Good Capitalists

Some of us didn’t get the memo, the one about capitalism being the best thing ever. So we didn’t set out to become rich, only successful – successful at something useful to others, or if not that, something that wasn’t entirely pointless, or if not that, something that wasn’t degrading, or if not that, at least something that wasn’t soul-killing, as no one wants to live a life of quiet desperation. Getting all the good stuff and the endless competition for it, and all the scorekeeping – the proper display of that good stuff along with a healthy portfolio of cleverly assembled growth investments, and golf with the right people – seemed kind of stupid. But maybe that was a sixties thing. Our fathers, the go-getting Willy Loman salesmen of the Ozzie and Harriett fifties, were proud of that solid house in the suburbs, and the big new car, with big fins, in the driveway. They came of age in the Great Depression. They worked hard, through the hardest of times, for that good stuff – and they wanted to show it off. It symbolized triumph in the face of long odds in a dog-eat-dog world, an economic system where only the bold and brash, or the clever, survived. And they did more than survive. So they loved competitive capitalism. They had won – and they didn’t understand the kids at all. Their kids shrugged at the whole idea of the wonders of capitalism, if they weren’t out in the streets protesting The System and The Man, or worse yet, off living in a commune somewhere raising goats. It must have been infuriating. But you love your kids, and if your son decides to become an English teacher, that’s not a tragedy, or only a minor tragedy. At least he’ll get by. But there won’t be much good stuff.

Those fathers should have waited a generation. The next generation was fine with grab-it-all capitalism. They started businesses that became major corporations – Microsoft and Apple and whatnot – and they developed a whole world of high finance. Oliver Stone showed its dark side in that 1987 movie, Wall Street – but that was at the tail-end of a generation of ascendant infatuation with the wonders of competitive capitalism. Sure, there was a downside – but there were all the goodies – the big BMW (no fins) and the martini, shaken, not stirred. Yes, James Bond was emblematic – not a businessman, but so well dressed, with the neat car with all the gizmos, and every other thing a devastatingly sophisticated man of the world should have. And there were the women falling at his feet – not the dead ones of course. Right there was a reason to make it big in finance or the corporate world. You could become as cool as James Bond, or at least accumulate the approximate accouterments. Capitalism, well played, could make you cool.

So this pulsed back and forth. Capitalism, well played, could make you safe and secure, and personally proud. Then capitalism well played or not, was inherently pointless – there was more to life than getting and keeping and displaying stuff. Then, a generation later, capitalism, well played, could make you really cool.

And now we have Mitt Romney running for president, pretty much claiming that capitalism made him cool. He was damned good at it after all. And he argues he should be president because he was so good at it – he knows how things work, why businesses hire people, why they don’t, and how to save a failing concern, or put it out of its misery through bankruptcy and liquidation. It fact, he’s so good at this that his buy-out firm, Bain Capital, made a ton of money even when one of the firms they acquired went belly-up. Thus you should actually admire him because he’s so very rich. He’s rich because he knows how things work. And that is cool.

Those of us who didn’t get the memo about capitalism being the best thing ever are not impressed and more likely to gravitate to Obama, who says that while he doesn’t begrudge anyone their wealth and success – not at all – running the country is a different thing entirely. There, success is defined differently. Being useful to others – all the citizens – is what matters. Having a good head for business isn’t. And the same argument could have taken place in 1967, when the sixties kid told his fifties father he was changing his college major to English, because he wanted to become a teacher and do something useful. Neither side understands the other.

But here’s a thought. What if Romney does not really understand capitalism at all? That is an odd thing to contend, but in Slate, William Saletan argues that Mitt Romney has actually betrayed capitalism – depending on how you define it of course, and there’s the problem:

Mitt Romney claims to represent the private sector. He spent 15 years running and supervising Bain Capital, a private equity firm. He sees capitalism as a moral system. “Our Founding Fathers endeavored to create a moral and just society like no other in history, and out of that grew a moral and just economic system,” Romney argued in a speech in Missouri three weeks ago. He noted that free enterprise “has helped lift more people out of poverty across the globe than any government program.” As to the “fear that some might succeed more than others,” Romney assured doubters that “success breeds success.”

Now there’s the answer to the kid who wants to be an English teacher, to do good, opening minds and all that, because that, unlike just getting rich and accumulating goodies, is the moral thing to do. Romney argues the more moral thing to do is to get into business and be really successful – because that helps far more people. But even the famous guy from CNBC had a problem with that:

Last fall, in a Republican primary debate, financial pundit Jim Cramer asked Romney whether “public companies have any social responsibility to create jobs” or whether, alternatively, they “should exist solely to create maximum profit for their shareholders.” Romney rejected the dilemma: “We don’t have to decide between the two, because they go together. What happens with profit is that you can grow the business. You can expand it. You add working capital, and you hire people.”

