In “Two Cheers for Capitalism” Bobo says a big coming debate will be over how much say government should have over business and income equality. In the comments “David Henry” from Walden Pond says he’s given us “The same old GOP whine in a new bottle. No, Mr. Brooks. Without government “proposals” we would still have child labor, abuse of employees, and no benefits.” In “The DuBose Family: Grieving But Determined” Mr. Blow says the siblings and mother of Samuel DuBose are struggling to deal with his killing by a university police officer. Prof. Krugman, in “China’s Naked Emperors,” says the politicians in Beijing who have ruled during economic booms, not unlike many of their American counterparts, have no idea what they’re doing. Here’s Bobo:
We are clearly heading toward another great debate about the nature of capitalism. Contemporary capitalism’s critics are becoming both bolder and more intellectually rigorous. Protests and discussions are sprouting up all over the place.
For example, this week I was attending the Aspen Action Forum, a gathering of young business and NGO leaders selected because of their work for social change. My friend and Times colleague Anand Giridharadas delivered a courageous and provocative keynote address that ruffled some feathers, earned a standing ovation and has had people talking ever since.
Anand argued that a rough etiquette has developed among those who work in and raise money for nonprofits. The rich are to be praised for the good they do with their philanthropy, but they are never to be challenged for the harm they do in their businesses. “Capitalism’s rough edges must be sanded and its surplus fruit shared, but the underlying system must NEVER be questioned,” he said.
Anand suggested that in these days of growing income inequality, this approach is no longer good enough. “Sometimes I wonder,” he said, “whether these various forms of giving back have become to our era what the papal indulgence was to the Middle Ages: a relatively inexpensive way of getting oneself seemingly on the right side of justice, without having to alter the fundamentals of one’s life.”
The winners of our age, he continued, may be helping society with their foundations, but in their business enterprises, the main occupation of their life, they are doing serious harm. First they are using political and financial muscle to enact policies that help them “stack up, protect and bequeath the money.”
Second, they offload risks and volatility onto workers. Uber’s owners have a lot of security but they deny any responsibility for their workers’ “lives, health, desire for career growth.”
Third, the owners of capital are increasingly remote from their communities. “In the old days, if a company C.E.O. suddenly dumped the defined-benefits pension, you knew who to go see to complain. Today it may be an unseen private equity fund that lobbies for the change.” The virtualization of ownership insulates the privileged from the “devastating consequences” of their decisions.
Anand’s speech struck me as deeply patriotic in its passion and concern. He didn’t offer a policy agenda to address these deep structural problems, but his description of them implied that government would have to get much more heavily involved in corporate governance and private-sector investment decisions than ever before.
Indeed, progressive economists are already walking down this path. Hillary Clinton’s new tax plan is based on the assumption that government officials are smart enough to tell investors how they should time their investments. Her corporate governance proposals are based on the idea that federal officials know better than executives how they should run their own companies. There will be much more of this in years to come.
This strikes me as a departure from recent progressivism. In the recent past progressives have argued for a little redistribution to fund human capital development: early childhood education, child and family leave, better community colleges.
But the next wave of thinking implies that it is not enough to simply give people access to capitalism and provide them with a safety net. The underlying system has to be reconfigured.
This is a bigger debate.
People like me will argue that it’s a wrong turn. First, government planners are not smart enough to plan complex systems in this way. The beauty of capitalism is that it takes a dim view of human reason. No group of experts is smart enough to allocate the resources of society well. Capitalism sets up a system of discovery as different people compete and adapt in accordance with market signals. If you try to get technocratic planners organizing investment markets or internal business governance, you will wind up with perversities and rigidities that will make everything worse.
Second, the attempt to tame the market will end up stultifying it. Everybody knows that capitalism’s creative destruction can be rough. But over the last few decades, a ragged version of global capitalism in places ranging from China to Nigeria has brought about the greatest reduction in poverty in human history. America’s fluid style of capitalism attracts driven and talented immigrants and creates vast waves of technological innovation. This dynamism is always in danger of being stultified by planners who think they can tame it and by governing elites who want to rig it. We should not take it for granted.
