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Vocabulary > Economy > Capitalism
Pat Bagley
Salt Lake Tribune
Utah
Cagle
1.11.2008
capital
capitalism
http://www.guardian.co.uk/capitalismincrisis
http://www.nytimes.com/2012/03/17/opinion/nocera-the-good-bad-and-ugly-of-capitalism.html
http://www.nytimes.com/2012/03/14/opinion/friedman-capitalism-version-2012.html
http://www.guardian.co.uk/politics/2012/jan/19/david-cameron-pledges-popular-capitalism
http://www.nytimes.com/2011/10/27/opinion/kristof-crony-capitalism-comes-homes.html
http://www.timesonline.co.uk/tol/comment/columnists/daniel_finkelstein/article5391267.ece
'ethical capitalism'
2009
http://www.independent.co.uk/news/uk/politics/cameron-urges-ethical-capitalism-after-crunch-1222122.html
capitalist
http://www.nytimes.com/2012/01/25/us/politics/obama-sets-sights-on-romney-in-state-of-the-union.html
http://www.nytimes.com/2011/09/07/opinion/a-capitalist-idea.html
capitalisation
primary capital
venture capital
http://topics.nytimes.com/topics/reference/timestopics/subjects/v/venture_capital/index.html
http://www.nytimes.com/2005/05/07/technology/07vonage.html
venture capitalism
venture capitalist
http://www.nytimes.com/2009/07/07/technology/start-ups/07venture.html
http://www.nytimes.com/2005/05/22/business/yourmoney/22venture.html
capitalist system
business
http://business.guardian.co.uk/0,,519528,00.html
http://www.independent.co.uk/news/business/
Cartoonist Kipper Williams gives his take on
the day's business news 2008-2006
http://www.guardian.co.uk/business/series/kipperwilliams
http://business.guardian.co.uk/kipper/0,,1844441,00.html
big business
http://society.guardian.co.uk/children/story/0,,2108439,00.html
income inequality
USA
http://topics.nytimes.com/top/reference/timestopics/subjects/i/income/income_inequality/index.html
http://www.nytimes.com/2010/10/17/business/17view.html
Schrank
The Independent
16 November 2008
http://www.independent.co.uk/opinion/the-daily-cartoon-760940.html?ino=13
L to R: French President Nicolas Sarkozy,
US
President George W. Bush, British Prime Minister Gordon Brown
The Good, Bad and Ugly of Capitalism
March 16, 2012
The New York Times
By JOE NOCERA
On Wednesday, Howard Schultz, the chairman and chief executive
of Starbucks, will take the podium at his company’s annual meeting and talk
about the importance of morality in business.
Yes, morality. I don’t know that he’ll use that exact word. But there can be
little doubt that in recent years, especially, Schultz has been practicing a
kind of moral capitalism. Profitability is important, he believes, but so is
treating customers, employees and coffee growers fairly. Recently, Schultz has
defined Starbucks’s mission even more broadly, creating programs that have
nothing at all to do with selling coffee but are aimed at helping the country
recover from the Great Recession.
In the speech, Schultz plans to make a direct link between Starbucks’s record
profits and this larger societal role the company has embraced. He will make the
case that companies that earn the country’s trust will ultimately be rewarded
with a higher stock price. “The value of your company is driven by your
company’s values,” he plans to say.
I bring up Schultz and Starbucks because this week we saw a different kind of
American capitalism on display — the “rip your eyeballs out” capitalism of
Goldman Sachs. In the corporate equivalent of the shot heard round the world,
Greg Smith, a former Goldman executive, wrote an Op-Ed article in The Times as
he was walking out the door in which he described a corporate culture that
values only one thing: making as much money as possible, by whatever means
necessary. According to Smith, Goldman views clients as pigeons to be plucked
rather than customers to be valued. Goldman traders vie to see how much profit
they can make at the expense of their clients, even if it means selling them
products that are sure to “blow up” eventually. “It makes me ill how callously
people talk about ripping their clients off,” Smith wrote.
