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 earning ever more profits and increased share prices.
But does the pursuit of increase shareholder value absolve corporations of any responsibility to the stakeholders in our society; the 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 if 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 to service more than 7,000 restaurants across this country to generate returns for its shareholders?
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, stakeholder capitalism was taken for granted in this country. 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. The shareholders had replaced stakeholders with the goal of increasing stock prices and thus a corporation’s value. The political culture of the time aided that transformation. The way to prosperity, it was alleged, was to coddle the wealthy, deregulate business and undermine the labor movement. Taxes on the wealthy were slashed and corporate raiders pursued hostile takeovers of corporations with the exclusive goal of increasing shareholder value at the expense of the stakeholders and often against the desires of corporate management.
The result is what we see today; good-paying manufacturing jobs gone; a middle class under stress; 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 turned out to be fraudulent. It is time we as a nation recognize that the economic polices of the last 30 years were the wrong polices.
That to revive the American dream and the American middle class requires a return to policies that made fulfillment of that dream possible and created that middle class. It is time to focus on the way 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 merely 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.
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. Furthermore, we need a system where workers’ representatives also sit on corporate boards and have a say in the decision making process. The lives of stakeholders should not subject exclusively to the whims of CEOs who have abandoned them in the past.
All this is possible, but only if we demand it.