Wednesday Jul 30, 2025
#62: Ruchir Sharma On What Went Wrong With Capitalism
To quote Aerosmith’s Steven Tyler, “There’s something wrong with the world today.” Wealth and income inequality have soared to levels not seen in a century; housing affordability has hit the worst levels on record; consumer sentiment has plunged even though the unemployment rate hovers around 4%; the federal debt is growing exponentially even while inflation still simmers above the Fed’s target leading many to point to the growing risk of a debt crisis. Meanwhile, retail investors speculate in meme stocks and crypto projects employing leverage in a way we have rarely if ever seen before. But the underlying problem common to all of these issues has largely been misdiagnosed. In his latest book, Ruchir Sharma makes a compelling case for What Went Wrong With Capitalism in the United States over the past forty years that has led to many of the challenges we face today. In this conversation, he shares some of the high level themes of the book, including what it will take to rehabilitate capitalism, bringing much needed balance to the economy, and what that process will mean for investors. As the chair of Rockefeller International, he also has a clear vested interest in the outcomes. For notes and links related to this episode visit TheFelderReport.com/podcast.
1 months ago
Having read Ruchir Sharma’s book, I will say he does a commendable job of recounting recent history and exactly what has gone wrong with modern capitalist systems, citing the rise of easy money since 1971 that facilitated the enormous expansion of government with rising public deficits. Exponential debt is certainly the most obvious and disconcerting outcome from the mismanagement of capitalist economies. Sharma also explains how expanding public sectors have created inefficiencies that crowd out private sector growth needed to pay for that public sector spending. He draws parallels to the rise of zombie companies and banking systems in Japan and China, where market clearing pricing and reallocation of resources is prevented by state intervention. The same has happened in the West, in the US and Europe, as central banks have used bailouts, financial repression, and easy credit to shore up faltering markets and banks. In conclusion, Sharma’s main culprit is overprotective government and the bailout culture it has created. His prescription is to get government out of the way so that private market capitalism can flourish. Unfortunately, this prescription is not likely to find much support in the current cultural and political climate. The problem is that Sharma neglects to hone in on the major causes and drivers of capitalism’s missteps and miscues. While he has well-documented those excesses and miscues, he has failed to really explain how and why capitalism has gone wrong over the past 50+ years. Why has the corporate sector lost its sense of proportion and responsibility? Why have politicians paid only lip service to civic responsibility and public service while serving their narrow self-interest in becoming as wealthy as their elite peers? Why has popular culture sunk into a narcissistic pool? How has this happened?