Why Do Liberals Hate Corporate America?

Martin Rosensky of  Silver Spring, Maryland wrote this letter to the editor of the Washington Post on October 5, 2010:

In his Oct. 3 op-ed, “The Moynihan feast,” George F. Will stated that “liberal politics produces a culture of dependency and a government riddled with rent-seeking — the manipulation of government power for private advantage.”

 If you change “liberal politics” to “conservative politics” and “private advantage” to “corporate advantage” in the above sentence, would not that capture conservative politics to a T?

This got me thinking – why do liberals hate corporate America so much? In fact, I’m always shocked at the naivety of otherwise smart people about what a “corporation” actually is. I’ve never met Martin, but he reads George Will so he must be smart (George and I agree on most political issues, but he’s so much smarter than I am I really can’t read his stuff. Plus, when the Nats moved from RFK to Nationals Park, his seats didn’t move an inch and mine got pushed out a section. Still bitter. But, I digress). Liberals seem to view corporations as some living being that makes money at the expense of other people. This misconception used to annoy me, but when I read Martin’s letter I realized that perhaps the issue is just lack of understanding. So, rather than vilify him the way he does corporations, I decided to do some ‘splaining.

A large company like, say, IBM, is comprised of, first and foremost, of a bunch of employees. Some of them make a lot of money and some make less, based on a free market determination of their value. The CEO makes more than the guy sweeping the halls at night. But, the guy who sweeps the floors is “profiting” from IBM’s success and would suffer by the failure many liberals would wish upon it (by losing his job). And, today, the floor sweeper is getting very generous benefits, including healthcare (benefits he will soon lose under Obamacare – more on that in my next blog entry). IBM is owned by public shareholders, which are primarily large mutual funds, whose underlying shareholders (through IRAs, 401(k)’s, and pension funds, but often directly as well) are individuals, increasingly middle class individuals. So, when IBM does well and their stock price goes up, middle class shareholders do well. IBM also pays a $0.65/share dividend (up from $0.12 ten years ago), which is often a critical source of income for older Americans living on fixed income from their retirement savings (parenthetically, President Obama is proposing to increase taxes on dividends, which will cause companies to cut them and those same older folks will lose income overnight; oh, but, wait, Obama will never raise taxes on people making less than the $250,000 per year; yeah, right).

I think perhaps the liberal aversion to “corporate America” stems from the high pay the top execs get. This was confirmed by my liberal friend Jami when she commented on my “Swing and a Miss” blog (on Facebook) with some blather about Wall Street bonuses. But, hey, I absolutely agree that too many public boards became too cozy with management and too many execs got paid too much for lousy performance. I think investor activism has helped with that problem and I think we’re moving in the right direction with regulations on the composition of public boards, compensation committees, and audit committees (see – I’m not against all regulation).  But regulating executive pay with a “pay czar” as the current President is doing is one of the most gallactically stupid ideas I’ve ever heard. It will ensure that the best executives go do something else with their talents where pay is not regulated and the lousy ones with no other options will stick it out and live with the lower regulated pay. Dumb dumb dumb.

But, there’s no way around the fact that the private sector is the only growth engine for the economy. So, like it or not, all of our fortunes are tied to the success of corporations. Thus, it is self-defeating for anyone to assail the United States business community or root against American corporations while simultaneously lamenting high unemployment. It was the approach FDR took, starting in about 1930, and look what happened. It cost us about 10 more years of the Great Depression. It wasn’t until World War II, when he finally realized he had to embrace the business community to win the war that the economy turned around. There’s a great op-ed piece in the October 1st edition of the Wall Street Journal demonstrating with data I’d never seen before how FDR’s anti-business, anti-growth policies kept us in the depression for 10 years while the rest of the developed world started growing more robustly.

So, I hope a better understanding of just what a corporation is (a bunch of workers earning money to pay their bills, owned by a bunch of middle class shareholders through their 401(k) plans) will help this liberal allergy to corporate America. As I discussed in “A Swing and a Miss,” we need pro-growth policies to get people back to work. A good starting point is helping liberals understand that corporations are their ally in that effort, not their enemy.

Next up: Obamacare for Floor Sweepers

About Bruce Robertson

Bruce Robertson is an amateur writer and professional provocateur
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15 Responses to Why Do Liberals Hate Corporate America?

  1. Dan Grabois says:

    Hi Cousin,

    Being one of those bleeding heart libs (as you saw abundantly at my wedding!), I’ll tell you a few of the things that bother me about corporations. Or rather, corporatization (is that a word?) in the US.

    1. Remember the store CompUSA? You would go in there asking about printers, say, and the salesperson would start reading you the labels on the printers because he or she knew nothing about computers or printers. You might argue, well, CompUSA went out of business. True, but it was really the only place that sold computer stuff at the beginning of the PC era, and there are LOTS of other stores now where there is zero expertise at the customer level. I take this as a symptom of companies getting gigantic to maximize profits at the expense of helping customers. And you might tell me I can found my own computer store, but it’s hard for the vaunted small businessman to go up against these megacompanies.

    2. Speaking of customer service: Press 1 for this, 2 for that. The phone tree has been the most evil invention since the CD jewel box. And it is a regular feature of big businesses. OK, so Zappos is a great company and you can actually talk to a human there, but should it really be big news that one company provides customer service?

