Category: Capitalism

Millennials Blame Capitalism for “the Crushing Burden of College Debt”?

(p. A22) “Millennials don’t remember the Cold War,” said Maurice Isserman, a history professor at Hamilton College who has studied democratic socialism. “They don’t react in the same way to the word ‘socialist’ and associate it with totalitarian communism.”

Instead, young voters have experienced a structural shift in the economy, including the 2008 financial crisis and the crushing burden of college debt, that has given them a more critical view of capitalism, he said.

For the full story, see:

Patricia Mazzei and Sydney Ember. “Sanders’s Views on Cuba Split Young and Old Voters.” The New York Times (Saturday, February 29, 2020): A22.

(Note: the online version of the story has the date Feb. 28, 2020, and has the title “Sanders Is Stirring Cold War Angst. Young Voters Say, So What?.”)

Chinese Communist Officials Rewarded for Loyalty, Not for Competence or Boldness

(p. A1) The Chinese people are getting a rare glimpse of how China’s giant, opaque bureaucratic system works — or, rather, how it fails to work. Too many of its officials have become political apparatchiks, fearful of making decisions that anger their superiors and too removed and haughty when dealing with the public to admit mistakes and learn from them.

“The most important issue this outbreak exposed is the local government’s lack of action and fear of action,” said Xu Kaizhen, a best-selling author who is famous for his novels that explore the intricate workings of China’s bureaucratic politics.

“Under the high-pressure environment of an anticorruption campaign, most people, including senior government officials, only care about self-preservation,” Mr. Xu said. “They don’t want to be the first to speak up. They wait for their superiors to make decisions and are only accountable to their superiors instead of the people.”

The Chinese government appears to be aware of the problem. The Communist Party’s top leadership acknowledged in a meeting on Monday [February 3, 2020] that the (p. A9) epidemic was “a major test of China’s system and capacity for governance.”

. . .

Chinese officials are spending as much as one-third of their time on political studying sessions, a lot of which are about Mr. Xi’s speeches. Political loyalty weighs much more in performance evaluations than before. Now the rule of thumb in Chinese officialdom seems to be demonstrating loyalty as explicitly as possible, keeping everything else vague and evading responsibility at all costs when things go wrong.

. . .

On social media, low-level cadres are complaining that they are receiving so many instructions from the higher-ups that they spend most of their time filling out spreadsheets instead of getting real work done. In a social media post headlined “The Formalism Under the Mask,” the author wrote, “Most people in the system don’t do things to solve problems. They do things to solve responsibilities.”

For the full story, see:

Li Yuan. “In China, Virus Spurred Rush of Blame Shifting.” The New York Times (Wednesday, February 5, 2020): A1 & A9.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story was updated Feb. 14 [sic], 2020, and has the title “Coronavirus Crisis Shows China’s Governance Failure.”)

Cheering Entrepreneurs “Because They’ve Lived the American Dream”

(p. B1) Wall Street’s disdain for the bottom-up populist campaigns of Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont has gotten a lot of attention. The candidates’ full-throated attacks on corporate greed, extreme wealth and banking excesses are backed up by ambitious plans to upend the industry’s everyday operations.

Wariness extends far beyond an elite financial fellowship, though, to many small and medium-size businesses whose executives are not reflexively Republican but worry that the ascendancy of a left-wing Democrat would create an anti-business climate.

. . .

Michael Brady, the owner of two employment franchises in Jacksonville, Fla., is one of the independent business executives interviewed who feel unappreciated. “I get up before 6 o’clock every morning and work hard,” he said. “I put 200 people to work every week.”

Mr. Brady, 53, said he voted for Barack Obama in 2012 and Mr. Trump in 2016. Since then, he said, some of the president’s actions and “some of his tweets” have made him cringe.

He said he could vote for a Democrat this year. But he finds several of the economic proposals from the party’s left wing off-putting, mentioning free college tuition and a nationwide $15-an-hour minimum wage.

What particularly irks Mr. Brady, though, are some of Ms. Warren’s statements about successful entrepreneurs’ not having built their businesses entirely on their own. Attacks on the country’s wealthy elite have also grated.

“When did the word millionaire or billionaire become a bad word?” he asked. “I cheer those people on because they’ve lived the American dream.”

For the full story, see:

Patricia Cohen. “Employers Are Leery Of Warren And Sanders.” The New York Times (Saturday, January 18, 2020): B1 & B5.

(Note: ellipsis added.)

(Note: the online version of the story has the date Jan. 17, 2020, and has the title “Trump Fans or Not, Business Owners Are Wary of Warren and Sanders.”)

“Openness to Creative Destruction” Discussed on Power Trading Radio

John O’Donnell interviewed me at 6 PM 11/8/19, about my book “Openness to Creative Destruction” on his weekly Friday show on Power Trading Radio. (In the screen capture above, Merlin Rothfeld is on the left and John O’Donnell is on the right.)

