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Calling Names, Throwing Stones

February 28, 2020 (2,388 words)

There are those who say my commentary suffers from being simple-minded. It’s true, these days I do favor clean lines and straightforward explanations. But in chasing a concise thought one should avoid relying too heavily on cliché.

That’s easier said than done, if you’ll notice, since for much of the prestige press and the new internet blogosphere and podcast universe, it seems cliché is just about everybody’s stock-in-trade.

Is this a form of intellectual laziness? Yes, it is. But ultimately I think it’s more of a language problem, an example of our inability to think in anything other than adversarial terms.

Now that Bernie Sanders has emerged as the front-runner for the Democratic nomination in the upcoming presidential election, critics are tripping over themselves to demonize him as a socialist. (Of course Mr. Sanders opened this linguistic can of worms himself, by proudly identifying as a “democratic socialist.”)

His supporters, too, are being rudely dismissed as favoring socialism over capitalism. But what does this even mean in today’s world?

Whether it’s an uneducated immigrant factory worker of a century ago fighting for union representation, or young people now just coming out of school and entering the work force – when such folks are quoted as identifying as “socialist,” or expressing an interest in “socialism,” all they are really saying is “capitalism has done me wrong,” or “it looks like it will do me wrong,” and “there must be a better way.”

Let’s face it, there is a good bit of evidence to support the view that capitalism has done, and is doing, many people wrong. And frankly that evidence continues to mount on a daily basis, with each new report of corporate maleficence on the part of our largest and most respected financial institutions and international conglomerates.

With all its warts, though, capitalism is the only game in town. Everyone knows this, even if our present vocabulary limits our ability to articulate the problem with a keener eye.

It’s not a question of scraping capitalism in favor of some moribund concept of socialism, regardless of how it’s being caricatured as such in the press. It’s more a matter of figuring out how to clean capitalism up. How do we cut down on the more flagrant abuses being committed in its name, under the cover of its moral-sounding mantle?

Why is it so hard to work any nuance into public discourse? Why do we so readily engage flaccid stereotypes, and constantly search out political heroes and villains to cheer or vilify?

MICHAEL BLOOMBERG

Following this rubric we only ever have two choices. Consider Michael Bloomberg, the billionaire philanthropist and ex-mayor of New York City who is a late entry into the Democratic primary race.

He is either a successful entrepreneur who took his management skills into public service and then started giving his money way to reduce gun violence and climate change (hero).

Or, he is a rapacious billionaire who amassed a gross amount of wealth, who became an authoritarian mayor targeting young black men, and who now is trying to buy his way to national political power (villain).

The truth is more complicated than either thumbnail sketch will allow. Most of us are prepared to admit as much, at least when we’re not letting our televisions and smartphones get us all riled up.

To properly locate Mr. Bloomberg in context, one should first acknowledge the “finalization” of the economy that has occurred, and then recognize his role in that transformation.

During the decades’ long boom that followed WWII, Wall Street did not play a particularly prominent role in the process. Business leaders were people who ran companies that actually made things. Not people who got rich through wheeling and dealing.

That all changed in the 1980s, due to some clever deregulation. Suddenly there was big money to be made in buying and selling businesses. No need to bother with the grunt work of actually running a successful company.

In too many cases the financial deals that made piles of money for the perpetrators left the firms changing hands saddled with crippling levels of debt.

After the dust settled on these transactions, and exorbitant profits were extracted from balance sheets and distributed to new “owners,” these once-thriving companies emerged as shells of their former selves. Too often the end result was bankruptcy and job destruction.

Yes, this familiar path to private equity wealth is being followed to this day.

With the financial sector doubling in size as a share of the economy, it has unfortunately pulled lots of capital and a slew of smart people away from productive activities. There is no evidence this mega-expansion of Wall Street has made the rest of the economy more efficient.

In fact, family income has stagnated as the financial sector has expanded, with a few people getting rich. And let’s not forget it was the runaway expansion of the financial sector that paved the way for the worst economic crisis since the 1930s.

So Michael Bloomberg fits into this narrative how?

He created and sold a proprietary computer system that provides real-time access to large quantities of financial data. A subscription is expensive, but it’s something every wheeler-dealer must have, since it allows the subscriber to react to market events a few minutes faster than those without such access.

The famous Bloomberg Terminal is an example of a very profitable business that has not been especially beneficial to the overall economy. Getting financial information a few minutes earlier does nothing to improve shop floor business decisions that affect jobs and productivity.

While Mr. Bloomberg may not have engaged in destructive business practices himself, he created specialty software for wheeler-dealers who most certainly have. He contributed to a financial arms race that advances the interest of a select few, but leaves most of us still standing at square one.

ELIZABETH WARREN

Though her platform is essentially the same as Bernie Sanders’, Senator Warren has slipped badly in the polls and is faring poorly in the early primaries.

That’s too bad, since in recent years she has established a reputation as an effective crusader in the very area of our economy that has caused so much trouble: fraud and excess in the financial industry. If you remember, she was plucked from academia by President Barack Obama.

No matter how you feel about his administration’s legacy otherwise, we should all be grateful to Mr. Obama for bringing this woman onto the national stage at a time when her expertise and perspective is so desperately needed.

The Consumer Financial Protection Bureau was a key reform instituted after the 2008 financial crisis, and it was Elizabeth Warren’s brainchild from the start. By all accounts it was wildly successful, saving ordinary families billions (with a “b”). Until, that is, the Trump administration came along and decided to undermine its authority.

Whoever gets elected as our next President, Senator Warren should be given a prominent role in the new administration. My thought would be to install her as Secretary of the Treasury. Why keep putting Goldman Sachs executives in this post? Let’s try a financial whiz kid who has NOT manipulated the system to make millions for themselves as a hedge fund manager and investor.

