At the annual World Economic Forum meeting in Davos this year, Klaus Schwab gave a televised interview where he said that stakeholder capitalism will become the ideal economic system for efficiently allocating resources in order to “master ze future.” However, the problem with Schwab’s stakeholder capitalism is that it is inconsistent with its stated ends. Furthermore, Schwab’s ideas are not new. Most of them are variations of old ideas like social responsibility and fixing market failures.

If you live in the United States, you are most likely familiar with empty storefronts, especially in malls. Once-great shopping centers are now suffering vacancies and a lack of patrons. To the readers of mises.org, it should not be surprising that the government is largely responsible. The state, through various interventions, has led to more vacant storefronts and financially struggling malls than there would be otherwise. Let me explain using a personal anecdote.

Some economists have suggested that inflation results when the money supply expands faster than the rate at which goods and services are produced. They correctly point out that this expansion of the money supply will generally lead to rising prices. But what most economists fail to mention is that inflation can exist even when prices are stable.

One of the principles of good public policy is to focus efforts on understanding social problems and searching for effective responses where those problems are serious, not where they are minor or missing. Local problems justify locally focused and decided policies, problems that have effects that are more widely spread justify geographically broader policies, and the broadest problems justify national policies, as illustrated by the federalism of the US Constitution, particularly the Tenth Amendment.