Capitalism’s Better Angels Have Emerged to Revive the American Dream

There is no denying that American capitalism has built the modern world. Consider that 7 out of the top 10 public companies in the world are U.S. companies, while out of the top 100, 54 are from these United States^[1]. American capitalism celebrates the entrepreneurial spirit, its ingenuity, its hard work, and innovation; and the rewards have been there. Of the top 10 billionaires in the world, 6 fly the stars and stripes, and among all the world’s 2,668 billionaires, about 27% are based in the U.S^[2]. This wealth was built by the legacy economy in which business owners and management were not fully aligned in the success and sustainability of the business with the rank-and-file workers, nor with outside investors (public or private).

Like a butterfly emerging from its cocoon, the post-pandemic world is different from just a few years ago. And with the continued rise of information technology, communication technologies, and real-time data, businesses, and therefore markets, are able to adjust very quickly to real-time changes in consumer demand, interest rates, and other micro- and macroeconomic variables. For evidence, one just has to track the market and consumer reactions to the U.S. Federal Reserve increasing interest rates at an historic pace that most living Americans have not experienced.

The emergence of shared/employee ownership has long been a European and Latin American success story and not so much an American one. The share of businesses that are employee owned has remained flat for decades. Yet, in the last two years, a number of emerging asset managers such as my firm, Good Scout Capital, as well as the big players like KKR, are advancing employee ownership to properly align incentives for everyone in the capital stack, among which rank-and-file employees in manual labor jobs were absent from. No more! The adoption of shared and employee ownership is emerging in other sectors as well, demonstrating a whole of economy approach. Philanthropy has reset their aim with better equipped programs and accountable diversity and inclusion goals^[3], while in government, laws^[4] passed to support and incentivize these types of companies will go into action this year.

At Good Scout, our approach to investing is held together with deep gratitude for what our ancestors did to get us to this place. Landing in America is a beacon of hope. We have lived it. We are children of immigrants. My dad came to this country with 8 dollars in his pocket, and my sister and I completed our graduate school degrees debt free. There are very few places in this world where something like this could happen on the scale that it had. Recognizing our roots gives us the motivation to reinvigorate the American dream. We don’t have to reinvent the world; we just need to focus the strength of our system on more sectors to grow the pie larger.

This blog is part of the Breakthrough Strategies with Emerging Managers Thought Leadership Series, providing perspectives and experiences from emerging fund managers. The series is a partnership between Confluence Philanthropy and ImpactAssets.