Why capitalism will always outperform other economic models
"A rising tide lifts all boats," says Ken Langone, one of the co-founders of Home Depot as he makes his case for capitalism being the being the best economic model.
"A rising tide lifts all boats," says Ken Langone, one of the co-founders of Home Depot as he makes his case for capitalism being the being the best economic model. He co-founded The Home Depot with his friends Arthur Blank, Bernard Marcus, Pat Farrah, and Ron Brill back in 1978, and today it's a multibillion-dollar company. And while he agrees that capitalism has its downsides, he says that he can point to 3,000 people who started out with an entry-level position at a Home Depot that rose through the ranks and are now millionaires. Ken's latest book is I Love Capitalism!: An American Story.
Ken Langone: Very simply, I could not have accomplished what I’ve accomplished, including my own net worth and including job creation, if I was raised in a country where free enterprise was not encouraged and free enterprise was not the order of the day. It wouldn’t happen.
There are people who legitimately can say they’re self-made, they did it all themselves.
I went out of my way in the book to point out the exact opposite, in my case and only my case, that I was anything but self-made.
I can think back all the way to my childhood to the people that were there that helped me, that encouraged me, that stimulated me, that motivated me, that picked me up when I was down, and maybe sat on me when I got a little too full of myself.
So I make reference to “self-made” as it relates to me and me alone. I am not self-made. That is not false humility, that’s just the truth.
I think a good start is: define self-made. That’s a good start. And I don’t want to go there because we could spend five hours arguing what it means.
In my case I know that, where I am today, without question, only happened because along the way I had any number of episodes in my life where if it weren’t for the intervention of somebody else, where it weren’t for the encouragement, whether it was my mom and dad, whether it was my wife, whether it was a professor, whether it was the guy that ran the liquor store in Roslyn, I can go on and on and on, I know each of those episodes was a building block for where I am today.
And I go out of my way not to determine who is self-made and who is not; I think that’s for each person to decide themselves.
I’m very comfortable saying that I have literally hundreds of thousands of people – you look at Home Depot, for example, I’m one of the co-founders. Why are we so successful? We’re so successful principally because when you go to a Home Depot store you feel wanted, you feel “I can get help”, you feel like these people care about you. There’s 400,000 of them! They all helped to make me successful.
Without them Home Depot would not have been the success it is, and probably I wouldn’t have been known, and probably I wouldn’t have written the book.
Look, I’m not stretching, I’m saying I look at the thing objectively, but again I swear off saying who is “self-made” and who’s “not self-made”. That’s all.
Well, I think capitalism will always do better than everything else for a variety of reasons. One, there is a downside, in other words nothing is certain and there’s a price to pay in failure in capitalism. You lose your business, your business doesn’t succeed, whatever.
The other thing is capitalism I think is a dynamic effort that can result—Bernie, Arthur and I and Pat Farrah founded Home Depot. Our hard work, our creativity, our ability to raise the money to start the company, all those things has resulted in 400,000 people having great jobs today.
But a better number for me: we have 3000 kids—and by the way, so nobody gets offended I’m 82, if you’re under 82 you’re a kid—So we have 3000 kids who started working for us fresh out of high school, didn’t go to college, pushing carts in, that’s the entry-level job, pushing carts in from the parking lot, we have 3000 kids today who are multimillionaires. That’s how capitalism is supposed to work. It’s a shared effort and the results should be shared.
I happen to think we all live better—the old saying a rising tide lifts all boats, I happen to say all of us live better in this country because we have a capitalistic system, a capitalistic system underpinning the whole nation.
I would say that most of us that have benefited mightily by capitalism I think there’s a moral obligation on our part to make sure we bring as many people to the party with us as we can.
Now, this is not judgmental, I’m not suggesting for a minute that what I do is the “right thing” and what everybody else does is the “wrong thing”, what I’m saying is simply this: I feel a strong moral imperative to share my wealth.
I believe in paying all the people—and by the way nobody works for me, everybody works with me, and I believe that—I think all those people have a right to know the better I do, the better they’re going to do, both in terms of lifestyle, in terms of remuneration, in terms of a future.
And that’s the moral imperative of being in a capitalistic system where you have succeeded.
I feel a lot better around all the people who work with me knowing that they have a better life, they live in a nicer home, they go on vacations that they otherwise would not be able to afford, they’re educating their kids—they themselves might philanthropically jump into the pond. So it’s that simple.