    3. Threatening to take your business elsewhere: we bleeding-hearts love this option, but try doing it to the lady at the Verizon Wireless store. She couldn’t care less. With a huge company, one person’s business makes very little difference to that low-paid worker.

    4. “Forcing” employees to have mind-numbingly horrible jobs. OK, I put “forcing” in quotes because nobody is forcing anyone to work anywhere. Starvation is a perfectly good option, as is homelessness. But frankly, I would prefer to live in a society where we don’t heat our houses so warm (except maybe in the case of my parents), we drive less, we eat more simply, but more people are fulfilled by what they do, or, dare I ask it, are happy. Because of the trend of big companies to buy out little companies, many of the jobs out there are with big companies. Can’t get around it. Now, you might argue that almost nobody is happy with his or her job. I totally agree: we’ve got a society where it’s hard to be happy. It’s easier to earn money than to be happy. That’s where I think we’ve gone wrong.

    5. Unions. Confession: I’m in one, the pathetic Local 802 of the American Federation of Musicians. I’m aware that nobody in this country is interested in classical music, but I sure am glad that I get paid a decent wage to perform here in NYC (you might argue that I shouldn’t be paid that wage, and perhaps you’d be right – the free market is certainly doing all it can to lower my wage and it WILL be successful and soon). But in many industries, unions are kept out, and they can be kept out by giant companies that threaten to shut down operations if they organize. If it is the will of the free market to keep workers’ wages low, then I’m not such a fan of the free market (full disclosure: I’m not such a fan of the free market).

    6. Paying for checked and carry-on bags. Now, you could say that, if I don’t like the way the airlines work, I should start my own. But the fact is that we are without power regarding this kind of new fee. And here’s my prediction: if people protest, and stop flying, so that the airlines have financial trouble, they will get a government bailout. So, maybe the free-marketers aren’t such fans of the free market, either.

    I could go on, but I need to earn my wages.


    • Dan, thank you so much for the thoughtful comments. It’s about time someone posted a counterpoint to my blog. There’s only so much blogging you can do after a few vodkas on American Airlines flights without some comments before you give up. Plus, you and I present a great point/counter-point. We are blood related, but appear to hold quite opposing political views. And, despite the shared DNA, you (and your brother) were endowed with real talent. So much so that you’ve both built careers around your (musical) talent. I, on the other hand, got nothing so I have to move other people’s money around to make a living. More amazingly (to me, anyway) is that none of your answers to “why do liberals hate corporate America?” are what I expected. And, most shockingly, I agree with many of your emotional reactions, but come to a very different conclusion on each. Let’s dig in. I’m just going to go down your points one by one.

      1. CompUSA sucked. Holy crap, did they ever. I hated that place. I was required to have a laptop when I got to business school in 1996. I ordered one from Gateway and it was delayed so I canceled the order and went to CompUSA in Boston to buy one. The sales reps knew as much about computers as my son….and he was 3 at the time. But, I think you really answered this one already. Economic Darwinism took care of this problem. CompUSA is gone. Their business model (sell computer shit in big retail stores with crappy sales reps) didn’t work very well. In its place we have now have Dell, where you can customize a computer on-line or on the phone with very knowledgeable sales reps, Apple Stores (the sales reps there are great), and even Best Buy (where the sales reps are decent, but not great). The free market fixed this problem for us. Admittedly, it didn’t happen overnight, but Rome wasn’t built in a day. I’m not sure what else you would have done? Should the federal government have mandated that every CompUSA sales rep attend a 10 week training program on what an ink jet printer is? I can’t imagine that would have worked very well. Or maybe the government should just take a monopoly on selling computers directly. But, we should probably consider the level of customer service at the DMV or Post Office before we ask for that.

      There’s an even more disappointing implicaton in your first point that, sadly, suggests you didn’t totally get my post. Your concern is that big companies are giving us crappy customer service to “maximize profits.” What is a profit in a corporation? It is the difference between revenue and costs, after tax. What happens to these “profits?” Well, they either get re-invested in the business to grow the equity value (i.e., stock price) or they get returned to shareholders in the form of a dividend. Either way, these profits benefit the shareholders who are….you and me and the guy next door to you and me. Well, let’s hope neither of us ever owned CompUSA stock, but the point is that their stock was owned by middle class folks (including liberals) who owned their stock through 401(k) plans, mutual funds, etc. So, “maximizing profits” is a very very good thing. It’s what corporate CEOs are paid to do……and it benefits every day folks. I am 100% confident with all the business training I have ever received that if a company consistently maximizes profits by screwing customers, they will go out of business eventually. CompUSA is a great example. Next…..

      2. You hate getting automated customer service reps instead of live people. I’m basically with you on this one too, though I have to admit that many of these systems have gotten so sophisticated that they’re not too bad. But, again, if there were strong enough customer demand in some business or another for personal attention on the phone, someone would do it. The problem isn’t that companies are screwing consumers by not providing that service. The problem is that we don’t really care enough to demand it. If we did, there would be a business opportunity for a company to take business away from their competitors on the basis of live reps vs. automated reps. I can’t think of one, but I wouldn’t be surprised if this has actually happened somewhere.

