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Capitalism and Its Critics

February 26, 2020

“Capitalism and Its Critics”

Ambassador Nikki R. Haley

February 26, 2020 / Hudson Institute

Thank you, NAME, for that kind introduction. 

It’s a great pleasure to be at the Hudson Institute.  Hudson is in the forefront of the battle of ideas.  Ideas about what makes America strong and prosperous.  Ideas about what makes the world freer and more just.  I’m honored to be with you.

I came here today with a simple goal. To remind us why capitalism is the best economic system the world has ever seen.

A growing number of people have forgotten this fundamental truth.

The Democratic presidential candidates are embracing socialism.  And some in more traditionally conservative circles are calling for a “watered-down” version of capitalism.  

While these two camps are different, they are the same in one key respect.  Both are dangerous to the American people.  For the sake of our children and grandchildren, America’s future must be built on an actual capitalist foundation.


I’ll start with the people and place I know best: My family and my home state of South Carolina.

I’m the daughter of Indian immigrants. My parents left lives of relative privilege in India to move to America. They wanted to give their children the best shot at the best life. It took them to the town of Bamberg, South Carolina, population 2,500.

When I was growing up, my mother did what so many immigrants do. She started a small business. A retail clothing and gift store in one of the most rural parts of the state. It was a family business in every sense of the word. Started from scratch.

When I was twelve years old, my mother’s long-time bookkeeper announced she was leaving. After a couple of weeks of not finding a replacement, the bookkeeper got concerned. She had to train someone to take her place and time was growing short. She asked my mom how she wanted to handle it.

I happened to be walking past at that exact moment. My mom grabbed my arm and said, “Train her. She can do it.”

By the time I was 13, I was doing taxes, keeping the ledger, and balancing the expenses and bank account. It wasn’t until I got to college that I realized that wasn’t normal.

Now I realize it was totally child labor.

I love telling this story for many reasons. Mostly because it shows the promise of America.

This is a country where a woman can start a business.

Where she can hire neighbors and give them a good paycheck.

Where people can find different jobs, better jobs, that match their talents and passions.

This is a country where someone who wants to make the world a better place can.

And for all these reasons, this country has lifted up more people, unlocked more progress, and unleashed more prosperity than any other country in history.

This is America. And the American system is capitalism.

Many people avoid saying that word, including some conservatives and business leaders. Some think it’s a “politically incorrect” word. But we shouldn’t be ashamed of capitalism. It’s another word for freedom. And it springs from America’s most cherished ideals.

We all know the most famous phrases from the Declaration of Independence. “We hold these truths to be self-evident.” We are “endowed by our Creator with certain unalienable rights.”

But while we know these words, we often forget their meaning. Yes, they mean free speech, freedom of religion, and other fundamental rights. But the Founders knew that economic freedom was also essential. What good are our rights if our homes and savings can be taken? Are we really free if we own nothing and the government owns everything? Of course not.

So while the Founders never used the word, they gave us capitalism in all but the name. And over the years, we’ve proven that capitalism can work for everyone.


It is a myth that capitalism is just for the wealthy or big corporations.

It has benefited workers and communities most of all.

It is also a myth that capitalism is all America stands for. We have other deeply held values that make our economy and our country stronger.

We don’t allow sweatshop working conditions in America.

We’ve invested in a vast public education system to help our children learn the skills they need.

We’ve created a social safety net to make sure our friends, family, and neighbors don’t fall through the cracks when they fall on hard times.

As Americans, we don’t want a country where people get left behind.

And we don’t want a country where government tells people, “You can’t aspire to a better way of life.  We’ll just try to make you comfortable with the life you have.”

We want a country where every American can get ahead.

And we have made tremendous progress.

Every American is massively better off today than our ancestors were.

In 1800, no one had electricity. If you needed to go somewhere, you probably walked. You were lucky if you lived to the age of 40. One-third of children didn’t live past the age of five.

Then Americans did what we do best. We worked hard. We invented things. We gave more people the freedom to pursue their dreams. We reached for the stars. And we never let anything get in our way.

Now we drive cars. We fly in airplanes. We have the internet, computers, and cell phones. Average incomes have soared by more than 4,000 percent. Amazing medical breakthroughs mean we live twice as long. And America is just getting started.

But it’s not just us. Capitalism has transformed the world.

Two hundred years ago, 94% of the world lived in extreme poverty. Today, it’s 10%.

Much of this drop happened in the last 40 years, after Soviet communism collapsed in Russia and Eastern Europe, and after Communist China adopted sweeping market reforms.

