Is Compassionate Capitalism Dead?

Did it ever really exist?

Under US law, other than a proscription against violating statutes and bona fide governmental regulations (“compliance”), corporate boards of directors have only one fiduciary obligation: maximize shareholder values. Under the laws of some European nations, shareholders are but one category of stakeholders to which a corporate board has a statutory duty. Often these additional legally empowered stakeholders include employees, unions, society and the community.

Corporate boards in the US thus must justify their charitable efforts, not in terms of sheer goodness, but in how such efforts improve their public or in-trade perception, which in turn facilitates recruitment of skilled labor, increases the desires of other businesses and customers to deal with them and adds to their reputation of solidity and reliability. Those “desired responses” are thus linked to the board’s sole corporate mandate: maximize shareholder values. Where companies are controlled by individual mega-billionaires, the primary shareholders, provided minority shareholders are not negatively prejudiced (see, Cal Supreme Court: Jones vs. H.F. Ahmanson – 1969), pet charities and causes are often prioritized… at some risk.

What is equally at stake, as privileged classes are accorded greater power and influence (see, US Supreme Court: Citizens United vs FEC – 2010), is that amassed wealth allows those at the top of the income inequality ladder (the worst spread in the entire developed world) to dictate power, influence and, depending where they deploy their capital (including political contributions), direct policy-making that used to be relegated to elected representatives assumed to be operating in the interests of their constituencies. In effect, what is considered political corruption in other nations, using vast pools of capital even if not directly controlled by candidates (wink, wink) to buy media, to make political contributions and effectively buy polices favorable to those with the financing able to do so, has been legalized in the United States. But by international standards, it is still viewed a corruption.  Regardless of the source – for example, Soros on the left, Bloomberg in the middle and Adelson on the right – money talks and free choice walks. We have become a plutocracy.

Strangely, the populist upsurge for Donald Trump, ironically himself a member of the monied elite, is as much a reflection of the failure of current governmental realities – favoring “elites” – as anything else. Despite Trump’s current media monopoly and surging approval ratings, he will be as much of a victim even as he is currently seen as a “rally around the flag boys” champion in dealing with this pandemic.

Younger generations are watching and learning. Their fear that their elders were saddling them with the legacy of complete and total disruption by reason of ignoring climate change has temporarily refocused on the political distortions and “mis-actions” of the federal government over COVID-19. These are the voters of the future, if there is even a nation left in which to vote. And what they see, particularly in urban concentrations, is that the current forms of our “democracy” and the underlying elevation of naked “capitalism” are no longer working.

The rising generations were raised before the Cold War or the Red Scare that dominated the post-WWI political scene until the 1989. They are not repelled by words like “socialism” and “communism,” even as misinterpreted by conservative politicians who tend to conflate social programs with socialism (hence, Bernie Sanders use of “socialism” in his approach actually attracts the young); they seem to feel a greater aversion to naked capitalism, at least the way it has grown in the United States. Words that older generations spent years fighting (Korea, Vietnam, etc.) no longer carry a negative connotation. They’ve returned to the dictionary meanings without the brutal reality of the autocrats who hid behind those concepts for total personal aggrandizement. Our younger generations are watching distortions of the American form of government, as it has devolved into a less than perfect, unequal representational form of government, seemingly for the total personal aggrandizement of Donald John Trump.

Those who do not remember the past are condemned to repeat its mistakes. Thank you, George Santayana. And so it is that most Americans believe that, as this pandemic eventually passes, we shall return to what was before. History tells us that will not happen. The political basics will change. Even if the United States survives, and even if this happens past my lifetime, our current eroding and disappearing notion of citizen equality, the beliefs that market-driven capitalism is why we are and will be successful (as if one rule can last an eternity for all things and all people, an obvious absurdity), are simply unsustainable. Unless we change our views to the core, this will end… and end sooner than most realize. Fighting to preserve it with a tweak or two may delay the inevitable, but this will not stop what is coming. History is most instructive in this regard.