      3. Threatening to take your business somewhere else doesn’t work. OK – this is a tough one. At the micro level, I can’t disagree and I once blew three major cranial arteries in a Verizon wireless store (and yet continue to spend almost $500/month there – yeah, just wait till both of your kids are sending 1200 text messages per day). At the time, I had 3 phones, a Blackberry, and a wireless aircard with them and they gave a better deal to the guy in front of me in line who was getting his first ever cell phone. Seriously, it was a good day for gun control in Maryland. Why didn’t I tell them to fuck off? There are at least 4 viable wireless carriers. The answer is that VZN has, by far, the best network in the world. It is their competitive advantage. I once used Sprint and their customer service was 10x better than VZN. But, their network sucked and I dropped calls. So it goes with businesses and customer decisions. Each of us decides what factors are most important and make our buying decisions accordingly. If customer service is more important to you than the network, switch to Sprint. The free markets are working here too. More important, I think this really does work at the macro level. Consumer businesses with good customer service will push those with crappy service out of the market. There used to a large home improvement store called Hechingers. Nobody in that place knew how to hammer a nail or, for that matter, where the hammers or nails were in the store. Along came a (now huge) company called Home Depot. They hired and trained people who (a) knew where the plumbing section was, (b) knew what part you needed if your toilet was running, and (c) walked you to the plumbing section and showed you what part you needed and how to install it. They are a very successful company and Hechingers is gone. The free market works.

      4. Companies “force” people to have mind-numbingly horrible jobs. Oooh boy. First, as you quickly commented, nobody is forced to have any job. And, I’m confident that the folks in what you call mind-numbingly horrible jobs are happier than the 9.6% of the country that is currently unemployed. But, I think both of those comments miss 2 much bigger points. First. What’s mind numbing to you and me may not be so mind numbing to someone else. I don’t know how else to say this, but to say it. We’re both pretty sharp guys. We need intellectual stimulation in our lives and work. Some people don’t and may be perfectly happy sweeping the floor at IBM. Even if they’re not, they may not have the horsepower to do much else. But, the much bigger point and one I plan to blog about in more detail sometime, is that many people in mind numbingly horrible jobs ended up there b/c they lacked the education (not the brain power) to get to a better job. Sadly, in this country, many of the folks getting screwed on education are minorities in inner cities. And, this, I’m sorry to say, is the fault of the liberals. I’m going to out my own liberal mother on this one. A few years ago, she finally admitted to me that the liberal politicians (as wholly owned subsidiaries of the teacher’s unions) have this all wrong and that school choice was essential to fixing the problem (she can chime in if she thinks I’ve mis-represented her). This is actually my single biggest hot button issue and probably the #1 reason I could never vote for most democrat candidates. I could not sleep at night knowing I was electing candidates who would rather get re-elected than help our children (in inner cities especially) get a good education. The data is so solid now that simply throwing more money at shitty public schools (the consummate liberal answer) simply doesn’t work. Your city is a glaring example and so is mine. I’m hopeful that documentaries like Waiting for Superman will get this issue front and center. And, I have to say, this is my biggest disappointment with Obama. While he’s been horrid on the economy, I expected that. I had high hopes for him on education and he’s been a disaster. He was presented with a once-in-a-lifetime-Nixon-goes-to-China-esque opportunity to fix public education. He’s an African American liberal. And, he’s totally punting. He sends his kids to the #1 private school in Washington, DC, but allowed a very popular (with liberal African Americans) school voucher program in DC to expire. It’s really criminal. So, when you say corporations force employees into mind numbingly horrible jobs, I call bullshit. There are mind numbingly horrible jobs out there and they will always go to the least educated. Sadly, in America, we are doing a terrible job educating the inner city youth because of the liberal debt to the teacher’s unions. Education is the ONLY way to avoid mind numbingly horrible jobs and this needs to be fixed like yesterday and the liberals apparently will not fix it. Sorry – didn’t mean to soapbox that one, but, like I said, it is my singular #1 hot button issue. It should be everyone’s.

      5. Big corporations prevent unionization. Yes, they often do and thank God they do. In your points 1 and 2, you lament poor customer service and in point 6 you complain about the airlines. There’s plenty to complain about when it comes to customer service with the major airlines (trust me, I know – I’m executive platinum on AA and gold on Delta). Why? Answer: unions. All employees of almost all airlines are unionized and, thus, largely protected from being fired or having bad behavior punished. It’s a complete seniority system so the people employed there are not the best people, there just the ones who’ve been there longest. That never works. So, what do these employees do? They mostly treat customers like shit because there’s no particular penalty to doing so. They go through the motions, get paid what the union contract says they are entitled to, and performance be damned. If you want a counter-example, check out the excellent customer service and lack of bag charges at mostly non-unionized Southwest Airlines. In my world of entrepreneurial companies, when employees don’t perform, they get fired, usually immediately. As a result, small entrepreneurial companies are the most innovative companies in the world. We saw in point 4 how incredibly destructive the teacher’s unions have been. I have no doubt that, in its day, the union movement was important in this country. I have no doubt that when employees were working in sweat shops, the ability of employees to organize and fight that was important. But, there are very stringent and enforceable laws against all that. When employers violate them, they will suffer the full wrath of my sister. Unions that negotiate high wages and generous benefits generally hurt employees, not help them. Maybe not the ones who are employed at the time, but certainly the ones who are unemployed when the company fails under the weight of the union contract. When unions negotiate high wages and sweetheart benefits, it ultimately kills profitability and companies don’t hire or, worse, go out of business (or have to be bailed out). The primary reason that GM had to be bailed out was because unions negotiated for such onerous packages (and management agreed to it and shame on them for doing it). Unions are a complete anachronism in this country, like the horse and buggy or dial-up Internet. The sooner they’re gone in their entirety, the better off our economy will be. If you could magically abolish all unions tomorrow, I am convinced that the unemployment rate would drop by half. I’m sure the 9.6% unemployed would like that. And, don’t even get me started on unions for government employees (which is well over half of all unionized employees). That is insane.

