The re­mor­al­iza­tion of the stock mar­ket

The Hazleton Standard-Speaker - - OPINION - DAVID BROOKS is a colum­nist with The New YORK TIMES.

Sud­denly eco­nomic pop­ulism is all the rage. In his now fa­mous mono­logue on Fox News, Tucker Carl­son ar­gued that Amer­i­can elites are us­ing ruth­less mar­ket forces to en­rich them­selves and im­mis­er­ate ev­ery­one else. On the cam­paign trail, Bernie San­ders and El­iz­a­beth War­ren are telling left-wing ver­sions of the same story.

In an era of tribal emo­tion­al­ism, you’re al­ways go­ing to be able to make a splash re­duc­ing a com­plex prob­lem to a sim­ple nar­ra­tive that sep­a­rates the world into the vir­tu­ous us, and the evil them (the bankers). But I’d tell a third story about our cur­rent plight, which is nei­ther eco­nomic pop­ulism nor free-mar­ket fun­da­men­tal­ism.

My story be­gins in the 1970s. The econ­omy was sick. Cor­po­ra­tions were bloated. Unions got greedy. Tax rates were too high and reg­u­la­tions were too tight. We needed to re­store eco­nomic dy­namism.

So in 1978, Jimmy Carter signed a tax bill that re­duced in­di­vid­ual and cor­po­rate tax rates. Sen. Ted Kennedy led the ef­fort to dereg­u­late the air­line and truck­ing in­dus­tries. When he came into of­fice, Ron­ald Rea­gan took it up an­other notch.

It ba­si­cally worked. We’ve had four long eco­nomic booms since then. But there was an in­ter­est­ing cul­tural shift that hap­pened along the way. In a healthy so­ci­ety, peo­ple try to bal­ance a whole bunch of dif­fer­ent pri­or­i­ties: eco­nomic, so­cial, moral, fa­mil­ial. Some­how over the past 40 years eco­nomic pri­or­i­ties took the top spot and oblit­er­ated ev­ery­thing else. As a mat­ter of pol­icy, we priv­i­leged eco­nomics and then even­tu­ally no longer could even see that there could be other pri­or­i­ties.

For ex­am­ple, there’s been a strik­ing shift in how cor­po­ra­tions see them­selves. In nor­mal times, cor­po­ra­tions serve a lot of stake­hold­ers — cus­tomers, em­ploy­ees, the towns in which they are lo­cated. But these days cor­po­ra­tions see them­selves as serv­ing one pur­pose and one stake­holder — max­i­miz­ing share­holder value. Ac­tivist in­vestors de­mand that ev­ery com­pany ruth­lessly cut the cost of its em­ploy­ees and ruth­lessly screw its home­town if it will raise the short­term stock price.

We turned off the moral lens. You prob­a­bly know the ex­am­ple of the Is­raeli day care cen­ters. Par­ents kept show­ing up late to pick up their kids. To ad­dress the prob­lem, the cen­ters ex­per­i­mented with fin­ing the late par­ents. But the num­ber of late pick­ups dou­bled. Be­fore, com­ing to pick up your kid on time was a moral obli­ga­tion — to be fair to the day care work­ers. Af­ter, it was seen as an eco­nomic trans­ac­tion. Par­ents were happy to pay to be late. We more or less did this as an en­tire so­ci­ety — we switched to a purely eco­nomic lens.

A deadly com­bi­na­tion of right-wing freemar­ket fun­da­men­tal­ism and left-wing moral rel­a­tivism led to a with­er­ing away of moral norms and shared codes of de­cent con­duct. We ripped the mar­ket out of its moral and so­cial con­text and let it op­er­ate purely by its own rules. We made the mar­ket its own priest and con­fes­sor.

So­ci­ety came to be seen as an at­om­ized col­lec­tion of in­di­vid­ual eco­nomic units pur­su­ing self-in­ter­est. Self­ish­ness was nor­mal­ized. As Steven Pearl­stein puts it in his out­stand­ing book, “Can Amer­i­can Cap­i­tal­ism Sur­vive?” “Old-fash­ioned norms around loy­alty, co­op­er­a­tion, hon­esty, equal­ity, fair­ness and com­pas­sion no longer seem to ap­ply in the eco­nomic sphere.”

Any­thing you could legally do to make money was deemed OK. A bil­lion-dol­lar salary for a hedge fund man­ager? Per­fectly ac­cept­able. The Ap­ple cor­po­ra­tion ex­ists be­cause of Amer­i­can in­sti­tu­tions. But, as Pearl­stein notes, Ap­ple parked its in­tel­lec­tual prop­erty in an Ir­ish sub­sidiary so it could avoid pay­ing taxes in Amer­ica and sup­port those in­sti­tu­tions. It saved $9 bil­lion in 2012 alone. This is clearly sleazy be­hav­ior. Ap­ple em­ploy­ees should be hu­mil­i­ated and ashamed.

But to­day the amoral­ism of the trad­ing floor gov­erns cor­po­rate de­ci­sion-mak­ing. Pearl­stein quotes Carl Ic­ahn: “I don’t be­lieve in the word ‘fair.’” So Ap­ple paid no rep­u­ta­tional price when it stiffed its own coun­try.

So­cial trust arises from a covenant: I give to my com­pany, my town and my gov­ern­ment, and they give back to me. But that covenant was ripped. Now the gen­eral per­cep­tion is: When I give, they take. As we dis­em­bed­ded in­di­vid­u­als from tra­di­tional moral norms we dis­em­bed­ded com­pa­nies from so­cial ones. Hu­man be­ings are moral an­i­mals, and sud­denly Amer­i­can moral an­i­mals found them­selves in an amoral eco­nomic sys­tem, which felt in­creas­ingly alien­at­ing and gross.

We wound up with the se­ces­sion of the suc­cess­ful, and in many parts of the coun­try we wound up dec­i­mat­ing the so­cial trust that is ac­tu­ally a pre­req­ui­site for eco­nomic pros­per­ity.

Cap­i­tal­ism is a won­der­ful sys­tem. The pop­ulists are per­pet­u­ally liv­ing in 2008, when the fi­nan­cial cri­sis vin­di­cated all their prej­u­dices. They ig­nore ev­ery­thing since — the 19 mil­lion jobs that have been cre­ated, the way wages are now ris­ing at 3.2 per­cent.

But cap­i­tal­ism needs to be em­bed­ded in moral norms, and it needs to serve a larger so­cial good. Re­mor­al­iz­ing and re­so­cial­iz­ing the mar­ket is the great pro­ject of the mo­ment. The cru­cial ques­tion is not: How can we have a good econ­omy? It’s: How can we have a good so­ci­ety? How can we have a so­ci­ety in which it’s eas­ier to be a good per­son?

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