The United States was already changing, experiencing upheavals, polarization that we have not seen since the Civil War, facing new barriers that shake us to our core. Asymmetrical warfare. Undermining the election process through long-distance digital manipulation. Massive costs and disruption due to climate change. Displacement of skilled workers by artificial intelligence and implementing automation. Realignment of wealth and income tilting totally to the top, and those elements using their wealth to usurp political power. The first major pandemic since the Spanish Flu in 1918-20 (SARS, MERS, H1N1, Ebola, etc. are not remotely as powerful).

What we have today, a government for the rich, cannot deal with these changes. It just does not work. For those who thought a dictator could never use the elective process, at least in the United States (as did Hitler in Germany, Putin in Russia, Erdogan in Turkey, etc.), to gain power, just watch Donald Trump push the envelope to expand his powers knowing his GOP Senate majority will protect him no matter what he does. Nature’s safety value just may be his age and health, but once autocracy finds roots, unless it is instantly crushed, it grows again like a persistent fungus.

Getting back to the notion of “compassionate capitalism,” where rich folks simply do what’s right because (??), let’s dissipate that mythology forever. I would like to share the story in the March 30^th Los Angeles Times that inspired today’s blog. An excerpt: “For the last month [March], Army reservist Lt. Col. Kamal Kalsi, an emergency room doctor in New York, has been scrambling to find a way to quickly mass produce ventilators, equipment that could save the lives of thousands of coronavirus victims nationwide.

“Two weeks ago, he thought he’d found a company in Sacramento with the perfect answer… But then, as he tells it, necessity took a back seat to business… The firm Kalsi contacted wanted tens of millions of dollars before it would help him, he said… Hearing that ‘tore me up a little,’ Kalsi said. ‘I understand. It’s a capitalist system.’…

“Though President Trump last week ordered General Motors to begin making ventilators [as much motivated against arch-nemesis Mary Barra, GM’s CEO], he has been hesitant to use the Defense Production Act, a Korean-War-era edict that allows the commander in chief to commandeer resources, and to provide centralized logistics and support that could help states obtain needed supplies.

“Instead, the federal government has largely left states to procure supplies such as masks and gowns themselves. The scramble has left those states, cities and even hospitals competing against one another in a free-market response to the pandemic.

“Adding to the tension, state governors, including California Gov. Gavin Newsom, are balancing those dire needs with the challenge of maintaining harmonious relations with the federal government, including a president who values kind words…

“The ventilator Kalsi sees as the solution is the Go2Vent, made by Vortran Medical in Sacramento and sold for about $100 each, though there is no proof it could be the panacea that he envisions. Vortran’s founder and chief medical officer, Dr. Gordon Wong, declined to comment, other than to say Friday he was close to inking a mass production deal with a venture capital-backed manufacturer in Chicago.” Use the Defense Production Act? Nothing from Trump on that one. How about using state-empowered eminent domain to take the company?

“‘Corporate profits should never be placed ahead of human life, and this is exactly why the [Defense Production Act] should come in and force these guys to play ball,’ Kalsi said Friday [3/27]. ‘We’ve been working to push the governor of California to push these guys…. Kalsi said he heard back that [California Governor Gavin] Newsom’s office wasn’t sure it had the power to compel anything. Legal experts say the issue is clear, noting that Newsom has declared a state of emergency.

“‘When there is a proclamation of a state of emergency, the governor of California is vested with the power to commandeer public and private property,’ UC Berkeley constitutional law expert Erwin Chemerinsky said in an email… If the governor did so, he added, the state would have to pay ‘just compensation.’… Newsom’s office did not immediately reply to a request for comment… The governor’s approach to the pandemic has been one of putting the carrot before the stick.” LA Times. Newsom walks the line between flaunting and further alienating Trump and his obsession to protect capitalism at all costs (he still needs the federal government)… and doing what should be done. How many must die from this approach even as Newsom’s and New York’s Andrew Cuomo’s path is so far superior to that of the President?

Vortran Medical is just one example. There are tens of thousands more. There is no morally or ethical basis to pretend what we have is the right system for the current era… or to think that the government we have evolved truly services the needs of the people it was elected to represent. History does not let us go back to the way it was… no matter how much we think it can. Time for a do-over, putting the Government of the people and by the people back into the hands of those people.

            I’m Peter Dekom, and if you think I am angry, just realize that I am actually holding back!