and senior executives become ever more wealthy by cutting expenses from the workers down below and redistributing this money up to themselves at the top.

This has caused the great population of workers in the middle and lower classes to fall further and further behind. Corporations have imposed upon workers measures like freezing or cutting wages, increasing the employee share of health insurance, ending 401(k) matching programs, eliminating pension programs, rightsizing, outsourcing, downsizing, centralizing, and just plain old layoffs. Globalization has been an enormous factor with corporations eliminating high-paying U.S. jobs and relocating them overseas to exploit ultra-cheap foreign labor. As a result, money is shifted away from the workers and into the pockets of wealthy shareholders and executives. We see this reflected very clearly in the statistics of income inequality with the rich growing ever richer and the vast majority of the people growing ever poorer.

Let's face it, this failure is a systemic failure. Our system does not prohibit this destructive behavior, but in fact, our system actually incentivizes this behavior. Our system rewards people with fabulous wealth for engaging in activity that clearly harms society. This is not how our system is supposed to work. Our system is supposed to reward only activities that benefit society, not that tear it apart.

The situation in Baltimore illustrates the result of the systemic flaw in our economic system. We clearly see that a significant portion of our society is being left behind to struggle.

The vast underclass in this nation was not caused by single moms, and it will not be fixed by enhanced training of police officers. We need to start addressing the bigger picture here that our system of free-market capitalism and competition is failing to adequately distribute wealth to the middle and lower classes. We need a more fair economic system that does not incentivize exploitation, but instead, that prioritizes financial security for all human beings throughout our society, regardless of color or test scores.

We need a system that works not only for a privileged few, but that works for all of us together.