- Small(er) enterprise is better than (quasi-)monopolies;
- Universal healthcare is both good and necessary;
- Let wages converge lower;
- Put money into the following infrastructures: education, energy efficiency, internet, transportation;
- Encourage innovation and exports;
- Encourage quality;
- Bring smart people in, our universities should be the Ellis Island of the 21st Century!
The key to the above is Wall Street: How good of an approximation for market-based capitalism?
4 comments:
I am president of a non-profit/ tax exempt-(501C-3) organization called Quality Day Campus Inc. the reason I point both my organization and title is to go on “internet record” as saying that “you reap what you sow.” wall Street, much like the federal government has been “ran by experts” for years, decades and centuries.
Calculate this…project that…end result is…
It took 300 hundred years for the Roman Empire to collapse. Technically, this country was established in 1789; with George Washington as its first president. Which means-(like the Roman Empire) we have roughly 81 more years to go–before we too, “collapse.”
The problem is simpler than you think….
The remedy is even more simpler…
Stop putting so much money into companies that already exist; that have “too much money, ego and power to begin with.”
Start re-investing in communities through economic development on large scales-(mega projects) that commit dollars to growth and stability through employment; education / vocational training; provisional services an so forth.
There is an entirely, new / untapped market called the underserved. If underserved people were suddenly to become “empowered“ (through employment, for income / wealth increase) they would become a new source of “consumerism” potentially tapping and creating sources of wealth generating sources that would benefit both social/ classes in this country.
Do the math; there are more poor people that middle income and rich people; I.e., so if the “rich” would start investing in the poor-(you’d save a lot on advertising) through economic redevelopment within more than 256 inner city areas across the country; you would reverse this “disparity” within the next three decades…
Currently, our organization is proposing one of the largest redevelopment projects in the country. At an estimated cost between $33 to $45 billion; creating an estimated 260,000 new jobs; lowering unemployment, reclaiming blighted communities, reducing crime, etc..
If you start at this approach, you will see things “turn around.” What no one is saying-(nor stating the obvious fact) is that you now have another “Enron” on your hands!
This time, is a lot of companies instead of one…How is it that these guys, the so called “experts” aren’t going to jail as the Enron guys did? Because many investors on Wall Street are also the politicians and power lobbyist in Washington. We it doesn’t effect them, they let it burn…
Ask yourself a question; why are the Feds considering bailing Wall Street out? Is that legal? Doesn’t that run contrary to the constitution? Or do they use the “it posses a potential / national threat to crippling the county excuse?“
Sadly to say, while millions of Americans are scrambling, running around trying to “save there vast fortunes” while projects and organizations like ours, have the solution to a problem that is “solvable.”
But remember, this is the information highway. I simply want to post this as a means for someone to find in an electronically / posted archive and say-”there was a solution” back then, those guys just didn’t take it…
Eighty one more years to go-(2089)
The clock is still ticking….
The Crisis Last Time
By RICHARD PARKER
For writers who seek to influence public affairs, timing plays a paramount role. And few writers have had better timing than Adolf Augustus Berle.
In the summer of 1932, with America trapped in the greatest financial crisis in its history, Berle published “The Modern Corporation and Private Property,” a scholarly yet readable analysis of America’s largest companies and their managers. Berle is largely forgotten today, yet with that book he succeeded in persuading Americans to see their economic system in a new way — and helped set the stage for the most fundamental realignment of power since abolition.
The stock market had plunged vertiginously three years earlier, and by 1932 Americans were desperate to reverse the much wider collapse that had ensued — and to make sure it wouldn’t happen again. The New Republic was soon hailing “The Modern Corporation” as the book of the year, while The New York Herald Tribune pronounced it “the most important work bearing on American statecraft” since the Federalist Papers. Louis Brandeis would cite its arguments in a major Supreme Court ruling on corporate power. Running for president, Franklin Delano Roosevelt recruited Berle — a Republican Wall Street lawyer who had supported Hoover — to join his “brain trust,” and that fall entrusted him with drafting what became the most important speech of the campaign. After the election, Berle remained in New York, yet his connection to the president he audaciously addressed as “Dear Caesar” was such that Time would characterize “The Modern Corporation” as “the economic bible of the Roosevelt administration.”