The coming debate about capitalism will be between those who want to restructure the underlying system and those who want to help people take advantage of its rough intensity. It will be between people who think you need strong government to defeat oligarchy and those who think you need open competition.
This will be fun.
Fun? FUN? Eff off, Bobo. Go sit in your “vast spaces for entertaining” and STFU. Here’s Mr. Blow:
Terina DuBose Allen had just gotten out of the shower when she answered the phone. It was her brother Aubrey DuBose.
Aubrey warned Terina, “You need to sit down.”
“I’m not sitting down,” Terina responded, sensing something wrong, and worrying maybe something had happened to their mother.
Aubrey said, “Sam is dead.”
Terina recalled to me over lunch Thursday in downtown Cincinnati, “I just screamed,” and she said she dropped to the floor. “Everything in my body went numb.” She continued, “I couldn’t get off the floor for three hours.”
Samuel DuBose was her brother, the second of five siblings. Terina is the oldest. Sam — no one called him Samuel, Terina explained — was a 43-year-old, unarmed Cincinnati man shot in the head and killed on July 19 by a University of Cincinnati police officer, Ray Tensing.
Terina struggled to explain the enormity of her and her family’s loss and her reaction to it: “I broke down because we had just lost a really good person, a person in the universe who always had your back.”
I spent much of the day Thursday with the DuBose family, “embedded,” as their lawyers called it. I went with them as they made the media rounds; I sat with them in the courtroom during the arraignment as they saw the man who killed Sam in the flesh for the first time; I ate with them; I was there when they laughed and when they cried uncontrollably in a hotel hallway. Grief comes in waves that keep crashing to shore.
I have had the honor and the solemn duty to be around many families with similar losses in the last couple of years, and there is something of an unsettling sameness: The feeling of being thrust into a harsh spotlight when you’d rather quietly grieve; being motivated by a sense of mission to fight for the person who is lost, all the while emotionally and physically running on empty; resisting the pull of a world trying desperately to reduce the man or woman you loved into a martyr it can champion or, conversely, a menace it can despise.
Tensing’s lawyer, Stew Mathews, said of Tensing: “He’s devastated by this, as is his family, and he is currently lodged in the Hamilton County Justice Center.”
Actually, if you want to see devastation, look no further than the DuBose family. As Terina said at the courthouse, “I wish my brother was in jail and not dead.”
But in addition to the staggering sense of loss is also a steel-spined determination, and no one in that family typifies that more than Terina. She has emerged as something of a spokeswoman and a warrior.
As she spoke to one of the lawyers on the sidewalk, I heard a man say over my shoulder, “She’s strong as hell,” to which a woman responded, “She’s my new idol.”
For instance, she has become a strong advocate for body cameras, although they are not perfect solutions. As she put it, in her brother’s case, they didn’t prevent the crime, but they prevented the cover-up.
Terina’s sister, Cleshawn DuBose, said of her: “We call her ‘Get-Right-Terina.’”
I got the sense of that statement immediately: If you were in the wrong, Terina would get you right.
Terina, who said she holds a graduate degree in strategic leadership and owns her own corporate consulting company, wanted to correct some of the “lies” about her brother.
According to both sisters, Sam wasn’t violent, and he wasn’t a heavy drinker. But, Terina said, “he wasn’t a monk” either.
As Terina said, “I’m trying to give you the real.” Cleshawn chimed in, “We don’t want Sam to be misrepresented.” Terina added, “for the better or the worse.”
Terina summed it up: Sam had been arrested dozens of times on traffic violations. Also, he smoked marijuana, and had years ago served time for selling it.
But as Terina put it, “That was the worst of it.”
Not only are none of those reasons to kill a man, or to say that he “deserved it,” none of those reasons have anything whatsoever to do with the incident that led to Sam’s death.
Sam was a human being — a man, a son, a brother and a father. “Sam was loved and Sam loved, hard,” Terina said.
Midway through the day, Sam’s mother, Audrey DuBose, joined the rest of the family on their rounds.
She was visibly drained, but still spiritually moored. She insisted that Terina and Cleshawn pray with her during one of our car rides: “We need to pray; we need the strength.”