It’s a similar story with childhood disease, literacy, and even the environment. You wouldn’t know it from listening to the gloom and doom of the left, but the facts are clear. The world is getting cleaner, healthier, and wealthier.

And the main reason is capitalism.  Everywhere capitalism takes root, people do better.

We should celebrate this, not apologize for it.


I’ve seen capitalism from two perspectives: Private life and public life.

My family’s experience taught me that capitalism can lift up families and communities. It also taught me that government can have your back, or it can stab you in the back. That lesson was a constant reminder when I got elected.

As Governor of South Carolina, I would always talk about how hard it was to make a dollar, and how easy it was for government to take it. My goal was to flip the script and come down on the side of workers and job creators. I wanted to make it clear that government was there to serve the people, not the other way around.

We started by changing the government culture. We had all state employees start answering the phones by saying, “It’s a great day in South Carolina. How can I help you?” They hated it. But I wanted to remind them that they worked for the person on the other end of the phone.

I told my agencies that time is money, and if you were costing a person or business time, then you were costing them money, and that was no longer acceptable. We had every agency streamline things. We were determined to set businesses up to succeed, not regulate them into failure.

The results were incredible.

We attracted over $20 billion in new capital investment. We were number one in foreign capital investment. Number one in export growth. We were building more BMWs than any place in the world. We recruited Volvo and Mercedes Benz, and five international tire companies. By the time we ended our administration, business and trade magazines named South Carolina “the beast of the southeast,” which I loved!

And best of all, our state unemployment rate hit a fifteen-year low. When I left office, more South Carolinians were working than ever before.

Now, remember, this is the same South Carolina that just one generation before was devastated by the collapse of the textile industry. For over a century, textiles dominated manufacturing in our state.  The process of shifting away from it was wrenching. Real people in real communities suffered.

But our answer was never socialism. The same communities in upstate South Carolina that once had textile mills today build cars, tires, and medical devices. The region has never had more jobs or better wages than it has today.

South Carolina is proof that capitalism works, and it works best for working people. I’m proud of our state and I’m proud of our record.


Then I went to the United Nations. More than anything else, that experience demonstrated to me just how exceptional America is. How fortunate we are to have the system we do.

Even with all the progress of the last few decades, there’s still too much pain and poverty in the world. There are many causes. But the biggest cause of human suffering is socialism.

Socialism is the polar opposite of capitalism. It’s the dangerous idea that the government should control the economy. That government should control your ideas, your property, your money, your lives.  And the consequences are well-documented and heartbreaking.

Socialism has failed everywhere it’s ever been tried. Instead of prosperity, it leads to poverty. Instead of opportunity, it creates dependency. Instead of liberty, it means oppression at home and often means aggression abroad. Instead of hope for a better tomorrow, socialism means a living nightmare every single day.

Look at North Korea. Its governing document is literally called the “Socialist Constitution.” While I was ambassador, the UN released a report documenting that country’s plight. About 70% of North Koreans require food aid. More than one out of five young and middle-aged women are malnourished. Nearly 30% of children are physically deformed from hunger. Torture and murder are the rule in the world’s deadliest gulags. And North Korea’s leader dreams of overtaking his southern neighbor and threatening America.

Across the border, in China, while the introduction of market capitalism has done wonders for the economy, the socialist political system has created the world’s most repressive nation. Nearly 1.4 billion people are under constant surveillance. Corruption is everywhere. In Xinjiang [SHIN-john], millions of Muslim Uighurs have been thrown into modern-day concentration camps, forced to change their names and drop their religion. Where people do have a choice, in Hong Kong and Taiwan, no one is choosing the Chinese socialist model.

Closer to home, socialism is alive — but not well — in Cuba and Nicaragua. I dealt with these countries as ambassador. My heart broke for their citizens. They live with tyranny beyond anything Americans would recognize.

Yet nothing moved me like the suffering of the good people of Venezuela.

In 2018, I stood on the Simon Bolivar Bridge, which crosses from Venezuela into Colombia. I watched thousands of Venezuelans go by. Entire families walking in the blazing heat for hours to get to Colombia where they would have the only meal they would eat that day. The average Venezuelan lost 24 pounds in 2017 alone. Three million have fled their homeland. They are literally fleeing socialism.

The socialist dictator Nicolas Maduro, propped up by his Cuban socialist allies, has run Venezuela into the ground. It was the richest country in Latin America when it was capitalist. It also had free and fair elections. Now Venezuelans are digging in trash cans and killing zoo animals for food.  Millions are sick, starving, and denied the most basic political freedoms.