In the wake of Smith’s article, plenty of people raced to Goldman’s defense.
Michael Bloomberg, New York’s billionaire mayor, whose company sells Goldman
expensive computer terminals, went to Goldman Sachs’s headquarters in a show of
support. The editors of his eponymous firm published an editorial that
mercilessly mocked Smith. They and others pointed out that Goldman clients are
big boys who can take care of themselves. Even some clients agreed. “You better
not turn your back on them,” one Goldman customer told The Financial Times. Yet,
he added, “They are also highly competent.”
But there’s a reason Smith’s article has struck such a chord. It is the same
reason that Goldman Sachs, despite having come through the financial crisis
largely unscathed, has become the target of such astonishing venom, described as
a vampire squid and the like. The reason is that the kind of amoral,
eat-what-you-kill capitalism that Goldman represents is one that most Americans
instinctively find repugnant. It confirms the suspicions many people have that
Wall Street has become a place where sleazy practices are the norm, and where
generating profits in ways that are detrimental to society is the ticket to a
successful career and a multimillion-dollar bonus.
Goldman bundled terrible subprime mortgages that helped bring about the
financial crisis. Smelling trouble, it unloaded its worst mortgage bonds by
cramming them down the throats of its clients. It secretly allowed a
short-seller, John Paulson, to pick some especially toxic mortgage bonds that
were bundled and sold to Goldman clients — with Paulson profiting by taking the
“short” side of the trade. Just recently, Goldman had to admit that one of its
investment bankers had acted as a merger adviser to the El Paso Corporation
while holding stock in Kinder Morgan, which was trying to acquire El Paso. It
would be hard to imagine a more blatant conflict — yet no one at Goldman
bothered to tell El Paso.
These practices may not be illegal, but can you really say they represent the
values that we want to see on Wall Street or in our corporations? I can’t.
And Goldman shouldn’t either. What has been amazing is that, despite three years
of nonstop criticism — including Congressional hearings and settlements with the
government — Goldman has not changed one iota. That is another reason Smith’s
article resonated. It confirmed that suspicion as well. Goldman’s response to
every controversy these past three years has been to bury them in a blizzard of
public relations. And this has been its response to the Smith article,
releasing, for instance, a companywide e-mail from Lloyd Blankfein, its chief
executive, insisting that Goldman does, too, care about clients. Consistently,
Goldman’s attitude has been: This, too, shall pass.
So far, though, it hasn’t. And maybe, just maybe, it won’t. Maybe the time has
come for Blankfein to watch what Howard Schultz is doing at Starbucks.
Sometimes, the best way to do well really is to do good.
The Good, Bad and Ugly of Capitalism, NYT,
16.3.2012,
http://www.nytimes.com/2012/03/17/opinion/nocera-the-good-bad-and-ugly-of-capitalism.html
Capitalism, Version 2012
March 13, 2012
The New York Times
By THOMAS L. FRIEDMAN
David Rothkopf, the chief executive and editor-at-large of
Foreign Policy magazine, has a smart new book out, entitled “Power, Inc.,” about
the epic rivalry between big business and government that captures, in many
ways, what the 2012 election should be about — and it’s not “contraception,”
although the word does begin with a “C.” It’s the future of “capitalism” and
whether it will be shaped in America or somewhere else.
Rothkopf argues that while for much of the 20th century the great struggle on
the world stage was between capitalism and communism, which capitalism won, the
great struggle in the 21st century will be about which version of capitalism
will win, which one will prove the most effective at generating growth and
become the most emulated.
“Will it be Beijing’s capitalism with Chinese characteristics?” asks Rothkopf.
“Will it be the democratic development capitalism of India and Brazil? Will it
be entrepreneurial small-state capitalism of Singapore and Israel? Will it be
European safety-net capitalism? Or will it be American capitalism?” It is an
intriguing question, which raises another: What is American capitalism today,
and what will enable it to thrive in the 21st century?