“To Be Profitable, You Have to Have a Purpose”

(p. F2) When a group of the nation’s largest companies said last month that they had changed their mission strictly from making profits to also include benefiting “customers, employees, suppliers, communities and shareholders,” it was generally applauded as an important step in the right direction.

. . .

Treasury Secretary Steven Mnuchin in his first public comment on the topic, flatly told me: “I wouldn’t have signed it,” stunning a room of policymakers and business leaders in Washington at last week’s DealBook DC Strategy Forum.

His explanation was nuanced: “To be profitable, you have to have a purpose. I think it’s not as simple as saying we either have a purpose or we have profits. I think the problem with creating a simple answer is it doesn’t fully explore the issues.”

He added: “I do think companies should be long-term oriented. I don’t think companies need to necessarily be focused on quarterly profits and hitting Street earnings numbers. But I think, ultimately, a business’s job is to deploy the capital correctly and to make profits.”

Stephen A. Schwarzman, the co-founder and chairman of Blackstone Group and one of only a handful of members of the Business Roundtable who declined to sign the document, also went public with his explanation in a conversation with me earlier this week: “I know why we’re in business: because people give us money to manage. They want us to earn a lot of money to give them back or else they would give us nothing.”

He said “the idea that business should be concerned” with employees, customers, suppliers and the community should be a given. But, he said, he objected to the idea in the Business Roundtable statement that profits should be listed as simply equal to the other four issues.

“I have trouble managing when I don’t know what I’m supposed to be doing,” he said, suggesting the statement gives managers too many masters. “I know what I’m supposed to be doing, which is making good investments, safely, and making a great contribution to these pension funds and regular people.”

For the full commentary, see:

Andrew Ross Sorkin. “Profits or Public Interest?” The New York Times (Thursday, September 19, 2019): F2.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Sept. 18, 2019, and has the title “Profits or the Public Interest: The Debate Continues.”)

Boston Brahmins Invested in Western Industrialization

(p. A13) One of history’s ironies is that, even though New England birthed the abolition movement, many of Boston’s most prominent families offered less than total support for freeing the slaves. Their prosperity required a steady supply of cotton to feed New England’s growing textile industry. Even after slavery ended in 1865, wealthy Bostonians were reluctant to abandon their traditional business. Henry Lee Higginson, 30 years old and freshly discharged from the Union Army, bought with his partners a 5,000-acre plantation in Georgia with the goal of turning a profit by growing cotton. But the 60 former slaves living on the plantation thought the wages and terms offered to be grossly inadequate; the land they had worked in chains for generations, they believed, should belong to them. The enterprise soon collapsed.

As similar episodes played out across the South, Boston’s business elites looked for new places to invest their money. “They began to reenvision American capitalist development, not in modifying and salvaging the arrangements of earlier decades but in a far more ambitious program of continental industrialization,” Noam Maggor writes in “Brahmin Capitalism.” “They retreated from cotton and moved into a host of groundbreaking ventures in the Great American West—mining, stockyards, and railroads.”

. . .

Especially representative of the Bostonians’ transformative influence was Higginson’s next enterprise. Far removed from Georgian cotton, his interests landed on a copper mine in northern Michigan’s remote Keweenaw Peninsula. Copper had been discovered there 20 years earlier, but extraction had been small-scale and labor intensive; the high cost per unit meant that mining was profitable only for veins that contained at least 40% copper. In a short time, high-yield mines in the area began to show signs of depletion. But with Higginson’s capital—alongside investments from other Brahmins—large-scale copper extraction could take place as a continuous operation, making mining profitable on belts that contained only 2%-4% copper. In this way, Higginson’s Eastern capital transformed Western mining and launched a career that would make him one of Boston’s leading financiers.

For the full review, see:

John Steele Gordon. “BOOKSHELF; Enterprising Bostonians; Contrary to stereotype, the Brahmins of New England crisscrossed the continent and took bold risks in search of higher yields.” The Wall Street Journal (Monday, June 26, 2017): A13.

(Note: ellipsis added.)

(Note: the online version of the review has the date June 25, 2017, and has the same title as the print version.)

The book under review is:

Maggor, Noam. Brahmin Capitalism: Frontiers of Wealth and Populism in America’s First Gilded Age. Cambridge, MA: Harvard University Press, 2017.

“For This Hong Kong, We Fight. We Shall Never Surrender.”

(p. A6) HONG KONG — Thousands of black-clad antigovernment protesters demonstrated at Hong Kong’s international airport on Friday [Aug. 9, 2019], taking aim at both a global transit hub and the city’s closely guarded reputation for order and efficiency.

. . .

The airport protest began in the early afternoon, as demonstrators in black T-shirts and face masks nearly filled the cavernous arrivals hall, chanting “Hong Kongers, keep going,” a rallying cry for the two-month-old protest movement.

“You’ve arrived in a broken, torn-apart city, not the one you have once pictured,” read a pamphlet that protesters offered to arriving travelers. “Yet for this Hong Kong, we fight. We shall never surrender.”

