Generation Z's anger should be directed at government cronyism, not capitalism.
Photo: FEE
On college campuses, in TikTok feeds, and in everyday conversations, a familiar narrative is gaining traction: capitalism is broken.
Rising rents and stagnant wages fuel the assertion by some young people that the free market has failed an entire generation. According to a 2024 survey by the Institute of Economic Affairs, more than 60% of young Britons now view socialism favorably. In the United States, the trend is similar, and Generation Z is becoming increasingly skeptical of capitalism’s promises.
But much of this idealism stems from distance: many of the young people who idealize socialism have never experienced the economic dysfunction or political repression that often accompanies it. For those who lived through Soviet shortages, the Venezuelan collapse, or East German surveillance, the word “socialism” does not evoke justice or opportunity, but rather fear, failure, and control. There is a reason why so many fled those systems to come to freer countries. What sounds utopian in theory has all too often turned out to be dystopian in practice.
But blaming capitalism is misguided. The real culprit is cronyism—the unholy alliance between big government and big business that distorts markets, stifles competition, and rewards political connections over genuine innovation.
The Myth of Market Failure
Capitalism, in its true form, is based on voluntary exchange. It rewards companies that satisfy people’s needs and desires, and it is consumers who decide what succeeds and what fails. Competition drives improvement, innovation, and lower prices. No one is forced to buy or sell anything; freedom of choice reigns.
Cronyism is something entirely different. In a crony capitalist system, companies succeed not by serving customers, but by lobbying politicians. Profits come from subsidies, bailouts, and regulations designed to crush the competition.
The 2008 financial crisis, often cited as proof of capitalism’s failure, revealed what happens when markets are manipulated. Reckless banks, instead of going bankrupt as they deserved, were bailed out with taxpayer money. Ordinary people lost their jobs and their homes, while those with political connections survived and prospered.
This was not free enterprise. It was cronyism.
The COVID-19 pandemic had a grim aftermath. Small businesses were forced to close their doors by government order. Meanwhile, corporate giants like Amazon—capable of operating under less stringent restrictions or pivoting to online operations—posted record profits. Policies, drafted in the name of public health, often favored large corporations, leaving the middle class devastated.
Cronyism on Both Sides of the Atlantic
Cronyism is not limited to a single country or political party.
In the United States and Europe, the symptoms are the same.
In the United States, Canada, and the United Kingdom, the dream of owning a home is becoming increasingly out of reach for young people. Sky-high housing prices are blamed on “market failure,” but the real cause lies in the many barriers imposed by the government: restrictive zoning laws, burdensome permitting requirements, and endless bureaucratic delays. Large real estate developers who can afford to circumvent or influence the system survive. Everyone else is left out.
The pattern repeats itself in Europe. French labor laws, designed to protect workers, stifle opportunities. Hiring becomes risky and expensive, especially for young people. Large companies, with the resources to manage compliance costs, consolidate their dominance. Small businesses and startups never get off the ground.
There is also the persistent myth that large companies fear government intervention. In reality, large companies often welcome it, because it keeps them at the top. Tech giants like Facebook and Google are now pushing for more regulations, knowing that the new and complex rules will strangle smaller competitors who cannot afford to hire an army of compliance officers. Green energy subsidies, intended to combat climate change, often end up funneling billions to well-connected companies while excluding emerging innovators.
Cronyism doesn't reward the best ideas. It rewards the most influential lobby groups.
Why Gen Z's Frustration Is Justified
Generation Z values justice, creativity, and freedom. These are the very principles that cronyism undermines. When political influence matters more than merit, and when success depends on government favoritism rather than consumer satisfaction, opportunities shrink and innovation slows. But they are mistaken in thinking that “socialism” would be a better option, especially given the rampant cronyism that has existed in every socialist state.
The temptation to seek salvation through government power is not new. The Soviet Union began with a promise of equality and brought oppression and scarcity (except for the party elites). Venezuela promised 21st-century socialism and brought hunger, economic collapse, and political repression. Meanwhile, countries that embraced free markets—even if imperfectly—have created unprecedented prosperity. Free markets have lifted billions of people out of poverty and unleashed innovation that has reshaped the modern world.
Markets aren’t perfect. But they leave the door open for anyone to succeed—not just those born into privilege or connected to power.
Direct your anger toward the right target
Generation Z’s frustration is real and deserves a solution. But the answer isn’t to overthrow capitalism—it’s to put an end to cronyism. A freer and fairer future depends on separating business from political power, not on bringing them closer together.
It means putting an end to corporate welfare, simplifying the rules of the game, and ensuring that competition—not connections—determines who wins.
Justice is worth fighting for. But we must fight in the right direction. If we rebel against cronyism—not capitalism—we can build a future where innovation thrives, opportunities are real, and every member of Generation Z has a real chance to get ahead.
This article was originally published in Spanish by the Fundación para la Educación Económica.
