[Marxism] C.E.O.s Should Fear a Recession. It Could Mean Revolution.
lnp3 at panix.com
Wed Aug 21 16:42:17 MDT 2019
NY Times, Aug. 21, 2019
C.E.O.s Should Fear a Recession. It Could Mean Revolution.
By Farhad Manjoo
A recession looms, and the nation’s C.E.O.s are growing fearful.
It isn’t the potential of downturn itself that has them alarmed —
downturns come and downturns go, but whatever happens, chief executives,
like cats, tend to land on their comfortably padded feet.
Instead, the cause of their fear appears to be something more
fundamental. As Alan Murray, the C.E.O. of Fortune, writes in a cover
story chronicling the C-suite anxiety: “More and more C.E.O.s worry that
public support for the system in which they’ve operated is in danger of
disappearing.” They’re worried that when the next recession breaks,
revolution might, too. This could be the hour that the ship comes in:
The coming recession might finally prompt the masses to sharpen their
pitchforks and demand a reckoning.
Company executives are right to worry. A downturn will mark the end of a
record period of uninterrupted economic expansion. The American economy
has been growing for more than a decade, stock indexes recently hit new
highs, and the unemployment rate is at a 50-year low.
And yet the vast majority of Americans will not look back on the last
decade as years of fat and plenty. This was a gilded expansion, a decade
of creaking wage growth and profoundly unequal outcomes. The number of
Americans receiving food stamps is 40 percent higher now than in 2008,
yet we have twice as many billionaires as we did a decade ago.
This was an expansion driven by outsized gains to a handful of
“superstar” firms in “superstar” cities. Economic devastation reigned in
rural areas alongside catastrophic success in urban ones — an expansion
marked by housing crunches and infrastructure nightmares that every
level of government seems incapable of addressing. Corporate profits
grew as if there were no tomorrow, but they didn’t trickle down to
everyone else. Instead, dividends and stock buybacks got bigger while
C.E.O. pay went through the rose-gold roof. The rest of us got
smartphones, money-losing conveniences — Uber, WeWork, Netflix and meal
delivery apps — and mountains of student debt.
And so, when recession comes, we’ll be right to ask: Was that it? Is
this the best it gets? And if so, isn’t it time to go full Elizabeth
Warren — to make some fundamental, radical changes to how the American
economy works, so that we might prevent decades more of growth that
disproportionally benefits the titans among us?
But the C.E.O.s now have a plan to head off revolution. They want you to
know: Actually, they really do care about the world. Like, a lot.
This week, in a statement widely feted by well-meaning Davos types, the
Business Roundtable — an association of chief executives of nearly 200
companies, including Apple, Amazon, General Motors and Walmart —
declared that the era of soulless corporatism was over. The Business
Roundtable once held that a corporation’s “paramount duty” was to its
shareholders. Now, the Roundtable is singing a new, more inclusive tune.
A corporation, it says, should balance the interests of its shareholders
with those of other “stakeholders,” including customers, employees,
suppliers and local communities.
In other words: no more Mr. Terrible Guy. Corporations are people, my
friend, and it turns out that they’re really nice people, both
interesting and interested, and we really must have them over for dinner
I spent a tedious few minutes this week trying to come up with an
analogy to convey how thoroughly empty I found the Roundtable’s gesture
to be. I think I got one: Imagine a co-worker has been stealing your
lunch from the office fridge for years. Then, one day, he strolls in
with a big grin and grand announcement. Maybe he unfolds a scroll and
blows a trumpet. He has realized that “lunch maximization” might not
have been the best approach after all, and he will now try to be aware
of the wider consequences of some of his actions. Yes, he still really
wants your lunch. Yes, he will probably still fight any efforts to
prevent him from taking your lunch. But you should know that he also
feels a tinge bad about how it’s all worked out. So, no hard feelings?
I mean: Yay? It’s nice that C.E.O.s have vowed to turn over a new leaf.
But their statement lacks any call for greater structural changes in the
American economy — changes to how companies are taxed or regulated, or
how executives are paid, or how they should be judged.
And because a public corporation’s most direct incentives — including
the C.E.O.’s pay — remain tied to stock performance, there’s no reason
to believe that corporations will voluntarily move away from pleasing
shareholders alone, despite the new, high-minded ideals. In fact, the
fanfare surrounding the Roundtable’s empty statement could be read as an
effort to stave off structural economic reform rather than accelerate
it. It’s a way for the C.E.O.s to tell us that they’re on the case, so
we don’t have to resort to something unthinkable, like a Warren presidency.
If I sound cynical, it’s only because I’m not a complete idiot. In the
Trump era, America’s C.E.O.s have become masterful at talking out of
both sides of their mouths. They’ll rush to issue virtue-signaling
denunciations of the latest outrage from President Trump in order to
please their woke, restless customer bases, while on the down low,
they’ll champion his tax cuts and regulatory dismantling. And when the
president gets too rowdy, they’ll tell him to knock it off over a
It’s all a game to the moguls in charge. Their greatest fear is that
we’ll stop playing.
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