Rothkopf’s view, which I share, is that the thing others have most admired and
tried to emulate about American capitalism is precisely what we’ve been
ignoring: America’s success for over 200 years was largely due to its healthy,
balanced public-private partnership — where government provided the
institutions, rules, safety nets, education, research and infrastructure to
empower the private sector to innovate, invest and take the risks that promote
growth and jobs.
When the private sector overwhelms the public, you get the 2008 subprime crisis.
When the public overwhelms the private, you get choking regulations. You need a
balance, which is why we have to get past this cartoonish “argument that the
choice is either all government or all the market,” argues Rothkopf. The lesson
of history, he adds, is that capitalism thrives best when you have this balance,
and “when you lose the balance, you get in trouble.”
For that reason, the ideal 2012 election would be one that offered the public
competing conservative and liberal versions of the key grand bargains, the key
balances, that America needs to forge to adapt its capitalism to this century.
The first is a grand bargain to fix our long-term structural deficit by phasing
in $1 in tax increases, via tax reform, for every $3 to $4 in cuts to
entitlements and defense over the next decade. If the Republican Party continues
to take the view that there must be no tax increases, we’re stuck. Capitalism
can’t work without safety nets or fiscal prudence, and we need both in a
sustainable balance.
As part of this, we will need an intergenerational grand bargain so we don’t end
up in an intergenerational civil war. We need a proper balance between
government spending on nursing homes and nursery schools — on the last six
months of life and the first six months of life.
Another grand bargain we need is between the environmental community and the oil
and gas industry over how to do two things at once: safely exploit America’s
newfound riches in natural gas, while simultaneously building a bridge to a
low-carbon energy economy, with greater emphasis on energy efficiency.
Another grand bargain we need is on infrastructure. We have more than a $2
trillion deficit in bridges, roads, airports, ports and bandwidth, and the
government doesn’t have the money to make it up. We need a bargain that enables
the government to both enlist and partner with the private sector to unleash
private investments in infrastructure that will serve the public and offer
investors appropriate returns.
Within both education and health care, we need grand bargains that better
allocate resources between remediation and prevention. In both health and
education, we spend more than anyone else in the world — without better
outcomes. We waste too much money treating people for preventable diseases and
reteaching students in college what they should have learned in high school.
Modern capitalism requires skilled workers and workers with portable health care
that allows them to move for any job.
We also need a grand bargain between employers, employees and government — à la
Germany — where government provides the incentives for employers to hire, train
and retrain labor.
We can’t have any of these bargains, though, without a more informed public
debate. The “big thing that’s missing” in U.S. politics today, Bill Gates said
to me in a recent interview, “is this technocratic understanding of the facts
and where things are working and where they’re not working,” so the debate can
be driven by data, not ideology.
Capitalism and political systems — like companies — must constantly evolve to
stay vital. People are watching how we evolve and whether our version of
democratic capitalism can continue to thrive. A lot is at stake here. But if “we
continue to treat politics as a reality show played for cheap theatrics,” argues
Rothkopf, “we increase the likelihood that the next chapter in the ongoing story
of capitalism is going to be written somewhere else.”
Capitalism, Version 2012, NYT, 13.3.2012,
http://www.nytimes.com/2012/03/14/opinion/friedman-capitalism-version-2012.html
Critiques for Capitalists in Obama’s Speech,
With One in Particular in His Sights
January 25, 2012
The New York Times
By MARK LANDLER
WASHINGTON — President Obama did not mention Mitt Romney on
Tuesday evening, but he didn’t need to. Mr. Romney, whom the president’s aides
still view as his most likely opponent in the fall, was the unspoken adversary
in Mr. Obama’s call for a more equitable society — the natural foil for his
proposals to level the playing field for middle-class Americans, from taxes to
trade policy.
When Mr. Obama talked about levying a millionaires’ tax, he might have been
referring to Mr. Romney’s newly released tax return, which disclosed he paid a
tax rate of 13.9 percent on income of more than $20 million in 2010.
When he referred to his administration’s bailout of the auto industry, noting
that “some even said we should let it die,” he could have been talking about Mr.
