Editorial: A tale of two capitalists
In a fascinating piece this Monday, New York Times columnist David Brooks portrays the presidential race as a battle of defining capitalism in the positive terms represented by Mitt Romney, or those terms cast in the negative by President Obama.
As with all columns that attempt to capture the complexities of a presidential race in a few hundred words, the argument is full of holes, but the premise has considerable merit and Brooks draws several thoughtful insights.
The first is that Obama has gone on the attack — not just against Romney, the candidate, but against the evils of capitalism. He’s hitting what seems to be the insufficient effort of major corporations, like steel mills, to prevent closing down and laying off workers even though management and owners might have been able to keep those plants running while earning a little less profit; he’s shaming the sinfully high salaries and bonuses CEOs are taking while workers are held to barely livable wages; he’s harping on the corporate excesses and financial shenanigans of bad boy businessmen who can’t seem to live without a fistful of greed stuffed in their pockets; he’s pouncing on firms that evade income taxes by moving offshore while doing their primary business in American markets, and for outsourcing jobs to cheaper labor elsewhere.
As Brooks writes, “instead of defending the policies of the past four years, the campaign has begun a series of attacks on the things people don’t like about capitalism.”
Brooks specifically refers to the advertisement the president’s campaign has been running in which Romney is singing “American the Beautiful” a bit out of tune, while the script alleges Romney has spent a lifetime in business (through Bain Capital) tearing down American corporations, shipping jobs off to China, Mexico and India, and, basically, doing more to harm American’s economic might than strengthening it.
What’s interesting is that Brooks, an economic conservative, takes the bait by challenging Obama’s campaign on some of the shadier aspects of capitalism — ducking taxes by locating offices in non-tax island countries; firing American workers and replacing them with cheaper labor abroad; and being at the forefront of a widening wage gap between management and employees as if this growing differential in income should be accepted as the right of the elite.
The ad, Brooks writes, “challenges the entire logic of capitalism as it has existed over several decades. It’s part of a comprehensive attack on the economic system Romney personifies.” He goes on to say, “politically, this aggressive tactic has worked. It has shifted the focus of the race from being about big government, which Obama represents, to being about capitalism, which Romney represents…
“Just as Republicans spent years promising voters that they could have tax cuts forever, now the Democrats are promising voters that they can have all the benefits of capitalism without the downsides, like plant closures, rich CEOs and outsourcing. Just as Republicans used to force Democrats into the eat-your-spinach posture (you need to have high taxes if you want your programs), now Democrats are casting Republicans into the eat-your-spinach posture (you need to accept outsourcing and the pains of creative destruction, if you want your prosperity.)”
It is an apt summary of the conundrum the nation faces with its economic model.
But Brooks misses a key point: when Americans speak fondly of our capitalistic system, they are thinking of that era in which America’s businesses built the strongest middle class in the world and most every American profited from it. And that’s the type of capitalism that President Obama champions.
After WWII, this nation built an economic engine based on productive American workers that was the envy of the world. The nation’s middle class grew by leaps and bounds and fueled a consumer-based economy that, in turn, spurred decades of growth and spread wealth at every income level. By the 1950s, ’60s and ’70s, the American Dream of owning a home, yard and two cars was achievable by the vast majority. It was capitalism at its best, when corporations afforded well-endowed pensions and health care benefits along with some of the most competitive salaries in the world.
But with an expanding global economy, with access to cheap labor and distribution, and with an economy based more and more on stock returns and the financial marketplace, the role of the middleclass worker has been greatly diminished.
What’s shocking about this shifting landscape is that many big businesses suddenly don’t seem to care about their employees. Theirs is a march toward increasing profits, no matter whose ox is gored, no matter whose dreams are shattered.
What Brooks slights is that the middleclass rejects the premise that profits for those at the very top should come at the expense of America’s workers. This is not an argument about economic efficiency, it’s a political and moral argument about fairness.
While Brooks recognizes that you “can’t fight what is essentially a moral critique with economics,” he goes on to suggest that Romney’s best defense is to create a new vision of modern capitalism that is somehow kinder and gentler (that’s been played before and look where it got us) — from a guy who made his fortune pillaging and plundering American jobs. “Romney,” he writes, “is going to have to define a vision of modern capitalism. He’s going to have to separate his vision from the scandals and excesses we’ve seen over the last few years. He needs to define the kind of capitalist he is and why the country needs his virtues.
“Let’s face it, he’s not a heroic entrepreneur. He’s an efficiency expert. It has been the business of his life to take companies that were mediocre and sclerotic and try to make them efficient and dynamic… That’s his selling point: rigor and productivity. If he can build a capitalist vision around that, he’ll thrive. If not, he’s a punching bag.”
Astute? Very. But it’s a questionable game plan.
Preaching more rigor and increased productivity — which would translate to higher profits for corporate higher-ups and trickle down economics for workers — is hardly the tonic for an overworked and underpaid middleclass.
Obama, on the other hand, can take the upper hand if he touts a more responsible business environment in which government curbs the excesses of big business and enforces a sense of communal obligation: insurance companies that cannot deny policyholders of benefits due them or drop them for pre-existing conditions; banks and financial institutions that cannot run wild with credit card fees, charges and other ploys that catch cardholders unaware and unprepared to pay the consequences; gas, oil, nuclear and energy companies that have to pay the full consequences of their environmental degradation; corporations that spread the wealth to workers rather than to a handful of CEOs; and tax policies that increase the tax burden among the very richest while giving the middleclass a break.
That Romney’s strength, like today’s faltering capitalistic model, is his economic rigor and fierce productivity — at whatever costs to the workers involved, or the nation — may well be the argument that decides the election.
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