By Michael Califra (D) and Ilya Galak (R)
“Well first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy; it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests…”
All corporations, whether American or foreign, look out for their own interests. And their interests are exclusive to growing profits and increasing share prices.
But does the pursuit of a fatter bottom line and increasing shareholder value absolve corporations of any responsibility to the stakeholders in our society?
To their employees, local suppliers, or the communities of people who spend their hard-earned money on the products they produce? Can they be faulted for pursuing what the economist Milton Friedman argued were simply CEOs, CFOs and corporate boards acting as “individuals pursuing their separate interests” when they close American factories and move good-paying American jobs to slave wage countries like China?
Should we care when a corporation like Burger King moves its corporate headquarters to Canada in order to avoid paying US taxes, even though it uses the Interstate highways and other expensive infrastructure the rest of us pay for to service its more than 7,000 restaurants across this country?
Over the last 30 years, American corporations have been willing to sacrifice the stakeholders in our communities to the religion of increased returns for shareholders with devastating results for working people and the American middle class.
60 years ago, Americans took stakeholder capitalism for granted. With a labor force that was one-third unionized, working people had real bargaining power with even the largest corporations and benefits like heath insurance and pensions were common place. Wage gains spread though the economy as working people with increasing disposable income bought products made in the USA by American workers.
By the 1980s, that system was being systematically dismantled. Corporations began venerating shareholders and throwing stakeholders under the bus in order to increase stock prices and thus a corporation’s value. The prevailing political culture of the time aided that transformation.
The way to prosperity, it was alleged, was to coddle the wealthy, deregulate businesses and undermine the labor movement. Taxes on the wealthy were slashed and corporate raiders pursued hostile takeovers of companies with the exclusive goal of increasing shareholder value at the expense of the stakeholders.
The result is what we see today – good-paying manufacturing jobs gone; a middle class under stress, and income inequality at levels not seen since the Gilded Age.
All this was not inevitable. It was not preordained by competition or by an interconnected, globalized world. Other countries – highly unionized and high-wage countries like Germany – took a different path and did not abandon stakeholders or hollow out their industrial base.
It happened in the USA because of choices we made; because of a bill of goods we were sold. Those choices turned out badly and the bill of goods fraudulent. It is time we as a nation recognize that the economic polices of the last 30 years were the wrong polices. If we really care about reviving the American dream and middle class we need return to the policies that made fulfillment of that dream possible and created that middle class. It is time to focus on ways to restore power to the stakeholders in our society.
That requires reforming the campaign finance system to insure politicians work for all the people and not just those wealthy enough to fund their campaigns.
We also need to reform business practices that emphasize short-term increases in stock prices above all else and start enforcing antitrust laws again. We need policies to bring back manufacturing and create new industries to replace those that won’t return.
And we need to give as many workers as possible the power to collectively bargain so their wage gains can again ripple though the economy, increasing prosperity for all. That should also include a system where workers’ representatives have a seat on corporate boards so that the lives of stakeholders should not subject exclusively to the whims of CEOs who have abandoned them in the past.
If all this sounds like a heavy lift, it is. Yet it is possible. We’ve seen the scales of justice heavily tilted toward the few swing toward greater equality many times in the history of this country. But only when the people rose up to demand it.