      6. Airlines charge for checked bags. Why are they doing this? For starters, their business model absolutely sucks. They have insanely high fixed costs (airplanes, it turns out, are really expensive) and high and unpredictable variable costs (jet fuel). There’s massive over-capacity in the industry (getting better with some consolidation, but means less competition, which means less incentive to compete on service) and they are tightly tied to macroeconomic cycles. But, the real problem is that it’s one of the most unionized and regulated industries (if not THE most regulated) and that imposes huge costs. Not only do the regulations (some of which are good because we want safe planes) add huge costs, but there are big taxes too. When you buy a $500-$1,000 ticket from NY to SF or London, you’re probably paying at about $50-$100 in taxes (ticket taxes, segment taxes, international arrival and departure taxes, security fees, and passenger facility charges). So, one of the reasons that the airlines are charging you to check your bags is they need to find revenue somewhere in a down economy, with a shitty business model, and government that regulates and taxes the crap out of their customers (without telling them, thus making the customers think the airlines gets all the revenue from the ticket). I suspect if we had less regulation and lower taxes, the airlines could survive more easily without charging you to check your bags. That said, the business model still sucks.

      Again, many thanks for your thoughtful comments. It was incredibly insightful for me to understand why at least one liberal hates corporations. And, the irony is that I hate many of the things you hate about corporations – bad customer service, hidden fees, automated operators, etc. But, we disagree quite violently on the root cause of the things we hate about corporations. And, most importantly, you didn’t offer any solutions. What would you do about bag fees? Would you legislate against them, hasten the airlines into bankruptcy, thereby engendering more bailouts? What would you do about automated operators? The free market may not fix everything and may not fix anything perfectly, but it’s by far the best mechanism we’ve got. If you doubt that, see Union, Soviet.

  2. Blueloom says:

    “If you want a counter-example, check out the excellent customer service and lack of bag charges at mostly non-unionized Southwest Airlines. ” A tiny, trivial point: Southwest charges 10 bux per passenger for online check-in. As far as I know, no other airline charges for online check-in. That may not be as high a fee as the miserable, m-f-ing checked luggage fee, but Southwest gets its pound of flesh, too.

    I’m the outed mom on the school choice/school voucher issue. I think that if parents could send their kids to any school in the jurisdiction, the principals, the teachers, and the school boards would have to sit up & take notice. I do have a First Amendment issue if the money follows the kid to a religious-based school (any religion). It’s tax money paying for religious education.

    But how do you account for this: perhaps the most innovative & activist school chancellor in the country (Michelle Rhee) was essentially voted down by the mostly Black, inner-city residents of Washington, DC. Mayor Fenty would clearly have retained Rhee. It is widely assumed that incoming mayor Gray will fire her ass.

    She was doing great things: she fired ineffective teachers. She canned about half of a seriously bloated school bureaucracy (saying that money should be spent on kids, not on twice as many school administrators as any city needs–duh!). She made all the right moves, but in an election widely assumed to have been a referendum on Ms. Rhee, her boss lost. I don’t get it. Why would the parents of all those Black kids that Ms. Rhee was pulling up by the bootstraps in school after school tell her to go to hell?

    As to the rest of the interesting discussion between Dan & Bruce on corporations, etc., I’ll remain silent. I’m basically a conflict avoider, especially when I know I’m out-gunned by people who know more than I do.

    half of the bleeding-heart lib set of parents that raised Bruce (his dad was a BHL, too)

    • OK, first of all, if anyone wonders why I have a potty mouth, note that my mother used the term “m-f-ing” on my blog. ‘Nuf said. Second, why are you people so worked up about the fees airlines charge to check bags or check in or whatever. Does it piss you off that McDonald’s charges you for a hamburger? Sheesh. The airlines are running a business and they are crushed by taxes and regulations. They are trying to find a way to make money. Ain’t nothing wrong with that. You’re about to see a torrent of extra charges from your credit card companies too because the government has just regulated their interest rates. The law of unintended consequences is running strong and the government you love so much causes most of those consequences.

      I must admit that I didn’t follow the DC mayoral race closely enough to know if it was, indeed, a referendum on Michelle Rhee. It seems unlikely since she seems quite popular and has clearly done a great job. I wonder if it’s more that the people of DC were too stupid (see below on stupidity of DC residents) to realize that the new guy would can her. And, I admit, I’m wondering if this view that it was a referendum on her is the Washington Post’s view more than anything. But, like I said, I didn’t follow it closely enough so I’ll have to concede the point.

      So, question is why would the good folks of DC elect a mayor who, if you’re right, is likely to work at cross purposes to the effective education of their kids. Well, the answer is that the liberal voters in DC are idiots. If you need evidence of this, recall that these are the same people who elected Marion Barry Mayor AFTER he was caughter on videotape, with a prostitute, doing crack cocaine. So, while I weep for their children, they deserve exactly what they get!

      • Blueloom says:

        “OK, first of all, if anyone wonders why I have a potty mouth, note that my mother used the term “m-f-ing” on my blog.”

