Friday, January 13, 2012
Yup, that's it.
Michael Lind writes a piece today that exemplifies good analysis. A good analyst, like a good diamond-cutter, knows exactly where to put his blade to make the right cut.
To show why Romney does NOT represent the traditions of "the free market", Lind places his knife between "stakeholder capitalism" and "shareholder capitalism".
Polistra has been cutting this question for a long time, using a more engineerish tool. (Follow the Broken Circle label below, especially this post as the closest equivalent to Lind's point.)
In pre-1970s America, a typical company had primary feedback loops to employees and customers, and a secondary loop to shareholders. Execs who served the shareholders at the expense of the customers and employees drove their companies into bankruptcy, so the practice was known BY EXPERIMENT to be a bad idea. Smart execs watched these bankruptcies and tried to keep their workers and customers happy, knowing BY EXPERIMENT that profit was more likely to follow from this practice.
In post-1970s America, only the loop with shareholders counts. The exec has exactly one goal: raise share prices and thus raise the value of his own stock options. Employees and customers are unnecessary externalities, and the wise exec eliminates them entirely. Just as before, this approach leads to bankruptcy. The difference is that bankruptcy is now desirable because it yields a huge cash bonus to the exec who caused the bankruptcy, and provides a huge payoff to Goldman's inverse bets.
Romney solely represents the modern setup. China gets the jobs, the execs get the money, and Goldman wins its bet. The employees and customers ... What are those things? Don't bother me with negative externalities.
Romney's top-level supporters in the Repooflican structure understand the whole system because they're on the receiving end (the Goldman end) of the cash flow. Accordingly, they've propagandized the rank-and-file followers to believe that this murderous arrangement is The Free Market. The earlier form has disappeared down the Memory Hole.
"Creative destruction" is the key to the propaganda. In normal old-fashioned capitalism some companies inevitably failed, but their death was not seen as creative or positive. The executives and shareholders suffered along with everyone else, so the exec tried to keep things running profitably. In modern Romneian capitalism, the death of a company is positive for the exec and the bettors, and nothing else exists.
To show why Romney does NOT represent the traditions of "the free market", Lind places his knife between "stakeholder capitalism" and "shareholder capitalism".
Polistra has been cutting this question for a long time, using a more engineerish tool. (Follow the Broken Circle label below, especially this post as the closest equivalent to Lind's point.)
In pre-1970s America, a typical company had primary feedback loops to employees and customers, and a secondary loop to shareholders. Execs who served the shareholders at the expense of the customers and employees drove their companies into bankruptcy, so the practice was known BY EXPERIMENT to be a bad idea. Smart execs watched these bankruptcies and tried to keep their workers and customers happy, knowing BY EXPERIMENT that profit was more likely to follow from this practice.
In post-1970s America, only the loop with shareholders counts. The exec has exactly one goal: raise share prices and thus raise the value of his own stock options. Employees and customers are unnecessary externalities, and the wise exec eliminates them entirely. Just as before, this approach leads to bankruptcy. The difference is that bankruptcy is now desirable because it yields a huge cash bonus to the exec who caused the bankruptcy, and provides a huge payoff to Goldman's inverse bets.
Romney solely represents the modern setup. China gets the jobs, the execs get the money, and Goldman wins its bet. The employees and customers ... What are those things? Don't bother me with negative externalities.
Romney's top-level supporters in the Repooflican structure understand the whole system because they're on the receiving end (the Goldman end) of the cash flow. Accordingly, they've propagandized the rank-and-file followers to believe that this murderous arrangement is The Free Market. The earlier form has disappeared down the Memory Hole.
"Creative destruction" is the key to the propaganda. In normal old-fashioned capitalism some companies inevitably failed, but their death was not seen as creative or positive. The executives and shareholders suffered along with everyone else, so the exec tried to keep things running profitably. In modern Romneian capitalism, the death of a company is positive for the exec and the bettors, and nothing else exists.
Labels: the broken circle
¶ 5:45 AM