ATTACKING THE FRONT RUNNER

As the clear front runner for the Democratic nomination, it’s only right that Bernie Sanders receive the lion’s share of scrutiny and criticism. After all, if your aim is to be commander-in-chief of this great nation you had better damn well be able to withstand your fair share of abuse.

My only disappointment is how so much of the criticism traffics in cliché.

Depending on who you are reading or listening to, Mr. Sanders is good at shouting from the podium but can’t get anything done. He has been unable to have any of his signature policy initiatives passed from his seat in the Senate.

He doesn’t believe in capitalism. He thinks profits are obscene and equate to greed. And he sees government as a more important source of job creation than the private sector.

Bernie Sanders is someone who doesn’t understand that in the real world businesses earn profits by offering goods or services at a price others are willing to pay. No one is ever forced to buy anything.

He also doesn’t realize that every single business leader, be it a humble bogeda owner or a lofty Fortune 500 CEO, realizes their greatest asset is their employees.

And whether the business has 15 such employees or 15,000, the leader goes to bed each night aware of the hard-working families who depend on the success of the business for their own piece of American dream.

Talk about laying it on a little thick… Can we please just ease up on the platitudes, people?

When Mr. Bloomberg tells us from the debate stage he “got lucky and made a lot of money, and now I’m giving it all away, including a lot to the Democratic Party,” we are not offended. He is merely expressing the healthy ego that’s an important component of any successful entrepreneur’s DNA.

When Sanders immediately responds by saying “I think your employees played a role in your success,” this in no way undercuts Mr. Bloomberg’s singular achievements. But the remark does serve as a counter-balance to the conventional myth of entrepreneurship that is bandied about.

The myth is used as a shield. It staves off a public reckoning. It prevents us from holding our hard-driving free market acolytes responsible for their sometimes-less-than-praiseworthy actions.

And one might add that’s really all the adjustment our current version of capitalism requires – some much needed counter-balance.

It’s not as though Sanders is not smart enough to realize many of Mr. Bloomberg’s employees have been well-compensated, allowing them to buy homes, send their children to college, and retire in comfort.

But using the well-being of a certain strata of employee to defend the status quo is a diversionary tactic, isn’t it? That some employees are being treated fairly hardly changes the fact that most of them – across the board and around the country – do not receive an equitable cut of a successful company’s bounty.

When Sanders calls out Bloomberg’s $60B net worth as “immoral,” he is not passing judgement on the man. But he is most definitely incriminating an economic system that functions apart from basic moral considerations.


we have allowed capitalism to become immoral…


The system itself is not inherently moral or immoral. But ours has become immoral in its practical application.

This is due in large measure to risk-taking, free-market-defending entrepreneurs who have been given a pass on how they look out for the full roster of employees entrusted to their care – and the communities in which they operate – as they march to the top.

Those who support Bernie Sanders are known to admire his authenticity. Now they are being criticized as naïve, of failing to realize Mr. Sanders’ most audacious proposals have little-to-no-chance of ever being enacted into law.

Sanders’ aura of authenticity comes from his saying the same thing throughout his political career. It should also be noted his pet peeves have been percolating since the 1890s. Maybe even since 1848. Yes, folks, our economic system has been broken (or rigged) for quite a long time now.

The challenge is finding an appropriate language which will allow us to carry on this important discussion without resorting to calling each other names, and throwing stones. Of building a vocabulary that can articulate the situation more accurately.

A step in the right direction would be for Mr. Sanders to drop his unfortunate, fraught-with-negative-connotation label of democratic socialist. He should identify himself as what he really is: a follower of FDR. Bernie Sanders is nothing if not a New Dealer for the 21st century.

It would also help if he could bring himself to verbalize a modicum of support for the generic concept of capitalism, while continuing to attack its negative manifestations.

For instance, if the free market is able to reward working families and help them do well, that’s fine with me, he should come out and say.

But an extractive, predatory capitalism that excessively rewards speculators and encourages their greed is corrosive to the common good, and he should continue to pound away on that theme.


it’s never been easy to believe in prophets…


What of electability? Will Mr. Sanders’ message appeal to anyone in the Democratic Party beyond his rabid base, let alone enough Republicans and Independents in a general election?

Will his candidacy at the top of the ticket hurt the down-ballot chances of House and Senate Democrats up for re-election?

His inability to build a coalition in the Senate, where he is one lone voice, should not be held against him, or pointed to as any sort of precursor for his potential effectiveness in the Oval Office.

If he captures the presidency it would constitute an unprecedented event in the history of American politics. It would send an unmistakable signal to legislators from either party in both houses of Congress that the mood of the American electorate has changed.

Then maybe, just maybe, we the people can start to see some real accountability from our fabled “job creators.”

How to pay for the ambitious programs on Bernie Sanders’ agenda? For starters, let’s stop giving lavish tax breaks to those job creators who have achieved out-sized success.

How to right the ship regarding prices and wages? Let’s stop passing every increase in costs on to consumers. This will require the investor class to push the plate of spaghetti away, and stop gorging themselves at the trough.

By that I mean – gasp – be prepared to take less of a return on one’s passive investments, so the rank-and-file can earn a decent wage and benefits.

On the subject of electability, and policies “that will never pass,” I give the last word to Elizabeth Warren, who has said many times in this primary season: “I don’t understand why anybody goes to the trouble of running to be president of the United States to talk about what we can’t really do and shouldn’t fight for.”

She has also said: “It is giant corporations that have taken our government and that are holding it by the throat, and we need to have the courage to fight back against that and until we’re ready to do that, it’s just more of the same.”

Robert J. Cavanaugh, Jr.
February 28, 2020

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