At first glance, the book would hardly seem to merit such broad acclaim. But if the topic was limited, Berle’s analysis was not. He used the data compiled by his co-author, the economist Gardiner Means, to examine how markets had become concentrated in just a few hundred firms and how senior managers had wrested power from the companies’ legal owners, the shareholders. No radical, Berle was eager to preserve the corporate system, which he called “the flower of our industrial organization.” But he now believed that new controls would have to balance “a variety of claims by various groups in the community” — not just its managers or shareholders — and assign “to each a portion of the income stream on the basis of public policy rather than private cupidity.”
In 1932, as in our own moment of financial crisis, most Americans could see that something needed to be done because these new behemoths — which had turned America from a nation of farmers into the world’s largest industrial power — were on the verge of collapse, poised like Samson to pull the entire economy down with them. Berle’s genius in “The Modern Corporation” was to align his professional insights with the public’s fears, and its anger. As he starkly put it in his preface, “Between a political organization of society and an economic organization of society, which will be the dominant form?”
In Theodore Roosevelt’s and Woodrow Wilson’s era, reformers like Brandeis had argued that strict antimonopoly and anti-collusion laws could return America to a place of small firms and farms, the beau ideal of Adam Smith’s market model. But Americans continued rushing to the cities, spurring an explosion in mass consumption, financed by a boom in cheap consumer credit and easy home loans. Then, in 1929, the markets crashed.
The crash for a time reinvigorated not only the anti-monopolists, but also union organizers, socialists, agrarian populists and crackpot utopians. It also brought forth “forward looking” chief executives like Gerald Swope of General Electric, who supported progressive corporatism — a world of government-mandated business cartels in exchange for higher wages, improved working conditions, and corporate-based workers’ compensation, pension and unemployment plans. Berle, however, was keen on none of these solutions. In his book, he explained that giant corporations were not “natural” economic institutions but recent inventions of the law, cobbled together on the remains of the medieval corporation, a quite different institution. What the Depression showed, he argued, was that modern corporations had failed not only stockholders, but the public — and would do so again, if left unregulated.
But what sort of regulation was required? On details, Berle was maddeningly but deliberately vague. What he did say clearly was that government needed to bear final responsibility for the economy by using its powers to balance supply and demand. It would also need to require corporate directors to manage the managers, not just for shareholders’ benefit but in accordance with new rules codifying the collective rights of stakeholders and the broader social responsibilities of corporations.
The impact of Berle’s ideas was no doubt enhanced by his decidedly nonradical biography. The son of a reform-minded Congregational minister and his wealthy wife, he had entered Harvard at 14 and finished Harvard Law School at 21 — at the time its youngest graduate ever. (Arrogant as well as gifted, he once showed up in Felix Frankfurter’s class the semester after completing it. Puzzled, Frankfurter asked him why he was back. “Oh,” Berle replied, “I wanted to see if you’d learned anything since last year.”) After a year at Louis Brandeis’s firm, he briefly did public-interest legal work before marrying well and settling down to a prosperous career in Wall Street corporate law.
As clients flocked to him, however, he began questioning the very system that was making them (and him) rich. In 1923, alarmed by the venality, the chicanery and frequently the stupidity of Wall Street, he started writing articles that over the next several years would virtually invent the modern field of corporate finance law, emphasizing moderate solutions. After Columbia Law School offered him a job in 1927, he began cycling between his lucrative practice downtown and his teaching uptown.
But the Great Crash — and the subsequent revelations of market manipulation, fraud and reckless risk-taking — forced Berle to change sides. He was a Mugwump Republican, but the economic chaos of the Depression, and the threat it posed to American democracy, convinced him a new sort of regulation was now unavoidable.
In late 1931, Franklin Roosevelt, then governor of New York, called on the Columbia political scientist Raymond Moley. Roosevelt was weighing a run for president and was looking for fresh ideas. Moley quickly approached Berle and connected the two ambitious Harvard men.
A month after “The Modern Corporation” appeared, Berle drafted Roosevelt’s famous Commonwealth Club address, delivered in September 1932. Proclaiming that “the day of enlightened administration has come,” Roosevelt articulated the rationale for much of the New Deal’s financial and corporate reforms, including deposit insurance and securities regulation. He defended the coming government interventions as protecting individualism and private property against concentrated economic power. Calling for a new “economic constitutional order,” he declared it our common duty to “build toward the time when a major depression cannot occur again.”
