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American Compass? No, I’d Rather Stay Lost.
A recent National Review article is titled “The Return of Conservative Economics.” When a politician or a political writer says his great new idea is “conservative,” grab your wallet and run the other way as fast as you can. Not only will it not be conservative, it will likely be daft — and accompanied by the force of law. The NRO article is a perfect example of this. It opens with:
Today we are announcing the formation of American Compass, an organization dedicated to helping American conservatism recover from its chronic case of market fundamentalism. In preparation, we have been perusing the mission statements of many of our nation’s think tanks. Nearly every group has one. Oddly, the right-of-center’s preeminent public-policy institutions all have the same one: to advance the principles of “limited government, free enterprise, and individual liberty” or “free markets and limited, effective government” or “free enterprise, limited government, individual freedom” or “individual liberty, limited government, free markets” or “economic choice and individual responsibility” or “individual, economic, and political freedom; private enterprise; and representative government.”
I guess they find the concepts of limited government, free enterprise, and individual liberty boring.
What’s even less thought-provoking is the writer’s statement about “conservatism’s chronic case of market fundamentalism.” Tucker Carlson has said similar things.
So who are these market fundamentalists? Are we talking about the Bush administration, with its massive increase in government regulation, spending, dollar devaluation, and a new entitlement? Or is it Barack “you didn’t build that” Obama?
Those two administrations brought us almost 16 years of a slow growth “New Normal” and created a lot of misery for those at the bottom of the ladder. They were not market fundamentalists.
Things started getting better when Trump, between tweets, nudged the country toward free markets. You know. Like a market fundamentalist.
Other than that, market fundamentalism has not been a factor in the 21st century. People who think that too much “free market ideology” is the problem with conservatism simply aren’t watching what’s going on. Nor do they appear to be interested.
Off to a bad start, it gets worse:
Senator Marco Rubio (R., Fla.) observed: “We have become defenders of the right of businesses to make a profit, the right of shareholders to receive a return on their investment, and the obligation people have to work. But we have neglected the rights of workers to share in the benefits they create for their employer — and the obligation of businesses to act in the best interest of the workers and the country that have made their success possible.”
What you’re hearing here is “Stakeholder Capitalism,” a fad that has been oozing out from under manhole covers for the past year or so. Market fundamentalism, if it ever came back, would stand in its way. Market fundamentalism would stand in the way of the good that Senator Rubio wants to do to people.
The sentiment expressed by the Senator would be nice, even compassionate, if expressed by a private citizen. But when the government says it, it is downright scary. Coercion is soon to follow.
A question for stakeholder capitalists: What if a corporation refuses to cooperate? What if the stockholders (owners) hold to the quaint idea that it is their money, they earned it and they have a right to spend or invest it as they see fit?
What should the punishment be?
Published in General
“Stakeholder Capitalism” used to be called family capitalism. Once, in a nation far different than the one we currently inhabit, there were governmental programs to allow for creating infra structure and adding value to society. Both Truman and Eisenhower saw to it that community colleges were built, as were community hospitals. And the freeway system came along, although Ike had to insist that it was being built for military purposes.
These massive building programs actually had a trickle down effect, as the wealth was shared by so many workers that the lower middle class became the middle middle class.
Family capitalism continues to flourish in places like Germany and most other European nations. Since 1984 or so, the average German worker has seen a 171 percent increase in wages. (Adjusted for inflation and for the same job.) Over in Australia the workers have seen a mere 70% increase. Other industrialized nations saw increases somewhere in the middle of those two extremes.
Here in the USA, no one noticed much of a rise in wages, as we managed to get by in less than a 3 percent raise for workers. So young people do not buy homes or cars, and marriage is postponed, as is the birth of children.
But the people at the top do not mind, as there have always been massive numbers of people arriving in our country, to do the jobs teenagers once did.
“market fundamentalism has not been a factor in the 21st century”. or most of the 20th. We had Reagan and we Coolidge in a century, nobody else. Market fundamentals do not require us to be open to predators such as China, but require simple things like, follow the constitution. Most of the Washington’s bureaucracy is not part of that and if we can’t strip it away, we lose.
Do these statistics take into account the re-unification of Germany in the late 1980’s? Obviously, the East German wages went up. Do they include any tax increases to pay for the importation of foreign (Muslim) workers? How can their wages continue to rise with the “global warming” solutions of reducing carbon (i.e., coal) emissions?
