highplainsdem

highplainsdem's Journal

January 13, 2012

Great CNN opinion piece: What kind of capitalist is Romney?

http://www.cnn.com/2012/01/13/opinion/lind-romney-bain/index.html

The choice is between "stakeholder capitalism" and "shareholder capitalism." According to the theory of stakeholder capitalism, corporations are and should be quasi-public entities with responsibilities to the nation-state and to the communities in which they are embedded. The corporation should make a profit and provide a fair return to investors. At the same time, workers who contribute their labor to the company have a legitimate interest in it as well as investors who provide capital. Managers serve the company and the country, not merely the investors.

In the theory of "shareholder capitalism," the corporation exists solely for the purpose of the investors, whom the managers serve as agents. In shareholder capitalism, short-term profits are the only goal, and if that means laying off workers instead of retraining them or reassigning them, breaking up the company and selling the assets to enrich private equity partners and shareholders, so be it.

The stakeholder conception of the firm is still the norm in Europe and East Asia, as it was in mid-20th century America. But beginning in the 1970s, the shareholder conception of capitalism prevailed in the United States.

-snip-

As a practitioner of the shareholder capitalism of the last generation, Mitt Romney as president would probably support policies that assume that the short-term interests of investors like Bain are identical to the long-term interests of the economy. By the same token, he would probably resist policies that increased the influence of managers, workers and local communities over companies at the expense of shareholders and financiers.

-snip-

January 13, 2012

Jonathan Chait: ‘Quiet Rooms’ and Republican Class War

http://www.nymag.com/daily/intel/2012/01/quiet-rooms-and-republican-class-war.html

The GOP Establishment’s deepest and most recurrent fear is an open debate over economic class. This is not a debate they feel they can win even among Republican voters, a majority of whom actually favor higher taxes on the rich. Romney’s assertion yesterday that economic inequality should not be discussed, or should only be mentioned in “quiet rooms,” is a too-frank expression of the GOP elite’s actual belief that the issue must be kept out of political debate.

President Bush’s former press secretary Ari Fleischer, who saw class warfare under every rock, was asked at a 2001 press conference if it inherently constituted class warfare to question any aspect of the distribution of Bush’s tax cuts:

-snip-

MR. FLEISCHER: I think if someone were to make a rather economic, esoteric, scholarly argument like you just did, that wouldn't be class warfare.

“Esoteric, scholarly” captures the same idea Romney is attempting to invoke with “quiet rooms.” Republicans believe any discussion of the disparate class impact of regressive policies constitutes an impermissible attack on the rich. If the matter is to be discussed at all, it must be under conditions that insulate it completely from the political debate, so as to avoid waking up the populist demons.

-snip-

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