“None of Roosevelt’s speeches,” Arthur Schlesinger Jr. later wrote, “caught up more poignantly the intellectual moods of the early Depression than this one.” It helped assure his landslide victory — and earned Berle a series of ever more important posts in the administration. America began an unprecedented 40-year expansion.
By the Reagan era, however, a new philosophy would take hold, and the public oversight of markets that Berle helped pioneer would over time be swept aside, in confident belief that markets could self-regulate and that government was the problem, not the solution.
Today, that era itself seems to be coming to end, and the question Berle posed — will democracy rule the corporations, or will the corporations rule democracy? — seems a profoundly important one worth asking again.
Richard Parker, an economist, teaches at the Kennedy School of Government at Harvard. He is the author of “John Kenneth Galbraith: His Life, His Politics, His Economics.”
September 13, 2010
Foreign Stimulus
By PIA ORRENIUS and MADELINE ZAVODNY
THE debate over Arizona’s controversial immigration law and Congress’s passage last month of another border security bill gives the impression that the only problem with our immigration policy is its inability to keep people from entering the country illegally. Not so. The country has an antiquated, jerry-built immigration system that fails on almost every count. The good news is that there is a way to replace it that will promote economic growth while reducing the flow of illegal workers.
First, work-based visas should become the norm in immigration, not the exception. The United States issues about 1.1 million green cards a year and allocates roughly 85 percent to family members of American citizens or legal residents, people seeking humanitarian refuge and “diversity immigrants,” who come from countries with low rates of immigration to the United States.
The remaining 15 percent go to people who are immigrating for work reasons — but half of these are for workers’ spouses and children, leaving a mere 7 percent for so-called principal workers, most of whom are highly skilled. No other major Western economy gives such a low priority to employment-based immigration, and for good reason: these immigrants are the most skilled and least likely to be a burden on taxpayers.
With so few slots allocated to work-based green cards, wait times continue to grow. Immigrants typically enter on temporary visas and adjust to permanent status over time. But most green card categories have strict numerical limits that fall far short of the number of immigrants on temporary visas who wish to stay. The most recent data suggest that 1.1 million approved applicants are waiting for employment-based green cards. Immigrants from China and India are among the most adversely affected because, in general, no more than 7 percent of green cards can be allotted each year to applicants from any one country.
There is a better way. Provisional work-based visas, sponsored by employers and valid as long as the holder has a job, should replace green cards as the primary path to legal immigration. These visas should not be subject to country quotas and should be open-ended, so that people who don’t seek permanent residency will not get kicked out of the country, as happens now.
The visas would be “portable” — that is, the holder wouldn’t be tied to one employer — to ensure that workers are treated fairly. But because these visas would be tied to employment, immigrants would have to leave the country if the economy deteriorated and they couldn’t find work.
In place of our current system’s lotteries and “first-come, first-served” policies, the government should hold regular auctions where companies can bid for permits to bring in foreign workers. Employers would bid highest for the most-valued workers, creating a selection mechanism that wouldn’t rely on the judgment of bureaucrats or the paperwork skills of immigration lawyers.
Separate auctions would be run for high- and low-skilled workers, because permit prices would depend on prospective wages. Bringing low-skilled workers into the program is vital to stemming illegal immigration, as the current system’s lack of sufficient visas for the low-skilled is a main reason that people cross the border illegally.
These auctions would be more efficient than the current system because they would respond to changes in labor demand. When prices rose, the government could react by increasing the number of permits, better syncing immigration with the business cycle. Work-based immigration would rise with economic growth and fall with rising unemployment.
Finally, the auctions would provide the government with new revenue in an era of huge deficits. Some of that money might be used to offset costs incurred by states or localities with large numbers of immigrants, or to retrain American workers displaced by immigration.
For the past two decades, policy makers have tinkered on the margins of the immigration system, reacting to the latest crisis or political priority. Greater emphasis on work-based immigration as part of a coherent immigration process would go a long way to enhance our economy’s competitiveness and the nation’s well-being.
Pia Orrenius, a research officer at the Federal Reserve Bank of Dallas, and Madeline Zavodny, a professor of economics at Agnes Scott College, are the authors of “Beside the Golden Door: U.S. Immigration Reform in a New Era of Globalization.”
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