Romney’s argument that the carmakers should have been allowed to fail. And when
he said he would oppose “any effort to return to the very same policies that
brought on this economic crisis in the first place,” he could have been
referring to Mr. Romney’s call for a rollback of regulations on Wall Street.
Nine months before he faces the voters, Mr. Obama seized what is likely to be
one of his most prominent platforms of the year to draw a bright line between
himself and Mr. Romney — and, in the process, try to appeal to those frustrated
by the deepening economic divide.
Gone was the soaring language of his last State of the Union address, when the
president spoke of winning the future — a challenge he likened to “our
generation’s Sputnik moment.” With the tents of the Occupy protesters catching
snow in American cities, he was tapping into a national sense of grievance.
“When Americans talk about folks like me paying my fair share of taxes, it’s not
because they envy the rich,” Mr. Obama said, answering Mr. Romney’s charge that
the president engages in the “bitter politics of envy.” “It’s because they
understand that when I get tax breaks I don’t need and the country can’t afford,
it either adds to the deficit or somebody else has to make up the difference.”
It is a theme he has struck repeatedly as his campaign has geared up, and
nowhere more forcefully than last month in Osawatomie, Kan., where he invoked
the spirit of Theodore Roosevelt, a Republican aristocrat who nevertheless broke
up monopolies and campaigned for a progressive income tax.
Mr. Obama’s appeal on Tuesday, studded as it was with the policy proposals that
fill these addresses, did not match that populist fury. But in the august
setting of the Capitol, squaring off against an often-hostile Congress, the
president rolled out an election-year message that offers voters a stark choice
between his vision and what he paints as the Darwinian approach of Mr. Romney
and other Republicans.
To some extent, Mr. Obama was also aiming his words at Florida, where Mr. Romney
and the rest of the Republican field are competing in a primary next week over
the right to challenge the president.
Every word in a State of the Union address is carefully chosen. So it was no
accident that when the president discussed the auto industry and the future of
American manufacturing, he said: “What’s happening in Detroit can happen in
other industries. It can happen in Cleveland and Pittsburgh and Raleigh.”
Those cities happen to be in Michigan, Ohio, Pennsylvania and North Carolina —
battleground states totaling 69 electoral votes.
But much of the president’s message was clearly intended to push back at his
Republican rivals and their critiques of his record.
Lest anyone forget Mr. Romney’s background at Bain Capital as an avid buyer and
seller of companies, Mr. Obama offered a paean to permanence — to companies
built on a sturdy foundation of manufacturing and skilled workers. These
businesses, he said, are the basis of a competitive economy.
Mr. Obama also seemed to have Mr. Romney in mind when he announced new housing
assistance and declared that “responsible homeowners shouldn’t have to sit and
wait for the housing market to hit bottom to get some relief.” Last year, Mr.
Romney went to Nevada, the state hardest hit by foreclosures, and told a Las
Vegas newspaper that the housing market needed to bottom out.
Mr. Obama also said he would oppose efforts to repeal financial regulations, and
he drew a direct link between the policies of his predecessor, George W. Bush,
and the economic mess that has consumed his own presidency.
In recent weeks, Mr. Obama has had a useful surrogate in Newt Gingrich, the
former House speaker, who has accused Mr. Romney of destroying jobs while at
Bain and pressured him to release his tax returns.
But Mr. Gingrich, whose victory in the South Carolina primary has turned him
into a real competitor, did not escape a few jabs Tuesday night. Mr. Obama
called for new rules to reduce the influence of lobbyists. Left unsaid was Mr.
Gingrich’s disclosure on Monday that he had been paid $1.6 million to advise the
mortgage giant Freddie Mac.
Mr. Romney was not silent on Mr. Obama’s big day, earlier laying out his own
case for leadership in a speech at a shuttered factory in Tampa, Fla. He argued
that his 25 years in business had given him the skills to turn around the
economy. The president, Mr. Romney said, “puts his faith in government; we put
our faith in the American people.”
“Ours is the party of free enterprise, free markets and consumer choice,” he
said. “The Republican Party stands for personal responsibility and equal
opportunity. We don’t demonize prosperity; we celebrate success.”