        Guilty. :>)

  3. Dan Grabois says:

    Jane, you ignorant slut (for those of you too young to get the reference, see Night Live, Saturday):

    Keeping to the point-by-point format, I will go through your excellent replies and provide my own extraordinarily biased points of view. Please bear in mind that I have taken precisely zero economics classes in my life, and that, while you speak nicely of my career, the plain fact is that I have never really had a Job with a capital J. So we see the world very differently, which is actually pretty fun.

    I myself own an Apple computer, I love the Apple store, and I regularly dis Microsoft and everything PC. The Apple customer service is amazing. At one of the schools I teach at, Apple recently provided replacement batteries for two laptops that were around 1095 days old (that’s two years and 364 days), FREE OF CHARGE. That’s downright anti-American, but Apple has my allegiance since they make a better product and stand behind it (even though it’s more expensive). But … in my experience, Apple is a huge anomaly – almost no companies are like it, which is why we are all so amazed by Apple and why all my BHL (bleeding heart liberal) friends use Apples (well, also all the good music software is Apple-based, so, amusingly, the poorest of all professional people use the most expensive equipment). Most of the big corporations we regularly come into contact with suck massively, and we are so downtrodden that we are resigned to it. I include all phone companies, all utilities, most airlines, most big-box stores, and so on. Your original question in your blog asked why we BHL’s hate corporate America. You didn’t ask us to solve the problems. This is why we hate corporate America. As a final comment here, I live in the suburbs now, and the post office is AMAZING. And (even though I believe that the USPS is largely spun off from the government into a quasi-private business), whether or not you can stand visiting the PO, the price of first class mail is remarkably cheap. When you and I were kids, a letter cost 8 cents to mail. It took about 4 days to arrive. Now it costs 44 cents – considering the general increase of the price of goods since the mid-’60’s, this isn’t so bad – and a letter takes 2-3 days to arrive. Have you mailed a letter in any other country? Ours is cheap and reliable. And, if it doesn’t absolutely, positively have to arrive overnight, you can use express mail, which costs about a tenth what FedEx charges and takes 2 days instead of one with FedEx. The DMV is another matter – there is no defending those shitheads.

    Your next point, about profits, will strain my non-existent technical faculties, but let me give you my reaction. First of all, I simply don’t buy (no pun intended) your premise that corporate profits benefit the common man. Most successful companies heap rewards on a VERY small group of people. It is not a secret that wealth is becoming strongly concentrated at the top of the heap, though I look forward to a future blog from you suggesting that this is not the case. As far as I can tell, the gigantizing of companies has led to bringing large amounts of wealth to a few people, crappy jobs (more later on this) to some people, some small wealth to stockholders (at the cost of the volatility of the market, which many can ill-afford to risk), and a lot of really cheap crap from China that nobody needs but that we buy for any number of reasons that we can get into if this exchange between you and me continues. It seems that, by touting the success of corporations as good for many (most?) Americans, you are overlooking the fact that, while corporations are bigger than ever, Americans as a whole are doing pretty badly right now, and “regular people” don’t seem to benefit from all the mergers that we see.

    On the subject of customer service, I will simply say that, as a human being, I prefer speaking to a human being rather than entering 1, 2, or 3, and in MY perfect world, customer service agents will treat us well because we should all treat each other well, even if it is not maximally profitable.

    I like your Home Depot example. Have you been to a bad Home Depot? We moved to the ‘burbs one year ago, and we are forever remarking on how amazing the Home Depot up here is. The salespeople do just what you say – they have answers, they take you around, they help, and they are friendly. The reason we remark on this is that it never happened to us before at any Home Depot. And here we get to one of the problems I touched on in my previous reply to you. Home Depot has a million stores. They don’t care if I complain that some of their workers are idiots, or that they are out of stock of everything I need. If you find a good Home Depot, you are just lucky. I think it has nothing to do with the chain itself. The chain is successful because the store is so huge and therefore the stuff is often (but not always) well priced. We also have a thriving old-fashioned hardware store nearby which I vastly prefer. In fact, I recently bought a wheel-barrow there, because it was cheaper than at Home Depot (and Home Depot was – surprise surprise – out of the one I would have liked).
    All of which brings us to education. I will certainly agree with you that this is a huge problem. Before I show you how we can fix it (just kidding), I will caution you that it is a dangerous game to suggest that crushingly boring jobs are ok for the uneducated, but not ok for you and me. Everybody needs some kind of stimulation at work. I think the big problem with society now is that there is simply not enough interesting work. The guys with the green visors that you see crunching numbers in old movies seem to be gone. Computers do a lot of that work, and those guys (known sometimes as the middle class and sometimes as my friends) don’t have a job. There is what I would call dead end employment available, jobs like burger flipping at McDonalds. If you think this work is not mind-numbing for the people who take these jobs, take a look at them when they are at work. These are clearly not people with stimulating employment. Beyond the 9.6% (announced today) of the people who are unemployed are huge numbers of people who are underemployed, and not because of lack of education. Indeed, many of my friends are OVER-educated for the jobs that are out there. I don’t think this is a problem that the consolidation of Rite Aid, CVS and Duane Reade into one giant pharmacy would solve. We hear so much talk about small business (you yourself touted small firms as among the most creative), but big business makes life much harder for small business.

