Understand how our economy has changed
Here’s a recommendation for Labor Day, the holiday that recognizes the American workplace: put Robert Reich’s book “Saving Capitalism: For the Many, Not the Few” on your reading list for the fall.
This bestseller takes an informed look at our national economy and how it can once again do far better at meeting the needs of all Americans. It’s a stimulating book about economics for people (such as me) who do not read books about economics. As Publishers Weekly notes, “Reich’s powerful final argument is that Americans need to rid themselves of the idea that it’s too late to change their economy.”
Reich, a prolific author, teaches public policy at the University of California. He served in three national administrations, including as Secretary of Labor. Reich is particularly effective at drawing connections across the wide expanse of recent history and economics and leading his readers to “ah-ha” moments of discovery. Consider this one example out of many. After World War II, CEOs generally understood that they were responsible to all the stakeholders of their corporations. Frank Abrams, chairman of Standard Oil of New Jersey, said in 1951 that the job of management “is to maintain an equitable and working balance among the claims of the various directly affected interest groups . . . stockholders, employees, customers, and the public at large.”
Today, CEOs are concerned for their shareholders to the exclusion of workers, customers and society. Former Coca-Cola CEO Roberto Goizueta declared, “We have one job: to generate a fair return for our owners.” By “fair” he meant the maximum return possible, regardless of its effect on other people.
This exclusive focus on shareholders, which dates back only to the 1980s, is not required by law. Corporate executives and directors do not have a fiduciary responsibility to maximize stock values or put shareholders’ interests above all others.
Reich explains that the structure of the American economy is fluid. It has changed many times over the years. He documents in detail the forces that have distorted our economy during the last several decades. In the best American tradition, he calls for the exercise of countervailing power to bring about reforms that will serve everybody. To find out about his bold and hopeful proposals, read “Saving Capitalism.”
The Rev. Charles Hoffacker, Brandywine The writer is the rector of St. Paul’s Parish, Baden.