As of Friday night, the demonstration remained peaceful, and there had been no reports of arrests or disruptions of flights. Protesters were careful to leave a path clear for travelers, some of whom recorded the demonstration on their phones or helped themselves to pamphlets.

. . .

Miki Ip, a real-estate agent who attended the demonstration, said she came partly to refute unproven claims by the Chinese government that the civil disobedience had been led by foreign forces who wanted to undermine Beijing’s authority.

“China has told us so many lies, and we lack a government that really works in our interests,” Ms. Ip, 38, said in the arrivals hall. “The living conditions facing youngsters nowadays are harsh, and they feel a lack of ownership over their hometown, both economically and politically.”

For the full story, see:

Katherine Li and Mike Ives. “Protesters in Hong Kong Choke Airport Terminal.” The New York Times (Saturday, Aug. 10, 2019): A6.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date Aug. 9, 2019, and has the title “Hong Kong Protesters Descend on Airport, With Plans to Stay for Days.”)

Gig Jobs Benefit Workers by “Cutting Out Corporate Bosses and Rent-Seeking Middlemen”

(p. C4) An astounding 94 percent of American jobs created between 2005 and 2015 were for “alternative work.” Slow and steady growth used to be a cardinal virtue for the big American corporation. Now leanness and flexibility are prized, and nobody is spared. “In the end,” Hyman writes, “even white men were not protected from this new reality.”

Hyman, a labor historian at Cornell, argues that the common explanation for what happened — mainly, that our current dispensation was foisted on us by technological and economic change — is self-serving and inadequate. He says that human choice, including a palpable shift in values, played an essential role. “Temp” traces how, for corporations and government policymakers alike, “the risk-taking entrepreneur supplanted the risk-averse, but loyal, company man as the capitalist ideal.”

. . .

His ending, about the gig economy, is weirdly upbeat. He believes that it’s still possible for work to be rewarding — maybe even more possible, now that apps and online platforms offer the promise of (leaving in place a few rent-seeking technocapitalist billionaires, of course). Individuals can sell their labor directly to one another.

For the full review, see:

Jennifer Szalai. “BOOKS OF THE TIMES; Gig Jobs Replace Gray Flannel Suits.” The New York Times (Thursday, Aug. 23, 2018): C4.

(Note: ellipsis added.)

(Note: the online version of the review has the date Aug. 22, 2018, and has the title “BOOKS OF THE TIMES; How the ‘Temp’ Economy Became the New Normal.”)

The book under review, is:

Hyman, Louis. Temp: How American Work, American Business, and the American Dream Became Temporary. New York: Viking, 2018.

“Rand’s Entrepreneur Is the Promethean Hero of Capitalism”

(p. B1) Few, if any, literary philosophers have had as much influence on American business and politics as Ayn Rand, especially now that Donald J. Trump occupies the White House.

President Trump named Rand his favorite writer and “The Fountainhead” his favorite novel. Secretary of State Rex W. Tillerson has cited “Atlas Shrugged” as a favorite work, and the C.I.A. director, Mike Pompeo, said the book “really had an impact on me.”

. . .

(p. B2) In business, Rand’s influence has been especially pronounced in Silicon Valley, where her overarching philosophy that “man exists for his own sake, that the pursuit of his own happiness is his highest moral purpose, that he must not sacrifice himself to others, nor sacrifice others to himself,” as she described it in a 1964 Playboy interview, has an obvious appeal for self-made entrepreneurs. Last year Vanity Fair anointed her the most influential figure in the technology industry, surpassing Steve Jobs.

. . .

“Rand’s entrepreneur is the Promethean hero of capitalism,” said Lawrence E. Cahoone, professor of philosophy at the College of the Holy Cross, whose lecture on Rand is part of his Great Courses series, “The Modern Political Tradition.” “But she never really explores how a dynamic entrepreneur actually runs a business.”

. . .

“Mention Ayn Rand to a group of academic philosophers and you’ll get laughed out of the room,” Mr. Cahoone said. “But I think there’s something to be said for Rand. She takes Nietzschean individualism to an extreme, but she’s undeniably inspirational.”

As the mysterious character John Galt proclaims near the end of “Atlas Shrugged”: “Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the not-quite, the not-yet, the not-at-all. Do not let the hero in your soul perish, in lonely frustration for the life you deserved, but have never been able to reach. Check your road and the nature of your battle. The world you desired can be won, it exists, it is real, it is possible, it’s yours.”

For the full commentary, see:

James B. Stewart. “COMMON SENSE; Tough Times For Disciples Of Ayn Rand.” The New York Times (Friday, July 14, 2017): B1-B2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 13, 2017, and has the title “COMMON SENSE; As a Guru, Ayn Rand May Have Limits. Ask Travis Kalanick.”)

Ayn Rand’s magnum opus, quoted above, is:

Rand, Ayn. Atlas Shrugged. New York: Random House, 1957.