The amoral­ity of our econ­omy

The Herald (Rock Hill) - - Opinion - BY DAVID BROOKS

Sud­denly eco­nomic pop­ulism is all the rage. In a 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 left­wing ver­sions of the same story.

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.

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. 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.

For ex­am­ple, there’s been a 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.

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.

Self­ish­ness was nor­mal­ized. As Steven Pearl­stein puts it in his 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. 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. 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.

But cap­i­tal­ism needs to be em­bed­ded in moral norms, and it needs to serve a larger so­cial good. 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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