Destroying Capitalism

FOR A BRIEF PERIOD OF TIME, capitalism worked well in America. That period was from roughly 1945 to the late nineteen seventies, the most prosperous economic era in American history, when a single familly breadwinner could comfortably support a family of four on minimum wage, incredible as that seems now. Corporations were a partnership between workers, shareholders, and stakeholders: Emoloyees could usually count on an entire career with one firm, and a comfortable pension and shiny gold watch upon retirement. All this resulted from decades of unionization and attendant violence on the part of ownership. Thugs were used to beat up organizers, but organizers ultimately prevailed. The prosperity continued until about 1973, when the Arab oil embargo exposed American dependence and blew up energy prices, a big fly in the financial ointment, so to speak. Seldom before and never since has such prosperity returned, all economic measures considered. Then came Jimmy Carter, and the beginnings of deregulation. Reagan put it on steroids, metaphorically. Much too much deregulation. Capitalism works better when constrained and shaped by big government rather than when unfettered from it. Capitalism does not automatically work on its own without help. Neo-liberal supply-side trickle down Reaganomics works poorly and distributes prosperity in highly concentrated doses. Demand side trickle up economics works, verifiably. Wealth is produced at the economic bottom, the foundation, the workers. As Buddha might have said: "This is a law eternal". John Maynard Keynes has spoken. Enter "Neutron Jack" Welch, G.E. CEO from 1981 t0 2001, and his twenty year crusade to change corporate behavior. He role modeled the destruction of honorable, effective, widely prosperous corporate business models, breaking capitalism, as detailed cogently in a recent book by NY Times writer David Gelles: "The man Who Broke Capitalism". Thinking entry workers disposable like plastic razors, Welch slashed the General Electric workforce by a hundred thousand, booting the bottom twenty percent, measuring production subjectively. No more pension nor gold watches. Instead the far less generous 401K, which Welch did not invent but readily embraced. Welch introduced "share price maximazation", according to which stock price became the overarching concern, eclipsing worker compensation, and supplanting the ideal that share price should be the natural product of overall corporate performance. A company buying back its own shares to inflate their value artificially, cutting worker wages, etc.. Other companies emulated this. The stock market soared in the eighties, with this dubious business model. A paper tiger, sitting atop worker's backs. Welch lived like a sultan, with personal jets, posh meals and vacations, all at worker expense, even after retirement. Others imitated. He became the first ever CEO billionaire. Many others followed. Thus began the great American money mmigration from bottom to top, which endures today, only more so. Twenty percent of the American population now owns eighty percent of the nation's wealth. It getting worse. We can and must do better, to save capitalism from itself. The more widely wealth is distributed, the greater the societal demand for goods and services, and the more toasters G.E. can sell. In "The Man Who Broke Capitalism", author Gelles offers an arguably effective prescription. The prescription is progressive, and will be called "socialsim", or even "communism" by the benighted right wing. Stay tuned.