Mr. Obama countered that he had turned things around, pointing to the revived
auto industry, a recovering economy and three million private-sector jobs. And
he flatly rejected the contention of Mr. Romney, Mr. Gingrich and other
Republicans that he is presiding over a country in decline.
“Anyone who tells you otherwise,” the president said, “anyone who tells you that
America is in decline or that our influence has waned, doesn’t know what they’re
talking about.”
Jonathan Weisman contributed reporting.
Critiques for Capitalists in Obama’s
Speech, With One in Particular in His Sights, NYT, 25.1.2012,
http://www.nytimes.com/2012/01/25/us/politics/obama-sets-sights-on-romney-in-state-of-the-union.html
Crony
Capitalism Comes Home
October 26,
2011
The New York Times
By NICHOLAS D. KRISTOF
Whenever I
write about Occupy Wall Street, some readers ask me if the protesters really are
half-naked Communists aiming to bring down the American economic system when
they’re not doing drugs or having sex in public.
The answer is no. That alarmist view of the movement is a credit to the
(prurient) imagination of its critics, and voyeurs of Occupy Wall Street will be
disappointed. More important, while alarmists seem to think that the movement is
a “mob” trying to overthrow capitalism, one can make a case that, on the
contrary, it highlights the need to restore basic capitalist principles like
accountability.
To put it another way, this is a chance to save capitalism from crony
capitalists.
I’m as passionate a believer in capitalism as anyone. My Krzysztofowicz cousins
(who didn’t shorten the family name) lived in Poland, and their experience with
Communism taught me that the way to raise living standards is capitalism.
But, in recent years, some financiers have chosen to live in a government-backed
featherbed. Their platform seems to be socialism for tycoons and capitalism for
the rest of us. They’re not evil at all. But when the system allows you more
than your fair share, it’s human to grab. That’s what explains featherbedding by
both unions and tycoons, and both are impediments to a well-functioning market
economy.
When I lived in Asia and covered the financial crisis there in the late 1990s,
American government officials spoke scathingly about “crony capitalism” in the
region. As Lawrence Summers, then a deputy Treasury secretary, put it in a
speech in August 1998: “In Asia, the problems related to ‘crony capitalism’ are
at the heart of this crisis, and that is why structural reforms must be a major
part” of the International Monetary Fund’s solution.
The American critique of the Asian crisis was correct. The countries involved
were nominally capitalist but needed major reforms to create accountability and
competitive markets.
Something similar is true today of the United States.
So I’d like to invite the finance ministers of Thailand, South Korea and
Indonesia — whom I and other Americans deemed emblems of crony capitalism in the
1990s — to stand up and denounce American crony capitalism today.
Capitalism is so successful an economic system partly because of an internal
discipline that allows for loss and even bankruptcy. It’s the possibility of
failure that creates the opportunity for triumph. Yet many of America’s major
banks are too big to fail, so they can privatize profits while socializing risk.
The upshot is that financial institutions boost leverage in search of supersize
profits and bonuses. Banks pretend that risk is eliminated because it’s
securitized. Rating agencies accept money to issue an imprimatur that turns out
to be meaningless. The system teeters, and then the taxpayer rushes in to bail
bankers out. Where’s the accountability?
It’s not just rabble-rousers at Occupy Wall Street who are seeking to put
America’s capitalists on a more capitalist footing.
“Structural change is necessary,” Paul Volcker, the former chairman of the
Federal Reserve, said in an important speech last month that discussed many of
these themes. He called for more curbs on big banks, possibly including trimming
their size, and he warned that otherwise we’re on a path of “increasingly
frequent, complex and dangerous financial breakdowns.”
Likewise, Mohamed El-Erian, another pillar of the financial world who is the
chief executive of Pimco, one of the world’s largest money managers, is
sympathetic to aspects of the Occupy movement. He told me that the economic
system needs to move toward “inclusive capitalism” and embrace broad-based job
creation while curbing excessive inequality.
