Common sense capitalism

Wednesday, May 23, 2007

By Gary Trauner

As a businessman and financial manager, a recent story about Northwest Airlines’ emergence from bankruptcy got me thinking about the plight of everyday working Wyomingites and the balance, or lack thereof, in our economy.

This story brings to mind United Airlines and so many others before it: a poorly run company enters bankruptcy, breaks its written commitments to its employees, puts the burden of these retirement commitments on our government, and reorganizes.

And upon emerging from bankruptcy, we find, as in the case of Northwest, the very people who ran the company into the ground stand to receive stock worth nearly $300 million, while the employees who built the company and conceded to reduced pay and benefits in an effort to save the company stand to get back roughly 20 percent of what they gave up.

Many “conservatives” call for increased personal responsibility, including toughening our nation’s bankruptcy laws. However, these same folks don’t seem to have a problem when a large corporation declares bankruptcy, unloads the pensions it promised to its workers (in writing) on the federal government, continues to pay its executives obscene amounts of money and is allowed to continue in business. This is hypocrisy of the worst kind.

While speaking to a local group of successful businessmen recently, I was asked, “If our GDP is growing, household income is up and unemployment is down, what is wrong with our economy?

In most recoveries, individuals see the lion’s share of gains through higher wages and income. In this “expansion,” the tables have been turned – corporate profitability and executive pay are the big winners, with individual wages stagnant, and even falling in some cases. In fact, the only reason household incomes are up is because people are either working longer hours, taking on multiple jobs or their spouses went to work as well.

So, regular people don’t earn any more while the price of energy, education and healthcare soar through the roof. My question back to this businessman was, “What good is a growing economy if the vast majority of people, most of them hard-working, continually lose ground?”  Interestingly, the room was silent – I received no answer.
Abraham Lincoln spoke of a government “… of the people, by the people and for the people.”  Government does have a role in helping us to achieve economic balance, or as I call it, “common sense” capitalism.

Seems to me that the economic focus of government should be:
-To provide a level playing field for all businesses;
-To ensure that business plays by the rules; and, most importantly,
-To ensure that government truly honors the constitutional right of each citizen to “life, liberty and the pursuit of happiness” by making sure our economic system works for all people, not just those at the top.

In a 1932 speech, Franklin Delano Roosevelt noted that while powerful groups often claim to oppose a strong government role in the nation’s economic life, they almost always seek government’s protection for their own interests. He argued that government’s task was to intervene “not to hamper individualism, but to protect it” by helping the less powerful confront abuses of the system by the powerful. In the words of FDR, “The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little.”

I also subscribe to a maxim set forth by another former President, Ronald Reagan, who said “trust but verify.” We need reasonable yet meaningful regulation and oversight of our markets, institutions and businesses in order to promote our economic system yet ensure compliance. The most dangerous threat to our economic way of life is a loss of confidence and trust in our system by consumers and investors.

We can start by extending responsibility and accountability to business and their managers. We should balance employee gains with corporate and executive gains. We should promote policies that benefit everyone, such as healthcare for all. Fiscally sound retirement plans and protection of consumer rights would be a good start. Let’s pursue “common sense” capitalism.
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Common sense capitalism | Planet JH News Article: Left Wing Local

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