    As for solving the education problem, I have to say that I’m surprised to hear you say that you can’t fix the problem by throwing money at it. This is because I think you are a professional money thrower, and you must see that throwing money at a place helps attract talent to that place. Here’s an example for you, from my world: when I was a music student, the Yale School of Music was an ok place to go. Some great teachers, some great students, but not so consistently amazing as, say, Juilliard. Then, they got a gift of $101,000,000. That’s not throwing money – that’s plowing money at the problem. The result: YSM is now free, they’ve hired great teachers, and it’s almost impossible to get in because there’s so much competition for spots. And you can take any of the illustrious institutions that all of us cousins attended. Part of what makes them good is that they have huge endowments, which gives them the ability to hire great faculty, and which also gives them the ability to build amazing facilities. And, have you by chance received letters from your alma maters asking for money? They know that it takes a lot of money to run a good school.

    Which leads to the solution to the teacher problem (I warn you that you are not going to like it AT ALL). First of all, I think we can agree (at last) that good teachers are crucial to good schools. And we can agree that the contracts that the union negotiates are not in the best interest of anyone but the teachers who suck. The reason, I think, that the union negotiates the kinds of benefits (read: tenure) that create the situation of terrible teachers ruining generation after generation of kids is that teaching salaries are pathetically low. As a union man (sorry), I know that we workers are always trying to negotiate deals that create a livable situation for us. For instance, my union will forego wage increases in favor of better medical benefits or better pensions, or (oh NO) job security. If I were a teacher, looking at a starting salary of $42,000, and hearing everyone preach how important teachers are to society, I’d damn well look for some other part of the package that would make up for that horrible salary.

    The solution is obvious: double (or triple) teachers’ salaries, and get rid of tenure. Then you have a system that even you will like: tremendous competition for teaching jobs, so that only the best and the brightest can get and keep these jobs. Simple, neat, and effective. Where will the money come from? I would like to avoid the “T” word at first, and say this money will be an investment that all of us make in the future of the country. We will decide jointly that this needs to happen, and we will all chip in, each according to his ability to pay. In other words … we will tax ourselves. And not at the local level, either. This is an issue that affects the entire country, and it must be paid, and fairly, by all.

    Now, to quote you: “Your city is a glaring example and so is mine.” Well, now that you know that I’m out of NYC and in the suburbs, I can agree with you. My current city, Croton on Hudson, has excruciatingly high property taxes, which I willingly pay because my son’s school is great. Why? We throw money at it.

    As for vouchers, that is a hard issue. If you are unwilling to implement my plan for high teacher pay, vouchers start to seem like a good idea. If, however, you are willing to invest in education with the $$ it takes to attract good teachers, you don’t need vouchers. In my perfect world, everyone cares enough about education that they are willing to pay for it, and Bill Gates should pay more than I pay, because it benefits us all, and we CANNOT give up on public education.

    Unions. I quote my distinguished cousin: “If you could magically abolish all unions tomorrow, I am convinced that the unemployment rate would drop by half.” Undoubtedly true. And wages would drop by half. If I am a mayor, and I need to hire a garbageman (or woman, since I am being a BHL here), if I have the power to call around to the pool of unemployed people asking how much they would need per annum to collect garbage, I could save a lot of money. I could probably get someone to do it for 20k a year, maybe less. A desperate pool of workers creates a real opportunity for a big employer, and I believe the law of supply and demand backs me up here. I just don’t like the world that that leads to. In the glory days of the American car industry, work at the plant wasn’t fascinating but it was enough to get you a house and a basic middle-class lifestyle. I think those workers even took pride in their work, or so I hear from Michael Moore. Anyway, Detroit built some great cars then. And the thing is, the union was able to negotiate a decent rate of pay with decent benefits. And then, roll ahead to the present, when companies can’t keep the salaries rising with the cost of living. The union has to look elsewhere: pension, whatever. And you see where this gets us. And is it the union’s fault? No way. Nobody wants to buy these cars any more because, in most cases, they suck. The car companies chose not to compete with the Japanese on QUALITY. And they paid the price. Do we really have to blame the unions for this?

    As for regulation of airlines, can we divide this up into its separate areas? I don’t know about you, but I want the government to regulate air safety. I also, BTW, want them to regulate food safety – I’m not interested in hiring a taster like the Roman emperors had. As for the other kinds of regulation, well, I confess to a certain ignorance. I’m told that Jimmy Carter, who I know was one of your favorites, deregulated the airlines. I know that there were some pretty amazing deals during the Reagan years: an impoverished musician like me was able to get around the world pretty nicely then. And now, you can fly on JetBlue (another good one, at least for me) for relatively cheap.

    What irritates me about a lot of conservative talk (and perhaps you can help me here) is the notion that workers’ behavior is explained by incentives. For instance, you say “… less competition, which means less incentive to compete on service.” Can I not expect that service will be decent unless there is an incentive? Airline workers should be like any workers: they should act in a civil fashion not out of a fear of penalty or the whiff of a nicer guy working for the other team. If a “flight attendant” acts rudely to me, I’m not prepared to blame the union. Airlines have crammed more and more seats into the planes. Maybe they have done this because they just can’t make a profit any other way. Maybe that’s because the government has to tax them to make sure they are safe. And maybe the government is now going broke. There’s a bigger picture here than just unions negotiating evil contracts. But, getting back to your original question, why your BHL friends (and cousins) hate the corporatization of America, airlines are a fine place to have some explanatory conversation!

