I don’t think the word “remoralization” is a real word yet but I admire David Brooks for inventing it for the purposes of his weekly article on capitalism. This post is going to be about our capitalist system and the stock market. Let’s start off with Mr. Brooks words:
There’s been a striking shift in how corporations see themselves. In normal times, corporations serve a lot of stakeholders — customers, employees, the towns in which they are located. But these days corporations see themselves as serving one purpose and one stakeholder — maximizing shareholder value. Activist investors demand that every company ruthlessly cut the cost of its employees and ruthlessly screw its hometown if it will raise the short-term stock price.source: New York Times – David Brooks
My three-legged stool analogy about how corporations used to be balanced between customers, employees, and shareholders applies here. When equal attention is placed on the three legs the corporation is healthy. When the legs become unbalanced turmoil results and we are, as David point out, in deep turmoil in the US in the last decades. When did corporations become immoral so they need remoralization?
“Stakeholder” which primarily mean the one-percent of the US population, who control more wealth than the bottom 90%, now demand that they get a lion’s share of the attention of the companies they control. This imbalance is one of the primary causes of the populist movement, even if the loudest voices in it don’t realize it. When a very small percentage of people control the economic assets severe unbalance is bound to happen.
How did we get to the point that the three-legged-stool is so completely out of kilter? How did we let that happen? I think a big part of that is that too many of us have blindly accepted the contrived propaganda on the subject.
We have been fed the line and seem to thoroughly believe that the only index needed to measure the prosperity in America are stock market indexes.
Since the stock market in the last two years went from 19,700 to 24,000 which would be about a 21% increase it sounds like, if we are to take that as the measure of our prosperity, we are living in the age of lavish prosperity. But when you look at almost any other measure the 21% just doesn’t begin to happen. If you want to look beyond the top 2% of the wealth holders there are so many other factors involved. More on that soon…