A long time ago in a galaxy far, far away, both Republicans and Democrats agreed that free markets and capitalism were good things. Now we seem to live in a new galaxy where one party is attacking those ideals and the other doesn't have the slightest idea how to defend them. It's past time to change all that.
The people who sit atop our most important financial institutions and political parties need to be aware that free market capitalism is losing a public relations war. I'm pretty sure a lot of very important capitalists aren't quite aware of it. I hope you saw a very stark example of that as it played out on Squawk Box this morning at the Delivering Alpha conference.In an exchange between American Enterprise Institute President Arthur Brooks and Blackrock CEO Larry Fink, Fink expressed incredulity that liberals are opposed to the free market and capitalism in general.
Sadly, Fink is wrong about that. He's not a pollster or a politician, so it's not really his job to know the rhetoric of the Left in general and the Democratic Party specifically. But it's changed and changed radically in the last few years. Capitalism is under vicious verbal attack, and in this case words can really hurt. And it goes beyond political parties and movements. You see it on social media. You see it in the entertainment media. And even religious leaders are amping up the anti-profit rhetoric.
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Perhaps Fink and some of his colleagues are a little stuck in the 1990's, when the Democrats made a point of loudly and clearly professing their support for the free markets. Here's a quiz: who said the following and, more importantly, when was it said?
"The most important family policy, urban policy, labor policy, minority policy, and foreign policy America can have is an expanding entrepreneurial economy of high-wage, high-skilled jobs."
The answer is Bill Clinton, and he said it right at the opening of his acceptance speech at the 1992 Democratic National Convention. Can anyone imagine Hillary Clinton saying that at the very beginning of a speech today? If you can, you really haven't been paying attention.
You haven't been paying attention to the growing popularity of Bernie Sander's campaign rhetoric as he finds a way to blame capitalism for every ill on Earth. You haven't been paying attention to Pope Francis as he called capitalism the "dung of the devil," even as he later admitted he doesn't really understand economics. You haven't been paying attention as the villains in just about every Hollywood movie are people trying to get richer or corporations trying to improve the bottom line, (and yes, I'm aware of the hypocrisy of for-profit commercial movies demonizing profits and commercialism).
Arthur Brooks is one of those people who knows this really isn't funny anymore. His stated goal in his new book is to clarify the very moral and good reasons to be a conservative, but on CNBC this morning he was forced to focus that message solely on supporting the ideal of the free market. That's a good thing because it's one thing if the Republican Party and even conservatism loses popularity, it's another if we throw the baby out with the bathwater. It's important for free market capitalists from both parties to explain that this is the economic model that best helps the poor get out of poverty and also allows people of all persuasions and cultures live with the most freedom. Brooks told CNBC that conservatives need to make this case earlier and more often in public, rather than focus on financial gains and wealth.
Let me point out a specific example of a missed opportunity. In 2009, Goldman Sachs CEO Lloyd Blankfein made his famous "God's work" comment in an interview with the Times of London. Here's part of what he said:
"We're very important. We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It's a virtuous cycle... I'm doing God's work."
What Blankfein should have done was make that quote in reverse order to what he actually said. The Blankfeins and other top capitalists in the world need to start out by talking about how they are helping people get jobs and achieve their dreams. Then get to the part about helping corporations grow. It's not easy, but it's also not complicated. The world's capitalists are not the two-dimensional goons or "Mr. Potter" types you see in the movies. But to push back against that image they need to talk less like a corporate earnings report and more like a preacher in church on Sunday.
And on the other side, the case against socialism and managed economies also needs to be made with the poor mentioned first and not corporate profits. When Bernie Sanders or anyone else calls for more welfare to help poor children, it's important to show how welfare programs actually increase the number of poor children. When the left attacks the profit motive in health care, it's important to show how government price controls on many vaccinations drove many out of the vaccine business and have often left us with dangerous shortages.
There is much work to do, but the first job is getting over our collective denial. This is not 1992 and more and more Americans are indeed confused about why we should be encouraging people to pursue personal wealth so they can do the things they love and spread that wealth via buying more goods and services. It may seem like an awfully simplistic and unnecessary message for the hedge fund managers and CEOs out there, but it's become crucial to clarify these truths no matter what political party you belong to.
When Democratic candidates for president and Popes start making statements so far to the left that they stand in stark contrast to the words of Presidents Kennedy and Clinton, something is very amiss. Larry Fink and his peers cannot ignore the severity of the situation any longer.