This seems like a friendly variation on the line for the Oliver Stone Wall Street movie – the evil Gordon Gekko boldly proclaiming that greed is good. But if greed, or its less nasty name, capitalism, rewards risk and creates jobs, and spreads success, you can see what Romney is getting at. It’s just that Saletan argues that those three contentions are false:

They demonstrate that faith in the free market rests on underlying values of risk-taking, shared sacrifice, and shared reward. When capitalism undercuts these values, it loses credibility. That’s why the attacks on Romney’s record at Bain are dangerous. They accuse him not of practicing capitalism, but of betraying it.

Romney did none of those things he praises, and everyone knows few businessmen do:

A compendium of polls, issued two years ago by the American Enterprise Institute, shows that voters judge corporate executives, often harshly, against larger measures of the public good. In a series of 14 surveys by Pew and Princeton Survey Research Associates from 1988 to 2009, Americans were asked whether “corporations generally strike a fair balance between making profits and serving the public interest.” The percentage who agreed with that statement never exceeded 45. The percentage who disagreed with it never fell below 50. The percentage who agreed that “there is too much power concentrated in the hands of a few big companies” never fell below 70. Two years ago, a Bloomberg survey asked Americans to choose between two statements about “big financial companies.” Only 40 percent of respondents said these companies “have a vital function that enables the economy to grow.” Fifty-six percent said the companies “enrich themselves at the expense of ordinary people.”

Harris Interactive polls from 1998 to 2010 reflect a similar pattern. According to the AEI report the percentage of Americans who agreed that “Wall Street only cares about money and absolutely nothing else” never dipped below 53. The percentage who agreed that “people on Wall Street are as honest and moral as other people” or that “most successful people on Wall Street deserve to make the kind of money they earn” never reached 50. The percentage who agreed that “what is good for Wall Street is good for the country” maxed out at 43. In 1985, 2002, and 2009, clear majorities told pollsters for CBS and Fox News that most corporate executives weren’t honest.

And it goes on and on, if you like polls. People know. Son, it’s far more moral to go into business than it is to go into teaching. No it isn’t. And Romney’s political opponents know that:

They’ve argued that he didn’t really earn the money he made, that he put profits before the public interest, and that he enriched himself at the expense of ordinary people. The harshest of these critiques was a video distributed this year by a PAC supporting Newt Gingrich. It began by extolling the values of free enterprise: “Capitalism made America great. Free markets, innovation, hard work.” But it argued that Romney had subverted these values. Instead of building enterprises and communities, he had raided and stripped family businesses, “dumping” their stock and “playing the system for a quick buck.” Instead of improving products, he had cheapened them. Instead of hiring people, he had fired them to squeeze out extra profits. Instead of helping his country, he had “sent jobs overseas.” Instead of nurturing companies, he had loaded them with debt and siphoned out the money. Instead of serving small investors, he had suckered and fleeced them. Instead of sharing the pain when workers lost their jobs and investors lost their savings, he and his pals had always managed “to turn the misfortunes of others into their own enormous financial gains.” He had betrayed every moral principle of business: loyalty, quality, service, prudence, stewardship, risk.

And in the primaries Newt Gingrich, Rick Santorum, Rick Perry, and others said such things directly, and of course Romney accused them of heresy. Saletan cites what Romney said during the mid-January debate in South Carolina:

We’re going to get attacked from the left, from Barack Obama, on capitalism. I know that people are going to say, “Oh, you should only practice it this way or that way,” and think they know better than the private market. My view is capitalism works. Free enterprise works. And I find it kind of strange, on a stage like this with Republicans, having to describe how private equity and venture capital work and how they’re successful and how they create jobs.

Romney wasn’t convincing. He seldom is. And now it’s Obama’s turn:

The latest ad from Obama’s super PAC shows a laid-off worker alleging that Romney “made over $100 million by shutting down our plant.” Over the past week, investigative stories in the Washington Post and New York Times, following up on previous work by the Wall Street Journal, have reported that Romney’s company invested in “firms that specialized in relocating jobs” to “low-wage countries like China and India,” and that “Bain structured deals so that it was difficult for the firm and its executives to ever really lose, even if practically everyone else involved with the company that Bain owned did, including its employees, creditors and even, at times, investors in Bain’s funds.” Yesterday in New Hampshire, Obama used the Post story to tarnish Romney’s agenda: “Governor Romney’s commitment to outsourcing is not just part of his record. It’s part of an overall economic vision that he and Republicans in Congress want to implement if they win this election.”

All this hurts, and Saletan adds this:

Was Romney a good capitalist or a bad one? Did he honor the values of free enterprise or forsake them? Romney might win that debate. But it isn’t the debate he wanted to have.

But it’s a debate that has been going on for a long time – ever since the sixties kid told his fifties father he really didn’t want to be a banker or an insurance salesman or the best CPA the world has ever seen. And there’s Robert and Edward Skidelsky’s new book How Much Is Enough?

