Rule by the Very Few
Pat Buchanan beat me to it writing about the Pfizer story which appeared in the New York Times. In what is now called an “inversion” strategy, Pfizer is in negotiations to buy a British drug company, declare its corporate home Great Britain, and cease paying corporate taxes to the U.S. Treasury. Buchanan argues that U.S. corporate taxes are among the highest in the world, and if the U.S. reduced them to zero, it could make up the revenue by tariffs on manufactured imports. I don’t feel especially confident that this would work, though I would state unequivocally, based on experience with him during one of his presidential campaigns, that Buchanan knows more about the nitty gritty of the federal budget than most prominent people in Washington.
On significant mention in the Pfizer story was the galvanizing role of hedge funds in encouraging companies to pull up stakes in the U.S. and renounce their nationality. It makes sense, I suppose. If you own a big block of stock which has a greater chance of appreciating if a company expatriates itself, you will do what you can to increase your return. And you will have leverage—enough perhaps to persuade a large company to do what you want. You will be rewarded as well. Recent stories about hedge fund chieftans demonstrate without a doubt that they are now the highest-paid princelings of capitalism, making sums well beyond a humble CEO who employs and manages hundreds of thousands of people. If during the 1950s, Secretary of Defense and former GM CEO Charlie Wilson said “What’s good for General Motors is good for the country” (the popular if incorrect version of what Wilson actually said) an apt aphorism about contemporary capitalism might be “What’s good for Appaloosa Management is good for David Tepper and his friends.”
The shift in the commanding heights of American capitalism from huge Midwest-based conglomerates that employed hundreds of thousands to small firms staffed by a handful of Ivy League graduates is the central fact of what the Marxists used to call “late capitalism.” With the exception of various technology developments, betting on the markets is a route to greater money and power (probably not status) than building companies, making useful discoveries, or just about anything else. As the “inversion” model now begins to illustrate, CEO’s of large companies tend to listen to hedge fund managers, and do what they are told.
I’m no economist, but seems obvious that this transformation has not only accompanied but contributed to the growing inequality that has taken place over two generations, and which shows every sign of increasing. It’s reached the point where “equality” ought to be elevated to the status of at least a secondary conservative goal, somewhere beneath liberty but not far from it. If one is conservative by temperament at all, it is because one sees virtues in the society one grew up with under threat. And growing up in California in the 1960s (as I did, in part) one was conscious of feeling that America was better because of its science and its social organization—that is, very few people seemed poor, and there was no obvious class of rich oligarchs. It was a middle class democracy. That alternative social model—the few very rich, the great mass of impoverished—was for Mexico or Brazil, or pre-revolutionary China, places which either teetered on the edge of violent revolution or deserved to.
Ironically, in that 1960s America, extraordinarily egalitarian by today’s standards, one heard (from a quite loud and much listened to New Left) constant calls to challenge corporate hegemony. Marxist tomes which purported to explain U.S. foreign policy by reference to needs of major capitalist enterprises brought fame to several professors.
One hears none of that now, though perhaps the Thomas Piketty book will revive it. So far as I can see, the United States has no anti-capitalist left whatsoever, only movements of cultural or ethnic minorities fighting for greater recognition or rights. This seems curious, since the capitalists are fewer, contribute less to the public good than any prior American capitalist elite, all the while managing to acquire a much larger slice of the pie. But there seems to be no hope of challenging them. A politician who suggested he would aim to restore an America with an income distribution resembling that of Eisenhower’s second term would be dismissed, not just on Fox but everywhere, as a mad, raging socialist.