The same day I stood on the Simon Bolivar bridge, I met a Venezuelan family and held their beautiful baby girl. Her mom was emotional. She said she never wanted her baby to grow up that way.

Socialism is a total disaster. And as Americans, we must condemn it, wherever it exists.


That is why it is truly amazing to see how socialism has become trendy in parts of America.

These days, it seems like socialism is everywhere.

It’s in our colleges and universities.

It’s in Congress, where an up-and-coming Congresswoman says, “capitalism is irredeemable.”

It’s at the highest levels of society and politics.

Right now, the Democratic presidential frontrunner is an avowed socialist named Bernie Sanders.

Only in a prosperous country like America can people be so flippant about capitalism and so naïve about socialism. Do you know where people aren’t demanding socialism? Venezuela. Nicaragua. North Korea. Every socialist country ever.

It’s at this point in the argument that defenders of socialism usually say that of course they don’t mean the socialism of Venezuela or China. 

Their version is different, they say.  It’s kinder and gentler.  They point to Scandinavia.

The same Scandinavia where Sweden tried socialism, saw it fail, and went so far in the other direction that it now has one of the freest economies in Europe.

The same Scandinavia where Denmark cut its business tax rate by more than half.  The Danish Prime Minister criticized Bernie Sanders and said his country is a “market economy.”

And get this. Finland’s president was recently asked if his country was socialist. His response: “No, God bless.”

Other democracies have tried socialism.  Israel, India, and the United Kingdom went through periods of socialism, only to abandon it. Their people are markedly better off as a result.

This trend in America must be taken seriously. An entire generation has grown up without knowing the suffering caused by socialism in the 20th century.  America’s collective amnesia is becoming a real threat. We owe it to ourselves and to future generations to educate young Americans about where socialism leads.

We have the facts on our side. But more than that, we’ve seen the faces of socialism’s victims. Their stories deserve to be heard. Stories of breadlines that stretch around streets. Stories of empty grocery stores and hospitals without medicine. Stories not just of poverty, but of oppression, torture, and murder. Just ask any of our fellow American citizens who fled socialism. They know the truth — and we need to tell it.

This is a fight we must wage, and win. We must promise each other, and future generations, that America will never become a socialist country.


But socialism isn’t the only thing we need to guard against.

There’s a growing trend of people who reject socialism and capitalism. They say the free market is broken, and it needs to be fixed. I find this strange, because it often comes from people who should know better.

Take the Business Roundtable. It includes the CEOs of America’s biggest companies. Last year, they tried to redefine the role of business. These corporate leaders want companies to focus not on business, but on some vague notion of helping “stakeholders.” They seem embarrassed by their companies’ success.  They shouldn’t be.

What the Business Roundtable says it means by “stakeholders” is customers, workers, and communities. This is puzzling.

It’s puzzling because in a capitalist economy, companies must tend to their customers, employees, and communities in order to succeed.

A company that doesn’t serve its customers, doesn’t have them for very long, and will go out of business. 

A company that doesn’t reward its workers sees them go to work for a competitor. 

A company that is not a good citizen in its community breeds resentment and ultimately will not prosper.

A cutthroat company that cheats its customers, abuses its workers, and offends its community is going to fail every time.

The Business Roundtable knows this. They know what capitalism is and why it works.

The thing that allows abusive companies to survive is misguided government policies.

Remember Solyndra?

It was supposed to cure global warming and create thousands of jobs. 

It did neither.  And when it went bankrupt, taxpayers were left holding the bag.

Which brings us to other critics of capitalism.

Some conservatives have turned against the market system. They tell us America needs a “new kind” of capitalism. A different kind of capitalism. A hyphenated capitalism.

Yet while these critics keep the word capitalism, they lose its meaning.  They want to give government more power to make more decisions for businesses and workers. They differ from the socialists only in degree.

Others reject capitalism in the name of the environment. Too many young Americans are being convinced that the only way to save the planet is to reject capitalism.

The opposite is true.  Only countries that succeed economically have the resources and political will to demand a cleaner environment.  Our capitalist economy continues to grow even as our carbon emissions decreased in 2019.

It falls to all of us to explain to young Americans that if they care about preserving the environment, they should care about preserving capitalism.


That is not to say our system is perfect. Of course it’s not.

The critics of capitalism – whether socialists or embarrassed conservatives — have pointed out some real issues. They are just wrong when they try to diagnose the underlying disease.

