Capitalism Kept An Imperfect Promise

The below is authored by a US immigrant from the Soviet Union and appeared in Barron’s magazine.

In a time when socialism and Marxism have become a trend in US politics, it provides a first-person perspective.

30 Years After the Soviet Fall, Capitalism Kept an Imperfect Promise

About the Author: Vitaly Ketselson is the CEO of IMA, a value investment firm in Denver, and the author of the upcoming Spirit in play: The art of a meaningful life.

On December 4, 1991, my family “got off the boat” from Russia – we landed at JFK, our stop on the way to Denver. I was 18 years old. My father moved my entire family to America for the better life of his children; Little did he know that the Soviet Union would collapse a few weeks later. I learned about America mostly from American films, which were highly biased towards coasters and skyscrapers, except for Westerns. Denver was flat, sunny and unusually hot. In the middle of winter, people used to wear T-shirts.

This was not the only surprise for us.

At the airport, we were picked up by half a dozen strangers from our aunt’s synagogue. They took us to our fully furnished apartment. It was shocking for me. I was brainwashed into believing that American-capitalist pigs would sell their brothers to supersize their Happy Meals. These cold-hearted capitalists put their time and money into taking care of people they had never met.

In Soviet Russia, everyone was (for the most part) equally poor. My family, despite my father’s high salary (he had a doctorate, which increased his salary), lived paycheck to paycheck. Our understanding of money, especially mine, was very limited – we never had.

Money and power often expose a person. Sometimes you like what is revealed; Many times you don’t. I am an investment manager. As an occupational hazard, I’ve spent time around some very wealthy people, and I haven’t seen any extra dose of happiness in them.

Money solves money problems. It doesn’t make people love you; Your actions do Money, like education, should buy you options. It should provide security. In the first few years in America, my parents were worried about how we would buy groceries and pay rent. Today we are not worried about that – and that is liberation.

After we arrived, I spent a few months knocking on the doors of every business within walking distance of my apartment. I didn’t realize it at the time, but the country was in recession. It was very difficult to get a job. Every member of my family needed to work.

When I got work in a restaurant on night shift, whatever I earned, till the last penny, I gave to my parents. This money went to food and rent. My stepmother, who was a doctor in Russia, was now cleaning rooms in a hotel.

Those were tough years, but I wouldn’t trade them for anything. He taught me to work harder than anyone else. I don’t know if I was staring at the starvation for success, the fear of failure, or what this country had to offer compared to my life in the Soviet Union. Maybe all of the above.

Yes, this country has kept its promise. But as I consider spending the bulk of my adult life here, I realize that I understand this country less today than I did 30 years ago.

The country has become tribal in the last decade. We outsource our thinking to the tribe’s native ship. Other tribes become our nemesis, and we lose subtlety. Tribalism has started affecting our freedom of expression. No, the government is not going to send you to the Gulag for your political views. We do it by ourselves by canceling each other out.

The more we self-censor, the less free we become. As nuance is lost, we lose practicality and flexibility, and we all follow the path of empires. They get too rich, overextend, think they are better than others, and then fail.

I see the same thing happening at the corporate level. As great companies win, they lose paranoia and a healthy sense of perspective. Their culture hardens, and they begin to think that success is a God-given right. Hubris creates an opening for the competition. iBM, GE, Xerox, Kodak, Polaroid, a one-time hallmark of this country, is now a sorry shadow of itself.

It saddens me to see the younger generation living under Soviet socialism and romanticizing socialism as an investor. When you tell them that every country that tried failed, they respond that they would do it better. Socialism doesn’t fail because of the quality of the people involved – no one thinks Russia or Venezuela would be successful if only they had better bureaucrats. Socialism simply counters our genetic programming.

Alignment of incentives is paramount to the success of any enterprise. The encouragement of government bureaucrats is not linked with the success of the country but with the keeping of their jobs. Compare SpaceX to the space program run by the US government. Capitalism is far from perfect, but it is the best system we have.

I am still optimistic about America, but we should not take our success for granted. As immigrants fresh off the boat, so we must go hungry.

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