How many James Bond gizmos do you really want? There are diminishing returns on greater and greater wealth, as many have pointed out. What would you do with a seventh swimming pool? And Robert Skidelsky here adds more, about capitalism’s obvious limits:

Intelligent defenders of capitalism always recognize that it’s a system with moral flaws, but they have regarded such flaws as the price of progress. Keynes was typical in this respect. In that essay, “Economic Possibilities for our Grandchildren,” he writes: “For at least another hundred years we must pretend to ourselves and to everyone else that fair is foul and foul is fair” – he knew his Shakespeare – “for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer, for only they can lead us out of the tunnel of economic necessity into the sunlight.” How innocent those words sound today.

Capitalism, it is now clear, has no tendency to evolve into something else. I’m not saying something higher, but just to evolve into some other system, a system fit for abundance. It has no tendency to do that. Left to itself, the machinery of one generation will carry on churning endlessly and pointlessly, pointlessly because it never asks the question, “What is this for, what’s it all about?” To bring it to a standstill requires an act of collective imagination and will.

We tried that starting in the late sixties. A young generation asked what this is for, and what’s it all about, Alfie – a question from the title song of a popular movie at the time, often flippantly applied to all sorts of things. But for all the collective imagination and will at the time, as it was the revolutionary sixties after all, nothing came to a standstill, as there was nothing to talk about. Capitalism has no end-point you can argue about. It doesn’t even have a point. It just is. And it’s not particularly cool, just like Mitt Romney.

And in the Chronicle of Higher Education, Robert and Edward Skidelsky go even further, with an item In Praise of Leisure:

The image of man as a congenital idler, stirred to action only by the prospect of gain, is unique to the modern age. Economists, in particular, see human beings as beasts of burden that need the stimulus of a carrot or stick to do anything at all. “To satisfy our wants to the utmost with the least effort” is how William Stanley Jevons, a pioneer of modern economic theory, defined the human problem. That was not the ancient view of things. Athens and Rome had citizens who, though economically unproductive, were active to the highest degree – in politics, war, philosophy, and literature. Why not take them, and not the donkey, as our guide?

There are worse things than being an English teacher. We are not beasts of burden, responsive only to the big stick and the tasty carrot, even if the carrot might be a third BMW convertible in the garage. We once knew such things, and in the New Statesman, Sophie Elmhirst argues even just a little quiet would be nice:

Quiet: from the Latin, quies, meaning “rest, quiet” and linked to the Old English hwil, meaning “space of time”. That’s about right: quiet isn’t only about sound but about pace, gentleness, slowness – spaces and places where things come to rest. Some people never seem to sit down; they’re constantly doing and talking, as if to stop is to fail. Noise, meanwhile, is from the Old French, noise, meaning “uproar, brawl”, apparently derived from the Latin, nausea, meaning “disgust, annoyance, discomfort” or, literally, seasickness – which is pretty much how it feels when you’re in a room of people yapping frantically at each other about all the things they’re doing with their lives.

Mitt Romney is pretty good at yapping frantically about all the things he’s done with his life, which he considers admirable. Others might think differently. To stop is not to fail. They knew that in Athens and Rome long ago. We were starting to remember that in the sixties – but then that passed. And now we have an odd situation where the economy is stuck, again, and as David Frum explains, the generations can’t agree on how capitalism can fix this:

We could jump-start the economy with a massive jolt of monetary and fiscal stimulus, but such a policy would risk inflation and pose a threat to retirement savings. So we don’t do it. We could borrow money to finance infrastructure programs that would set people to work now and enrich society over the long haul – but that borrowing would have to be serviced by taxes to which older Americans fiercely object. So we don’t do that either. …

The old have always grumbled about the young. No doubt Cro-Magnons complained that their kids didn’t appreciate their effort to put a nice, dry cave above their heads. Yet we seem today to hear a new bitterness in the attitudes of the old, a special glee in reproaching and denouncing the young. In 2012 job seekers outnumber jobs offered by a margin of 3–1, down from a post-Depression record of 5.5–1 in early 2009, with the ratio worst among the youngest workers. As young job applicants collect rejection slips, the leading conservative policy intellectual, Charles Murray, has publicly urged his fellow older Americans to regard unemployed young men as “lazy, irresponsible, and unmanly” and to publicly revile them as “bums.”

And Kevin Drum adds this:

Both the boomers and the generation before them were enormously lucky to have started their careers in the postwar world, roughly from 1950 through 1980. Good jobs were plentiful; retirement benefits – both public and private – increased steadily; and a variety of factors kept middle-class growth high. But the beneficiaries of this good fortune, like all beneficiaries of good fortune, became convinced that they had done well solely through hard work and native talent. If today’s kids aren’t doing as well, it must be because they’re dumber and lazier.

But they’re not. They just aren’t as lucky. And the competition between the generations is likely to heat up as time goes by. Welcome to our future.

It’s hard to know what to make of all that. We’re all fine with grab-it-all capitalism, as long as you don’t grab MY stuff. And Romney argues that’s cool, and good for everyone, and thus deeply moral – even if the luck of the draw, when you were born, determines most of your success. Some of us didn’t get the memo on that, the one about capitalism being the best thing ever. That’s why there are English teachers.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
This entry was posted in Bain Capital, Capitalism's Inherent Flaws, Mitt Romney, The Limits of Capitalism and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink.

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