They’re right when they say too many businesses engage in corrupt self-dealing. We saw it in the housing crisis of the last recession. We see it today with some anti-market monopolistic behavior. But that’s not capitalism. It’s corruption. It’s often illegal, and it’s always immoral. Corruption has no place in a free market. Everyone deserves an equal shot.

They’re right that too many special interests get special treatment. But that’s not capitalism either. That’s cronyism and corporate welfare. It destroys a level playing field and rigs the economy in favor of the well-connected. We should expose it and root it out.  And no company should ever get a taxpayer bailout.

They’re also right that some communities in the American heartland have suffered ill effects from globalist economics.  But globalism and capitalism are not even close to synonymous.  Take it from me, at the United Nations, I had a front row seat to witness the values of the multilateral bureaucrats. I assure you capitalism was not among them.

Finally, critics of capitalism are right that income levels are unequal in America. Income inequality will always exist in a free economy. That is not capitalism’s proudest feature, but it’s infinitely better than the alternative. Under socialism, everyone is equal. But they are equal in their poverty and misery. Most Americans don’t want to imagine John Lennon’s world of no possessions. We want everyone to have the opportunity to prosper, and capitalism creates that.


Our country has problems. Most of them are driven by cultural decay and big government, not by businesses or billionaires. Broken families. Insecure borders. Schools that cost too much and teach too little. A safety net that often traps people. Capitalism can’t be blamed for any of these problems. In fact, it can solve them. And the past few years have proved it.

President Trump has tackled economic issues head-on, from trade to taxes to red tape. Unemployment has hit a 50-year low. Wages are up for working people. Food stamp rolls are down. Companies of all kinds have created millions of new, good-paying jobs. The stock market has created trillions in new wealth, helping millions of retirees. After decades of investing overseas, our businesses are investing in American towns and American workers.

The United States is on a roll. Because this administration brought capitalism back.

Socialists and hyphenated capitalists have no good answer to this. And if their diagnosis is wrong, then it stands to reason that their cures are wrong, too.

Their so-called “solutions” always end up with the federal government taking a bigger role in telling businesses and workers what to do, how to invest, how to live. More tax credits here. More subsidies there. More mandates for this. More regulations for that.

The underlying assumption is that they can design a better economy.

My question to them is simple. If politicians can best run the economy, then why is Washington, D.C. such a mess?


There’s also another big problem with this approach.

For conservatives, the trend toward asking companies to get more involved in public issues is dangerous. If companies jump into politics, we’ll get more corruption, more collusion, and more corporate welfare, not less.

And by now we should all realize just how captive the corporate world is to liberal political correctness.

Disney threatens to pull out of Georgia because of a pro-life law.

Pension funds consider boycotting Israel and bowing to anti-Semites.

Google refuses to work with the Pentagon to keep America safe, even while its search engine is freely used by terrorists.

This is what happens when companies become activists. It’s rarely a good thing for conservatives. And it’s bad for workers too.  Few things are more dangerous than big government and big business in bed with each other. Businesses should stick to business.

At the end of the day, hyphenated capitalism is no capitalism at all. The better name for it is socialism lite. And it’s just a slippery slope to the full-blown thing.


I don’t believe we’ll get there. Because I believe in the American people. We have proved for nearly 250 years that capitalism works.

As Americans, we cannot give up on the values that made us the envy of the world. We must put those values to work once again, as we are doing today.

And while we renew our economy at home, we must proudly promote our principles abroad. Foreign adversaries like Russia and China seize on our failure to defend our way of life.

We must respond to the critics with the truth. Capitalism can end poverty, feed the world, and cure disease. Capitalism can give every child the chance not just to dream, but to do. That’s the hope that every parent has for her children.


And so, my thoughts come back to my family. My mom. My dad. My sister and two brothers. The six of us together, making our way in Bamberg, South Carolina, where our neighbors didn’t know who we were, what we were, or why we were there. We were there because my parents knew that in America their children would be better off than they were. I thank God every day for their decision to come here.

Our journey was unique, but our story was not. It is the same story that generations of Americans have lived. A story of hope, hard work, hard times, and hard choices. A story of belief that tomorrow will be better than today. It was. And it still can be for this generation, and all who follow, if we make the right choices.

Speaking for myself, I will never forget the lessons I learned in my mother’s store, and in all the days since. And I will never stop being the loud and proud ambassador of those principles to my country and the world.

Thank you. And God bless America.

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