I’m not surprised that their wages went up – but how much net wealth (after taxes) do their citizens enjoy?
Many are repaying their college loans.
I find this language not only uncomfortable, but a bit jolting. Businesses have no right to make a profit. Shareholders have no right to see a return on investment.
A worker shares in those benefits every time he gets a paycheck.
That’s a little too close to “you didn’t build that” for my taste.
Call me a market fundamentalist.
Some years ago when my husband was working as a pharmacist in a small hospital, the CFO told the employees that they should be grateful the hospital was paying their mortgage, putting food on their tables, and buying their cars. As if the corporation was just handing out money because they were so wonderfully beneficent and the workers did nothing of value to earn their pay. That attitude is great for morale.
I have a preference for workers being paid appropriately for the work they do. I don’t think they always are. I do have issues with making it law, but I don’t have an issue with developing intellectual grounding for a culture shift. I absolutely see in conservative culture a disregard for people who work for other people. It’s a vestige of the “country club” republican.
I see that the intellectual think-tanks have had a rather big impact on conservative culture and attitudes, so I’m not opposed to a think tank that drives that. If it affects policy, I would not be opposed to policies that make it easier for collective bargaining (the best way for employees to get what they think they are owed without cookie cutter government policies) or others that protect businesses from employee cannibalism.
However, I would appreciate as part of this anti-market fundamentalism a truly hard look at debt, credit creation, and debt financing in this country. Something is very wrong in this area and it is going to implode and we are all going to suffer dearly for it if it isn’t righted post-haste. It will hurt in the fix, too… but controlled pain is always better than uncontrolled… it’s like going to the gym to lose weight vs having losing your foot to diabetes.
Thank you for raising those points, CarolJoy.
What we can’t prove or disprove here is the unseen. The unseen is how the economy would have performed if the Presidents had not done those things. The United States was in a recovery after 12 years of bad economic policy followed by a major war. Germany and Japan were is such bad shape that our automotive industry had no competition.
A Keynesian economist would say that the spending helped. The counter point is that there is much more government spending per capita now, and the results are nothing like what happened in the fifties.
I would recommend to all Ricochet readers an essay called That Which is Seen, and That Which is Not Seen by Frédéric Bastiat. If you dive into it, you begin to see how government spending can be harmful to the economy, even before you get to deficits and taxes.
Western European countries have had historically slower growth and higher unemployment than the United States. Despite the wages increases, their standard of living is lower than ours.
Their governments are a much larger part of the economy than ours, even after Obama.
These are due to reasons that are opposite in spirit to free markets. Government “generosity” in student aid has caused tuition to go through the roof, and students have a huge debt to pay off. The high cost of housing is caused by people who already have property petitioning their governments to prevent new development. Environmentalists aren’t helping either.
This is very true. But it isn’t an embrace of capitalism that is causing the problems. Many of the elitists seemed perfectly happy with the slow growth “New Normal” that was imposed on this country.
Probably because periods of high growth increase the likelihood that someone named Bubba will buy the mansion next door.
Me too.
The worst thing that happened about 1965 was the Keynes gave politicians a license to spend. The other half of Keynes theorem was that spending would be countercyclical. In good times, the government would run surpluses. That part the politicians never got.
They also begin spending more effort protecting what got them wealthy and less in new entrepreneurial activity and, if big enough, more time trying to get governments to limit competition.
In a thriving and free economy, the
workers(that word sounds so socialistic, Marco) employees don’t have to be tied to their employers. If they can’t get a good return on their labors, they can move on. We don’t need a government protection racket.Hmmmmm. The grifters are using a new marketing campaign methinks.
It’s the cronyism that’s killing us. With the ever increasing expanse and influence of government, businessmen have increased interest in capturing that power to protect what they have, and squeeze out the competition. I don’t see how we solve our economic problems without first solving our bloated government problem.
You also have the dynamic between a closed economic system and the absolute free trade system which affects how companies can operate. Post World War II when most of the rest of the industrialized world was in full rebuild mode was the height of union power in America, in part because there was nowhere else to get the goods being sought by Americans. Foreign industrialization and the creation of the modern container shipping system sucked away the powers of the unions, because consumers in the U.S. could find lower cost products, that in some cases (vehicles) were better made by overseas competitors.
