Vulture Capitalism: The Whys of Its Rise 2
Siman Caulkin explains that it’s the MBAs. A nugget:
(snip)
But it’s not economics, it’s management, stupid. Unsurprisingly, downtrodden and outsourced workers, mis-sold-to customers, exploited suppliers and underpowered innovation cancelled out any gains from ever more ingenious financial engineering – leaving shareholders less well off in the shareholder-value-era since 1980 than in previous decades. The great crash of 2008 stripped away any remaining doubt: the economic progress of the last 30 years was a mirage. As Nassim Nicholas Taleb put it in The Black Swan, the profits were illusory, “simply borrowed against destiny with some random payment time.”
Read the rest.
November 12, 2012 at 11:27 am
Decent explanation although I think it predate the Eighties a bit. My dad worked for Alcoa in Pennsy, originally in Cressona, a small town with the largest aluminum extrusion factory in the world And Alcoa liquidated it in the 70’s and I remember the dislocation and the management of the company, because my dad was a lower level one, and there was nothing confidence inspiring or humane in it. It was just reductive, a scramble to the bottom. He eventually wound up with the same job at a much smaller Alcoa plant that made bottle caps in Lancaster. They gave up extrusion of machine and infrastructural parts for bottle caps. Which are probably now all made in China, anyway. Anyway, he’s describing the fresh water school of economists and business management, an way of thinking that’s taken a terrible beating during the Great Recession, by the Keynsians. Who have been right about everything, essentially.
The other question that arises is why do the northern European countries do so much better now than the US? They do just the things proscribed by US thinking in that article. Pay more for labor, have a social contract. Yet, they also have great productivity and much inequality is not the raging bonfire that it is here. I think the duality of the American character has something to do with it. There’s a dark seam in the ID that enjoys, even finds virtuous, stamping on the faces of others lower down, and if it can be done to maximize business, all the better. This is not a country of people overflowing with the pure milk of human kindness. Any seeming veneer of generosity is just that, a cheap veneer.
November 12, 2012 at 2:17 pm
I remember the beginning of the MBA movement in the 70s, but it was in the 80s that an MBA became a ticket to ride.
Mr. Feastingonroadkill once argued that Europe is saner than the States because all their religious fanatics emigrated to America.
I also suspect that the devastion of the two world wars awoke them to the importance of settling differences in sane ways.