Wednesday, November 22, 2017
Opinion

Column: Capitalism that works

RECOMMENDED READING


As long as U.S. intelligence agencies are hell-bent on spying on Germany, why can't they turn up some truly useful secrets? For instance, how to have an economy that bolsters a nation's power and fosters a vibrant middle class.

The latest edition of the CIA's World Factbook spells out how Germany succeeds and the United States fails at these crucial tasks. The book ranks the planet's 193 countries by their current account balances (that is, their trade balances) in 2013. Germany comes in first, with a surplus of $257 billion. The United States is last, with a deficit of $361 billion.

The composition of the top and bottom 20 nations on the list provides an even more illuminating picture. Three kinds of nations dominate the top 20: oil exporters (Saudi Arabia ranks third), East Asian manufacturers-for-export (China ranks second) and Northern European industrial and social democracies (not just Germany but also Denmark, Sweden, the Netherlands and Norway — the last, swimming in North Sea oil, an energy exporter as well).

The most striking aspect of the bottom 20, by contrast, is the prevalence of English-speaking nations. Not only does the United States finish 193rd, but Britain comes in at 192, Canada at 189, Australia at 186 and New Zealand at 173.

Does using English condemn a nation to producing less at home and buying more abroad? Probably not — especially since Britain and the United States once boasted huge export surpluses. But something has driven a wedge between the Anglo and the Saxon economies — and that something is the divergent evolutions of their respective forms of capitalism.

Anglophone economies are characterized by lower levels of regulation and worker rights than their Northern European counterparts, and most crucially, particularly in the United States and Britain, they have become dominated by finance. As Wall Street and "the City" (Britain's financial sector) have waxed, their nations' manufacturing sectors have waned. Crucial to this evolution (or devolution) has been an embrace of shareholder capitalism: the doctrine, first propounded by Milton Friedman, that corporations' sole mission is to reward their shareholders.

In the United States, boosting a company's share value has become the be-all and end-all of corporate purpose — and as the average length of time that a shareholder holds a stock has dropped precipitously in recent decades, raising short-term profits has come at the expense of other corporate activities. Corporations have shuttered factories and shipped jobs abroad. They have abandoned apprenticeship programs (and, in the spirit of parricides complaining that they're orphans, bemoaned the lack of adequately trained U.S. workers).

They have reduced wages and eliminated benefits by obtaining their workers through temp agencies. They have slashed investment in research and development and long-term product development while devoting more funds to buying back their own stock, which causes the value of outstanding shares to rise. Of late, through the practice of "inversion," they have legally expatriated themselves to reduce their U.S. taxes, even though the lion's share of their revenue still comes from U.S. consumers.

This form of capitalism is great for rewarding major investors and corporate chief executives. According to Equilar's annual report on CEO compensation, top corporate executives derive 60 percent of their compensation from stock value, up from the 20 percent in 1993 documented by Cornell Law professor Lynn Stout. But by so elevating shareholders (and themselves) over their workers and their country, the CEOs of these finance-driven companies drive down living standards and erode the United States' economic power.

The nations of Northern Europe, by contrast, have created economies that have enhanced their power and distributed wealth more equitably. In the Nordic countries, the world's highest levels of unionization have not led to a decline in competitiveness but rather to highly trained work forces and major trade surpluses. In Germany, corporations are required to give workers a role in key decisions, and shareholders play a minor role in businesses' funding and calculations. In consequence, the nation's manufacturing sector is continually upgraded and the nation's apprenticeship programs set the standard for developing skilled workers. Median compensation in manufacturing is a third again higher than it is in the United States — yet, counter to the wage-cutting conventional wisdom in American boardrooms and economics classrooms, Germany is No. 1 in trade and the United States is No. 193.

By virtue of the economic prowess it has attained through its system of industrial democracy and diminution of finance (and by having the euro as its currency), Germany has become Europe's dominant power. If the CIA were genuinely concerned about our national security, that's the lesson it would bring back from snooping on the Germans.

Harold Meyerson is editor at large of the American Prospect.

© 2014 Washington Post

Comments

Another voice: Wall isnít a lifesaver, itís a boondoggle

The first stage of President Donald Trumpís controversial border wall project ended last week, while the prospects for any more construction ó and even what type of wall ó remain uncertain.A Border Patrol agent was killed and his partner seriously wo...
Updated: 8 hours ago

Another voice: Time for Republicans to denounce this tax nonsense

Mick Mulvaney, the phony deficit hawk President Donald Trump tapped to oversee the nationís budget, all but admitted on Sunday that the GOP tax plan currently before the Senate is built on fiction. Senators from whom the public should expect more ó s...
Published: 11/20/17
Updated: 11/21/17
Editorial: Florida should restore online access to nursing home inspections

Editorial: Florida should restore online access to nursing home inspections

In a state with the nationís highest portion of residents over 65 years old and more than 80,000 nursing home beds, public records about those facilities should be as accessible as possible. Yet once again, Florida is turning back the clock to the da...
Published: 11/20/17

Another voice: A time of reckoning on sexual misconduct

Stories about powerful men engaging in sexual misconduct are becoming so common that, as with mass shootings, the country is in danger of growing inured to them. But unlike the tragic news about that latest deranged, murderous gunman, the massive out...
Published: 11/20/17

Another voice: Trump does the right thing for elephants; he shouldnít back down now

There is bad timing, and then there is this. Last week, an apparent military coup placed Zimbabwean President Robert Mugabe in custody, ushering in a new period of political uncertainty. A few days later, the Trump administration announced that Zimba...
Updated: 10 hours ago
Editorial: Fighting the opioid crisis on many fronts

Editorial: Fighting the opioid crisis on many fronts

From birth to death, opioid addiction is ravaging the lives of thousands of Floridians. Drugmakers, doctors, state lawmakers and insurance companies all have a role to play in slowing the epidemic. Lately some more responsible answers, including mill...
Published: 11/17/17
Updated: 11/21/17

Editorial: Good for Tampa council member Frank Reddick to appeal for community help to solve Seminole Heights killings

As the sole black member of the Tampa City Council, Frank Reddick was moved Thursday to make a special appeal for help in solving four recent murders in the racially mixed neighborhood of Southeast Seminole Heights. "Iím pleading to my brothers. You ...
Published: 11/17/17
Editorial: Itís time to renew communityís commitment to Tampa Theatre

Editorial: Itís time to renew communityís commitment to Tampa Theatre

New attention to downtown Tampa as a place to live, work and play is transforming the area at a dizzying pace. Credit goes to recent projects, both public and private, such as the Tampa River Walk, new residential towers, a University of South Florid...
Published: 11/17/17
Editorial: A time for real thanksgiving

Editorial: A time for real thanksgiving

By now the guest list if not the table is all set, and the house will be warmed with the noise of loved ones and the smell of that dish with cream of mushroom soup. Tucked between the sugar rush of Halloween and the sparkle of Christmas, Thanksgiving...
Updated: 4 hours ago
Editorial: Rays opening offer on stadium sounds too low

Editorial: Rays opening offer on stadium sounds too low

The Rays definitely like Ybor City, and Ybor City seems to like the Rays. So what could possibly come between this match made in baseball stadium heaven? Hundreds (and hundreds and hundreds) of millions of dollars. Rays owner Stu Sternberg told Times...
Published: 11/16/17
Updated: 11/17/17