Capitalism is described as "an economic and political system in which a country's trade and industry are controlled by private owners for profit." That's it in a nutshell, and it's worked better and benefited more people than any other economic system the world has ever known. But somewhere along the way our system of classic capitalism has been compromised, subverted, and dare I say even perverted.
My brother and I are the owners of a privately held corporation, meaning the two of us are the only stockholders. On an almost daily basis we do things above and beyond what is required by any regulation because we feel it is the right way to do business. This costs us a bit more to deliver our product, and reduces our profits somewhat, but we're still doing OK, and our clients say they appreciate our extra effort and attention. We'll never get rich doing business this way because we're "leaving money on the table", but we sleep well at night.
Today's publicly held corporations can't afford to leave money on the table. They must lie, cheat, and steal to squeeze every last penny from their customers. If they don't, their thousands of stockholders will demand a change in executive leadership and/or dump their stock, possibly tanking the company. If their product can be made the slightest bit cheaper, they'll do it. Cutting corners has become a fine art. Profits come first, always!
Consider this: Pharmaceutical manufacturers employ tens of thousands of brilliant researchers who spend years developing and testing new drugs that improve our quality of life, and in many cases actually save lives. They're amazing people doing incredible work. God bless them!
One of their creations was "opiods", drugs that can help those with chronic pain. This was a godsend for those hurting. But according to the new rules of what I call "perverted capitalism", pharmaceutical company executives have no qualms at all about turning these miracle drugs into an addictive nightmare for millions (?) of people. Opiod abuse has now become a national crisis. Lives and families have been torn apart, all so the drug makers can maximize their profits. Shame on them!
And, yes, they know exactly what they're doing. They know they're producing many times more opioids every year than can safely be prescribed and used by actual patients. Through their lobbyists they even pushed a bill through Congress last year that prohibited the Drug Enforcement Administration (the DEA) from investigating and interdicting massive opioid shipments to "suspicious" distributors. Had the drug companies failed, the DEA would have put a huge dent in their profits, and to them their profits are more important than peoples lives. That's just wrong!
Then we have corporate mergers that have the effect of reducing competition and inflating their bottom lines. Remember when we had Exxon and Mobil and Chevron and Texaco? Now we have Exxon/Mobil and Chevron/Texaco. United and Continental merged to form the new United Airlines. Delta and Northwest merged to form the new Delta Airlines. American and US Air merged to form the new American Airlines. Fares are up, and customer satisfaction is down, but airline profits are at record highs.
Remember when Macy's, Neiman Marcus, Lord and Taylor, Saks Fifth Avenue, and many others were all independent companies? Now they're all owned by giant retail conglomerates. Walmart and Amazon have taken over their sectors, too. Remember local hardware stores, mom and pop restaurants, community banks, and independent car dealerships? There are relatively few still in business, left behind in the race to merge, "increase synergy", and maximize profits.
And do I even need to mention corporate subsidies, aka "corporate welfare"? What the hell is that all about? Did they think we wouldn't notice?
I've heard it said your "character" is defined by how you behave when no one is looking. If that's so, then many of our players today have terrible character.
It's no longer about doing what's right, but only about what will make the most money and what they can get away with. At many businesses today doing "right" will get you fired, that's how cold blooded we've become. We're being attacked from within, and we're losing. Capitalism in 2017 is NOT your daddy's capitalism!
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Capitalism in America was based on our continent being a vast untapped resource with limitless riches to exploit, which is no longer the case. Any form of government can prove dangerous when taken to extremes. America's best ideas, like National Parks, the G.I. Bill, Social Security and Medicare are all socialist concepts and the serve well to soften the destructive greed of capitalism.
ReplyDeleteA lot of the problem are these Wall Street "analysts" who need to have their forecasts validated by big profits or else they'll downgrade a stock and prompt it to tank in value. It feeds the behavior of doing anything--except cutting CEO salaries--to make bigger and bigger profits. Every now and then you hear about companies that don't give in to that behavior and actually treat employees like human beings.
ReplyDeleteAnd I'll bet if you investigate it further you'll find that most of those corporations who treat their employees best are privately held, with no outside investors to answer to.
DeleteThe best example I'm aware of of a publicly held corporation who does the "right" think is Southwest Airlines. But if you look closer you'll see their profits have been consistently decent, without ever being industry leading. In other words, they were the tortoise in the race with the hare. How could they not succumb to investor pressures? Because their employees own an extraordinary 10% of the company. They look long term, and not just next quarter.
DeleteCostco.
DeleteAs always, you've hit the nail on the head. Capitalism as an economic and political system in which a country's trade and industry are controlled by private owners for profit stopped when it was no longer just "trade and industry" but also "politics."
ReplyDeleteIt seems that for a country to do best, trade and industry should be capitalistic and government should be socialistic. And trade and industry should not interfere in politics, and politics should interfere in trade and industry only to protect the consumer.
The combination (collusion?) of business and government has led to many disasters for the common man.
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