But the downside there has been even companies without bloated union contracts have seen jobs go overseas or wage increases for its workers stall, because more and more things have moved to cheaper foreign markets, including in places where some products have been sold below cost as a way to destroy competition. That was the basis of the Reagan steel tariffs of the 1980s that the types currently calling for an absolute free market system try to sweep under the table when they fret about Trump’s actions with China, and the most corrosive of the recent efforts has been major companies seeking H1-B applications to bring controllable lower-cost skilled workers into the U.S., to do jobs Americans will do, but at salaries those companies balk at paying.
Take limiting things like too far though, and you end up in the ‘Stakeholder Capitalism’ area, which is akin to the 1945-70 place American business was, except instead of unions, you now have the government dictating wage and benefit standards to companies, whether or not the product they’re producing is the best it can be within the cost people are willing to pay. It’s a hard balancing act, between not allowing foreign nations to cheat on free market rules, and going back to a tariff system to set up a Fortress America for business, but where government protects businesses at the same time it forces them into inefficiencies ostensibly to benefit workers.
This is, I think, what global warming/climate change is all about. Subsidies, favoritism and loot.
Companies that hire H1-B employees are penny wise and pound foolish. Many programmers from overseas do what they are told and no more. This includes requirements validation (are we doing the right stuff?), performance issues (does it run fast with no bugs), proper testing, and especially documentation, including capabilities for the future. One really good programmer can do the work of 3-4 mediocre performers without additional management.
The original purpose of H1-B was to bring employees from overseas to learn enough of the companies processes and procedures to help run the foreign facilities. After returning to their homes, creative foreign employees could then develop new products and share the results with the U.S. facilities, and vice-versa. A win-win for the companies and the U.S.
During the late Obama years is when the stories came out of big companies having their current workers training the H-1B imports who would replace them, which provoked some media outrage … but never enough to report that a lot of the companies doing this were the big crony-capitalist companies that were all-in on backing Hillary in the 2016 election. Corruption of the program was done by major companies backing politicians who would rail against evil big businesses, but then turn around and give ones who ponied up campaign cash and other support carve-out deals. That’s in part why they and the crony Democrats are freaking out about Bernie — he also demonizes evil big businesses, but actually believes it all needs to be destroyed.
Thanks for bringing this up, as I thought it was a much newer issue. My employer in the 1980’s started a facility in Singapore to source parts from Asia (mostly Japan, Taiwan, and U.S companies in Malaysia and Philippines) and build radios for the general public, such as in the Marine Band. The employees from Singapore were smart but somewhat new to the industry.
One of the things the Clintons did was to convince big business to partner with them to protect their interests, against both workers and smaller competing businesses, especially as those businesses went multinational. They did it because they were able to use the media to promote the idea it was still the 1950s, and big business was inexorably tied to the Republican Party, and every CEO had the mindset of GM’s boss Charlie Wilson. The crony Dems over the past 30 years could spout neo-Marxist boilerplate about big business safe in the knowledge that those same businesses knew they didn’t mean it, and would keep giving them money.
That’s what’s freaking the Clinton wing out, in that Bernie says those same things and means it. And if the businesses they’ve been working with feel the same way, there could be a mass exodus of business support from the Democratic Party, at least to the sidelines in 2020, if not all the way over to being Trump supporters. That could be awful for the down-ballot races, where candidates are either going to have to support or rebuff Bernie’s positions, and if they’re doing the latter, they’re going to need lots of $$$ to get their messages out, because their GOP opponents are going to try to portray them as Bernie clones as much as possible.
Disney and Southern California Edison were prominent members of that group.
This requires employer competition (employers competing for employees), something we cant get in a global employee marketplace unless all economies are the same with the same government weights on the economy… i.e. a one-world government.
Supposedly, automation and globalized trade is good because it increases purchasing power. It also creates wage deflation and destroys jobs. It seems to me more things should be going down in price and we need to quit thinking about what people get paid and revenue increases. I would think everything except healthcare should be going down like crazy. This includes taxes.
We never should have started trading so much with a bunch of fascists, i.e.China.
The natural state of the world is deflation. If the central banks are always creating credit growth that gets more expensive to service, that isn’t going to work. The time for the GOP to get really conservative was right after the Soviet union fell. It didn’t happen.
You and me both.
I think it has to do with Big government and Big Finance keeping control over us.