    One final point: I think you’ll agree that we don’t really have a free market any more than the USSR was really a communist country. We’ve got bailouts, we’ve got plenty of government support of companies, we’ve got no-bid contracts and thousand-dollar toilets, we’ve got many legislators doing everything they can to protect the corporations that support them. Mr. Bush let business do what it wanted in large measure, and now we’ve got a business cycle that is wreaking havoc on the lives of many of my friends. So we libs believe that these big companies are not really acting in our best interests, but in their own, and sometimes we benefit, but usually we don’t.

    End of filibuster!

  4. Tim says:

    I love you bro, but as a liberal econ major, it’s a bit patronizing to be told that my views on fiscal policy stem from my hatred of corporations, and that if someone could just explain some basic concepts to me, I’d understand. It’s a bit like me writing a post entitled “Why do conservatives hate people?”, explaining why conservatives should like human beings, and then assuming that now that you’ve been enlightened, you’ll change your views on issues such as conservative judges who regularly side on the side of business over individuals.

    Believe it or not, there’s some smart libs who have worked for corps and studied fiscal and economic policy. These people reach conclusions contrary to yours not out of ignorance, naivete or hatred, but out of a good faith conclusion based on analysis of relevant data that policies like tax cuts to the wealthy are not effective.

    On to the examples of lib hatred you cite. First, the pay czar. I agree that the concept of limiting executives’ compensation was idiotic and resulted from politicians’ pandering to public outrage, but Republicans shouldn’t be too sanctimonious on this as they were just as adamant about reigning in corporate bonuses. For example, when the AIG bonuses hit the papers, Senator Grassley asked “Why is Treasury allowing AIG to pay bonuses again this year?” Asked how he felt about the bonuses, he said:

    “I suggest, you know, obviously, maybe they ought to be removed. But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide. And in the case of the Japanese, they usually commit suicide before they make any apology.”

    Later, more than 80 Republicans voted for a bill to impose a 90 percent retroactive tax increase on bonuses for employees at AIG and the other biggest recipients of federal bailout funds.

    Next you turn to a WSJ column purportedly to show that economic incentives implemented by Roosevelt in the 1930s prolonged the Depression. The debate over the efficacy of FDR’s economic policies has raged among academics for almost eight decades, and one column from a former Republican Senator is supposed to settle the matter? And that’s supposed to say something about different economic policies in a much different world with a much different global economy? Here’s a column reaching the opposite conclusion. http://populistdemocrats.blogspot.com/2009/02/in-defense-of-new-deal.html. Convinced?

    The bottom line is that I urge you to consider the possibility that liberal views on economic policies are not motivated by ignorance or corporate hatred, but rather by a good faith, informed disagreement.

    First drink on me next time I’m in DC.


  5. Tim says:

    One more thought. We corporate-hating libs sure did show some love by bailing out a bunch of big corps.

    • Yes, and those bail-outs were a terrible idea. Mostly what you libs did was bail out the UAW. In fact, you countervailed years of bankruptcy precedent by bailing out the unions and sticking it to the bondholders. I would not brag about that. We have bankruptcy laws and processes for a reason – it’s an orderly way to distribute the assets in a bankrupt company. I am a big fan of Joseph Schumpeter’s theory of creative destruction and believe congress (including the liberals who put an “R” after their names) made a monumental mistake in these bailouts.

      • Joo Chung says:

        I get the impression that your entire readership is related to you in one way or the other. Not that it matters. But keep in mind that the bailouts were really one of the most bipartisan actions taken by the government. Initiated under a republican presidency and continued under a democratic presidency.

      • Hey Joo,

        First of all, many thanks for reading and commenting on my blog. Second – NO FAIR! OK, it is true that in the early days of my nascent blog, my readership included some (OK, a lot) of my relatives. However, I must observe that my relatives are vastly over-represented in the comment sections vs. the overall readership (based on these really neat stats the wordpress folks give me). Any entrepreneur will tell you that your first sale should always be to your mother. So, I confess that, when I started my blog, my first e-mail blast advertising it went to my relatives. I’m proud to say that at least 6 people not related to me are now regular readers. I’m shooting for 8 by Memorial Day!

        Second, I absolutely take your point that the bailouts were started under a Republican administration and continued under a Democratic one. 100% accurate. However, I would position it somewhat differently as the bailouts were started by one economically liberal administration and then trebled by another (3x more) economically liberal administration. GWB was obviously very prescient (as now acknowledged by BHO and a fully Democrat Congress) in lowering marginal tax rates, taxes on dividends, taxes on capital gains, etc. during the recession in the early aughts. However, by the time he left office, he had given over his economic brain to space aliens who convinced him that idiocy like one-time tax rebates and massive government bailouts of the private sector were a good idea.

        Thanks again for visiting my blog and commenting. I hope you’ll come back!

  6. First of all, let me say that I’m so psyched that I have engendered some great debate on my blog. This is really great stuff. I’m not sure anyone else is reading it, but I sure am having fun.

    Tim – thanks for your comments. I’m not so sure my post about what exactly a corporation is, can be construed as patronizing. My uber-brilliant, Yale-educated musician cousin seemed to have, frankly, a pretty sketchy sense of what profits are and what they mean for shareholders. I know you’re an econ major and understand business and I’ve always wrestled with how someone like you, who I think is a complete anomoly in the world of far lefties in your understanding of business, could be anti-business. I would think you would understand that private enterprise is the only real driver of the economy and would respect it as such. In fact, I kinda thought you did.

