Libertarianism is finished. Actually it was finished 80 years ago when it failed in the marketplace of ideas and remained until some crackpot but cynically self-interested billionaires started pouring money into talk radio, the Cato Instituted, the Tea Parties, the legal fiction that money is speech, and a variety of other aspects of a gigantic marketing campaign to revive this ghoulish zombie. Now Thomas Piketty has destroyed the economic understructure of libertarianism beyond repair. The notion that executives have no responsibility to anyone but shareholders is doing the same thing for the libertarian notion that "the invisible hand of the free market" is best equipped to make virtually all of our other decisions as a society.
That's an important point as we approach the 2014 elections. We can continue down a 35 year path of Conservative failure, or we can discard the failed ideology of deregulation and change the public policies which have contributed to destructive short-termism in the business world. We have a right to demand that...it's what society does, it's why we HAVE a government.
Businesses are given a right to operate by the societies in which function. That right to operate is not an absolute right. Society as a whole has a right to prescribe what the rules of the game are, and what makes for a healthy society and healthy communities. I am not advocating protectionism or anything like that. But I do think that this is rather short-sighted point of view, that “We are all that matters” kind of attitude is ultimately self-defeating, because we put the social fabric around them, and it’s only going to last so long.
I like the work of Jared Diamond and his book, Collapse: How Societies Choose to Fail or Succeed (Penguin, 2011) which looks at why societies collapse. A very strong conclusion is that when we fail to consider the collective consequences of our individual actions, and when we don’t have some governing structure, that ensures in some way that what is done is in some way benefitting the whole, the result is often a collapse. Economists used to call it “the tragedy of the commons.”
This isn't about "Socialism", it's about the survival of our Capitalist economy. Since that Capitalist economy provides the means of support for all of us it's also about the survival of America as a first-rate economic power and as a nation which is capable of supporting a good standard of living. The paradigm we've been pursuing for the last 35 years doesn't do that. It promotes gradual impoverishment of the vast majority of society, which has led to gradually slowing economic activity, increasing economic instability, and increasingly more frequent and severe economic downturns. We can do better.
There is a case to be made that certain behaviors which today are regarded as legitimate could be framed as less and less so, to the point that we would start to see real change.
Take McDonald’s [MCD] (and other low-wage employers). Taxpayers are in effect subsidizing McDonald’s business model. Their full-time employees are in the welfare system, because their salaries aren’t adequate to live on. This is outrageous. This is in effect a government subsidy for a company’s business model. In fact, the company goes so far as to provide guidelines to its employees as to how to apply for public assistance. I just don’t understand why we as a society find it acceptable to subsidize a highly profitable company’s low-paid workforce with public benefits. At the very least the government should have the right to bill the company for these subsidies – perhaps that would persuade it to offer a better deal to begin with.
There are studies under way showing that it’s good business to pay adequate salaries. For instance, the work by Zeynep Ton and Tanya Eby discussed in their book, The Good Jobs Strategy. It shows how firms can do well by paying a decent wage.