“You cannot be a good house in a rapidly deteriorating neighborhood,” he told
me. “The credibility and the fair functioning of the neighborhood matter a great
deal. Without that, the integrity of the capitalist system will weaken further.”
Lawrence Katz, a Harvard economist, adds that some inequality is necessary to
create incentives in a capitalist economy but that “too much inequality can harm
the efficient operation of the economy.” In particular, he says, excessive
inequality can have two perverse consequences: first, the very wealthy lobby for
favors, contracts and bailouts that distort markets; and, second, growing
inequality undermines the ability of the poorest to invest in their own
education.
“These factors mean that high inequality can generate further high inequality
and eventually poor economic growth,” Professor Katz said.
Does that ring a bell?
So, yes, we face a threat to our capitalist system. But it’s not coming from
half-naked anarchists manning the barricades at Occupy Wall Street protests.
Rather, it comes from pinstriped apologists for a financial system that glides
along without enough of the discipline of failure and that produces soaring
inequality, socialist bank bailouts and unaccountable executives.
It’s time to take the crony out of capitalism, right here at home.
Crony Capitalism Comes Home, NYT, 26.10.2011,
http://www.nytimes.com/2011/10/27/opinion/kristof-crony-capitalism-comes-homes.html
A
Capitalist Idea
September
6, 2011
The New York Times
By WILLIAM M. WALKER
PRESIDENT
OBAMA needs to go big. Jeffrey R. Immelt, chairman of the president’s Council on
Jobs and Competitiveness, may have suggestions, but considering that Fortune 100
companies have killed 2.9 million jobs in America over the past decade while
adding 2.4 million abroad, that may not be the best input. I’m an entrepreneur
and I’m creating jobs. Here are eight suggestions:
Significantly reduce Sarbanes-Oxley regulations for public companies with
revenues under $500 million. My company went public last year and spends $3
million to $4 million a year in additional insurance, accounting and legal costs
stemming from compliance with Sarbanes-Oxley financial reporting.
Reinstate Glass-Steagall and eliminate Dodd-Frank. Get commercial banks back to
being banks, and get investment banks back to raising capital and trading.
Reinstating Glass-Steagall would force the “too big to fail” banks to divest
assets, something Dodd-Frank does not address.
Raise rates on short-term capital gains and lower rates on long-term capital
gains. Hedge funds and private equity investors should not be rewarded for
short-term capital gains that produce enormous market volatility. Raise the
short-term capital gains rate to 35 percent, and lower the long-term rate (over
one year) to 10 percent.
Provide companies with the confidence that if they invest in the United States,
they aren’t going to face increased wage and benefit costs. Businesses will not
invest if they don’t know the actual cost they will bear to comply with health
care, consumer protection, banking and environmental regulations. The president
has created a regulatory landscape that scares investors and is making chief
executives hoard cash.
Require any mortgage originator who sells a mortgage to Fannie Mae or Freddie
Mac to take a first-loss position, meaning that if the loan goes bad, the
originator, not Fannie or Freddie, is responsible for the first 5 percent loss,
and then shares losses with Fannie or Freddie up to 20 percent.
Means-test Social Security. Many wealthy Americans do not need benefits. Give
them a tax deduction to the value of their estate for their accumulated
contributions.
Make serious cuts in Medicare and Medicaid. The health care bill sent the
message that we will insure every American and cover every disease. We cannot
afford that type of health care. Americans need to take responsibility for their
health and realize that life choices (smoking, overeating, etc.) may produce
health conditions that are not covered.
Identify 100 major infrastructure projects that will put this country ahead of
our competition and put people to work building high-speed trains, highways,
water pipelines, irrigation canals and alternative energy sources. Borrow as
much money as the government possibly can to fund this investment. At 2 percent
interest, it’s a good investment.
William M.
Walker is chief executive of Walker & Dunlop,
a commercial real estate financing company.
A Capitalist Idea, NYT, 6.9.2011,
http://www.nytimes.com/2011/09/07/opinion/a-capitalist-idea.html
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