Howard Marks founder, Oaktree Capital
In his latest memo to clients, billionaire distressed-debt investor Howard Marks admits he is increasingly concerned about rising “anti-capitalist sentiment” in the US, driven by left-wing populism. Democratic socialist US senator Bernie Sanders lost a leadership challenge to Hillary Clinton before the 2016 presidential election.
However, notes Marks, the “left wing of the Democratic Party is becoming a formidable bloc.” Two of Sanders’ fellow members of the Democratic Socialists of America, Alexandria Ocasio-Cortez and Julia Salazar – both of whom describe themselves as “radical” – won elections last year in New York.
The problem, says Marks, is that “for the 60 years… following World War II, much of the world enjoyed a rising tide of prosperity that lifted all boats”. As a result, most Americans happily accepted capitalism and free markets. But now, people feel that “the tide is no longer rising to the same extent… Their unhappiness crystallises in populism”. That ire needs a target – capitalism.
“Increased equality of income and improvement for people below the top… are worthy goals, and I support them,” says Marks. However, eroding property rights, intervening in the running of private businesses, and putting up top tax rates above 80% – as already proposed by some Democrat presidential candidates – “would be worse for just about everyone”. Marks notes, paraphrasing Winston Churchill: “I’m convinced that capitalism is the worst economic system… except for all the rest”.