Public Citizen News / March-April 2019
By Angela Bradbery
This article appeared in the March/April 2019 edition of Public Citizen News. Download the full edition here.
Can American Capitalism Survive?: Why Greed Is Not Good, Opportunity Is Not Equal, and Fairness Won’t Make Us Poor
By Steven Pearlstein; $27.99; St. Martin’s Press
Can American capitalism survive? That’s what Pulitzer Prize-winner Steven Pearlstein sets out to answer in his new book. But first, what kind of capitalism do we want? The former Washington Post reporter deftly shows the fallacy of many of free market capitalists’ key premises and envisions an economic system that is equitable and just.
Pearlstein maintains that we are in a new gilded age “in which the benefits of economic growth are being distributed more unequally than they have been at any time since before the economic reforms of the Progressive Era and the New Deal.” But people are growing disillusioned: “Americans are no longer willing to accept the glaring injustices created by the economic system simply because that system provides them with a higher-standard of living. For starters, many feel their standard of living is now falling, not rising.”
It used be that businesses benefited society by paying a living wage, and providing benefits and job security. But globalization, deregulation and rapid technological changes shrunk profits, Pearlstein says.
In the 1980s, corporations became targets of corporate raiders and became increasingly focused on share price – an obsession driven by Wall Street, the courts and executive pay packages. CEOs no longer make long-term investments in their companies, instead doing whatever it takes to keep stock prices high – cutting workers, lowering pay, avoiding taxes and opposing government regulations.
This path is not moral, Pearlstein argues, and a market economy can’t be successful it if is amoral. Inequality slows economic growth and reduces productivity.
But we can choose a different path, Pearlstein says.
His policy prescription includes a constitutional amendment to limit special interest money in politics, a guaranteed minimum income in exchange for national service (paid for in part by a higher income tax and a financial transactions tax), profit sharing for all employees, an end to class segregation in public schools, a restoration of competition to overly consolidated markets through more aggressive antitrust enforcement, reform of copyright and patent law, and greater reliance on customer-owned financial institutions.
Will American capitalism survive? It can if we have the willpower to transform it.