    But, while you call me patronizing (a charge I take and certainly see how my post felt that way to someone with your background), the more interesting thing is you never answered my question. Why do you hate corporations? The only thing you cited was the one thing I stipulated – big bonuses for top executives. While I’m not convinced of anything by citing liberal politicians who call themselves republicans (and we have many of them in congress and I love seeing them kicked out – see Castle, Mike), I am in agreement with you on executive pay. I absolutely believe that really talented and successful executives deserve to be paid very well (yes, millions), but I don’t think that’s what pisses anyone off. People are pissed off when companies are losing money and the execs get a $3 M bonus. Let me be clear: THAT IS WRONG. As I said in my original post, I think the market is cleaning itself up on that front, but we have a ways to go. You agree pay czars are stupid. Maybe we need other ideas. I’d be fine with a congressionally mandated bow and apology and, if I personally lose money on the company’s stock, castration, suicide, or public hanging. I’m open to other more practical ideas as well.

    But, other than executive pay, you’ve given me no reason that you hate corporations or why liberals, in general, hate corporations. My cousin could only cite the things we all hate about certain companies – bad customer service. And, in those cases, the market solved the problem for him by forcing the company out of business. In your post, you say:

    “Believe it or not, there’s some smart libs who have worked for corps and studied fiscal and economic policy. These people reach conclusions contrary to yours not out of ignorance, naivete or hatred, but out of a good faith conclusion based on analysis of relevant data that policies like tax cuts to the wealthy are not effective.”

    The problem is you changed the subject halfway through your statement. We’re talking about hatred of corporations, not tax cuts for the wealthy. And, I would point out, there’s no modern data whatsoever to support higher marginal taxes driving economic growth. In fact, the first modern day president to cut marginal tax rates for the “wealthy” to get us out of recession was a liberal named John F. Kennedy. It’s the biggest political irony in the last 50 years. The republicans fought him tooth and nail, he prevailed, and was right. This could have been a huge, long-term victory for your party, but you let the neo-Keynsians sneak back into your tent and screw it all up for you. But, I digress (but, only because you digressed).

    So, here’s what I’m starting to learn (albeit with limited data). The liberal hatred of American coporations is irrational. That was my hypothesis when I posted this blog entry. It’s been taught in the orthodoxy since the time of FDR who, indeed, villified them at his own peril, then embraced them as his ultimate savior. But, when really pushed, no liberal can rationally tell me why they are broadly anti-business – other than a few guys at the top being paid too much. Until they do, drinks in DC are on you!!

  7. Tim says:

    Hard for me to oppose your argument unless you give me some basis for your claim that libs hate corps. I don’t hate corporations. Give me some reasons why you think I, or libs, do. I think I addressed all the reasons you gave in your post: pay czar and the FDR study. I also gave you an example of corporate loving by libs: the bailouts. You can argue that it was poor policy, but it certainly contradicts your thesis that libs hate corps.

  8. Dan Grabois says:

    What does it mean that libs hate corps? Nobody is suggesting that we outlaw large companies, or distribute those profits of which I have a sketchy understanding to every American equally.

    Perhaps we are dealing with a different set of terms. Many Americans who are not deeply embedded in the business system (let’s say they have a job, but doing their job doesn’t mean analyzing “business” as a whole) have a relationship with corporate America that is defined by their relationships with … corporations in America. That is, they look at the corporations within their ken, and they see what they see.

    And what is that? They see that McDonalds is gigantic, sells really cheap and shitty food, and lots of really poor people eat that food and are fairly unhealthy because of it (see Me, Super Size). They see that their account at Citibank pays them .00001 percent interest (bear in mind that WE don’t really know all the ins and outs of interest rates). They see that Halliburton is … (take your pick). They see that American car companies make gas guzzlers and advertise the hell out of them so that people just have to own them, polluting the hell out of the air. They see that air travel is hideous. They see that their cell phone breaks at precisely the 367 day mark. They see that every toy they buy breaks after 13 minutes. They see that gas costs $2.999 and the oil companies are posting record profits (for some reason, these libs are unable to start their own oil company to undercut Exxon’s price).

    They see BP spilling a bazillion gallons of oil in the Gulf and not giving a shit, and instead complaining that it has caused them extra work. They see their friends’ pensions disappearing (many libs, like me, don’t have a keen understanding of exactly how the stock market works, but if you’ve got to understand each issue deeply before you weigh in, then see Palin, Sarah). They see insurance companies denying every claim, then touting their big profits (I know, I know, these profits go back to the smarties who invested right).

    Shall I go on? They see that their software doesn’t run on the new operating system. They see that their corner store, where they were treated like a prized customer and on a first name basis, has been put out of business by Rite Aid, which treats them like an irritant. They buy a shirt at Old Navy that rips on the third wearing. And so on.

    Permit us an emotional reaction here, please. My cousin-in-law Tim has a good understanding of economic theory, thank God, but I refuse to be happy in a big box world just because someone tells me it’s good for America.

  9. If you notice, liberals usually use the term corporation and big company interchangeably. The issue isn’t so much corporation, it’s size and power – not the concept itself; which makes this an old and classic issue of post-enlightenment economics (private property vs public property). The liberals don’t hate corporations, they just want to own and control them – for the betterment of society as a whole.

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