I noticed the way she drew long breaths, the way the water in the bottle she was holding vibrated because her hand was trembling, the way she closed her eyes for long stretches, even when talking. It was the familiar fatigue that hangs on the mothers of killed children.
She confessed to me in a quiet moment: “All I want to do is just shut my door and cover up and never open it again.”
That is what devastation feels like.
And now here’s Prof. Krugman:
Politicians who preside over economic booms often develop delusions of competence. You can see this domestically: Jeb Bush imagines that he knows the secrets of economic growth because he happened to be governor when Florida was experiencing a giant housing bubble, and he had the good luck to leave office just before it burst. We’ve seen it in many countries: I still remember the omniscience and omnipotence ascribed to Japanese bureaucrats in the 1980s, before the long stagnation set in.
This is the context in which you need to understand the strange goings-on in China’s stock market. In and of itself, the price of Chinese equities shouldn’t matter all that much. But the authorities have chosen to put their credibility on the line by trying to control that market — and are in the process of demonstrating that, China’s remarkable success over the past 25 years notwithstanding, the nation’s rulers have no idea what they’re doing.
Start with the fundamentals. China is at the end of an era — the era of superfast growth, made possible in large part by a vast migration of underemployed peasants from the countryside to coastal cities. This reserve of surplus labor is now dwindling, which means that growth must slow.
But China’s economic structure is built around the presumption of very rapid growth. Enterprises, many of them state-owned, hoard their earningsrather than return them to the public, which has stunted family incomes; at the same time, individual savings are high, in part because the social safety net is weak, so families accumulate cash just in case. As a result, Chinese spending is lopsided, with very high rates of investment but a very lowshare of consumer demand in gross domestic product.
This structure was workable as long as torrid economic growth offered sufficient investment opportunities. But now investment is running into rapidly decreasing returns. The result is a nasty transition problem: What happens if investment drops off but consumption doesn’t rise fast enough to fill the gap?
What China needs are reforms that spread the purchasing power — and it has, to be fair, been making efforts in that direction. But by all accounts these efforts have fallen short. For example, it has introduced what is supposed to be a national health care system, but in practice many workers fall through the cracks.
Meanwhile, China’s leaders appear to be terrified — probably for political reasons — by the prospect of even a brief recession. So they’ve been pumping up demand by, in effect, force-feeding the system with credit, including fostering a stock market boom. Such measures can work for a while, and all might have been well if the big reforms were moving fast enough. But they aren’t, and the result is a bubble that wants to burst.
China’s response has been an all-out effort to prop up stock prices. Large shareholders have been blocked from selling; state-run institutions have been told to buy shares; many companies with falling prices have been allowed to suspend trading. These are things you might do for a couple of days to contain an obviously unjustified panic, but they’re being applied on a sustained basis to a market that is still far above its level not long ago.
What do Chinese authorities think they’re doing?
In part, they may be worried about financial fallout. It seems that a number of players in China borrowed large sums with stocks as security, so that the market’s plunge could lead to defaults. This is especially troubling because China has a huge “shadow banking” sector that is essentially unregulated and could easily experience a wave of bank runs.
But it also looks as if the Chinese government, having encouraged citizens to buy stocks, now feels that it must defend stock prices to preserve its reputation. And what it’s ending up doing, of course, is shredding that reputation at record speed.
Indeed, every time you think the authorities have done everything possible to destroy their credibility, they top themselves. Lately state-run media have been assigning blame for the stock plunge to, you guessed it, a foreign conspiracy against China, which is even less plausible than you may think: China has long maintained controls that effectively shut foreigners out of its stock market, and it’s hard to sell off assets you were never allowed to own in the first place.
So what have we just learned? China’s incredible growth wasn’t a mirage, and its economy remains a productive powerhouse. The problems of transition to lower growth are obviously major, but we’ve known that for a while. The big news here isn’t about the Chinese economy; it’s about China’s leaders. Forget everything you’ve heard about their brilliance and foresightedness. Judging by their current flailing, they have no clue what they’re doing.