As the Occupy Movement gears up for its next phase, I hope it can help give visibility to ideas that move beyond vilifying "corporations" and "capitalism" and begin to focus on the incentives and policies that create sub-optimal results from business and capital markets. We need a more nuanced view of capitalism to make progress.
Corporations may be "persons" legally, but they are not in reality. To bring about change, we need to influence real people, especially those who shape the incentives, such as compensation and tax policy, that drive the behavior of business people and investors. General protest is important and legitimate for lots of reasons, but it's not all that is needed.
For those in the Occupy movement who blame corporations for a multitude of woes, it's also important to remember that "we the people" represent the demand for cheap goods, sugary soda, and freedom to live the way we want, which is the ying-to-the-yang of unsustainable consumption of natural resources and energy -- the goods and services largely being delivered by "corporate capitalism."
Meanwhile, however, although the encampments may be mostly gone, the attitudes about business that permeate Occupy are spreading. Harris Interactive released its latest polling data for 60 leading companies this week, and Wall Street firms hit a new low.
The percentage of respondents with a positive impression of the industry fell to 17 percent from 22 percent a year ago. The only industry with a less favorable standing was tobacco. Bank of America, Goldman Sachs and AIG had scores so low they resemble the approval ratings of companies like Enron before they went out of existence.
The reasons for this fall from grace probably stem from a host of issues, but clearly trust -- or the lack thereof -- in Wall Street, business and ,increasingly, something called "capitalism" -- play a big role. Indeed, a meta-narrative seems to have emerged, promulgated by pundits and authors alike, who blame multinationals for many of our economic woes.
For example, in a recent speech to promote his book, Death of the Liberal Class, I heard Christopher Hedges argue that there are three types of capitalism -- the local kind, like the green market in the parking lot at the neighborhood church, the regional kind -- like the grocery store chain, and then, of course, corporate capitalism. He made very clear which one was the problem. Mr. Hedges is articulate, passionate, well educated and seems in command of his facts. Given his background as a long time correspondent for the New York Times with a degree in divinity, it seems like truth is on his side -- and he touches on the big issues.
He referenced rapid decline of species, yawning problems in public health, a deficit of jobs and economic security -- and tying it all together? The failure of government to act, given that "they" -- the corporations -- control the campaign coffers, a reality now made worse by Citizens United and Super Pacs.
The room was packed, and even on the Upper East Side of Manhattan -- where there are likely more investment bankers in residence than any other place on the planet -- there were bursts of applause at his recurrent theme: corporations are at the root of the problems we face in this country. There is nothing left to be done, given their influence in the political process, but take to the streets.
I share his concern about the issues. I see two problems with his analysis.
The first problem, to quote the cartoon character Pogo -- "we have met the enemy, and he is us."
But further, every boomer fortunate to have a 401k plan wants it to go in one direction only -- up. The drumbeat for high returns is the flip side of short-term behavior in business and finance that drives the most egregious behavior in markets -- from creating junk mortgages to products with social and environmental costs. Excoriating corporations isn't going to bring about the changes we need. We need to delve into the incentives and the decision rules that shape behavior of those on both sides of the table.