Since they have not studied anything remotely similar to economic history, it is understandable that top CEOs don’t get it. I get it. But Vanderbilt economist Margaret Blair should know better.
According to Professor Blair, capitalists in the 1930s, 1940s, and 1950s reflected an interest in the public. “It was around ’88 or ’89 that their tone changed and they started advocating shareholder primacy.” Really?
Yes, in the shadow of the worst global economic downturn in history, with fascism and nationalism breathing down their necks, elected officials radically overhauled the regulatory frameworks that governed private corporations. But do not think for a moment that capitalists woke up one day in the 1930s and decided that the bottom line was no longer the bottom line. That never happened.
What did happen was that the United States spent some $14.63T defeating fascism and nationalism. Thanks to union activism, big government and big government contracts lifted working families up from the bottom. When, in the early 1970s, this huge multiplier ran out of steam, corporations began working assiduously to deregulate industry and shift the tax burden back onto working families.
Investors are not evil people. They are, however, not the same as the public. Consumers are not the same thing as citizens. CEOs are not the same thing as public servants. The very fact that we are looking to private business to change its tune displays a profound misunderstanding of republican values and institutions, on the one hand, and of private equity on the other.
Do private investors care about their world? Of course they do. But, to the extent that they believe its future lies in their private market decisions, to this extent they fundamentally misunderstand the problem.