A Book Review
Welfare capitalism built towns across America. Including my home town, which grew up in large part around Endicott-Johnson shoe factories.
Could it work again? Perhaps. Perhaps not. However, if companies cared a bit more about their workers, perhaps the government wouldn’t need to. That’s a worthy goal, but unfortunately a goal that isn’t really explored in “Winners Take All,” by Anand Giridharadas.
If you’re like me, you probably saw this book as you walked through an airport. Then again, that assumes you’re among the minority of Americans who find themselves strolling through airports. The people Giridharadas needs to help don’t get off the ground, much. And that’s a problem for the author.
Giridharadas tries to explain what’s going on. He points the finger at the financialization of America. As anthropologist David Graeber defines that concept: “Increasingly, corporate profits are not derived from commerce or industry at all, but from finance—which means, ultimately, from other people’s debts.”
Giridharadas adds that, “The financial sector has extracted more and more value from the American economy, at the expense not only of consumers and workers but also of industry itself.” There are no E-Js today, because, “more and more of the nation’s financial resources were swilled around Wall Street without taking the form of new investment by companies or higher wages for workers.”
Blame globalization. As companies lost a sense of place, they lost connection to their (often former) workers in that place. But the solution Giridharadas offers is less than satisfying. He seems to think that if the wealthy just paid more in taxes, the government-run welfare state could take care of people.
But the federal government doesn’t have the answer to unemployment, either. It tends to push for retraining programs that don’t work. As Amy Goldstein wrote in her book “Janesville,” after the 2008 GM plant shutdown in Wisconsin, “Job retraining, it turned out, was not a path to more work or better pay in and around Janesville, at least not during this time when jobs were so scarce.” Instead, former GMers did better by simply striking off on their own.
But Giridharadas seems to trust the government.
In one completely unfair parenthetical, he asserts: “It goes without saying, for example, that if hedge funders hadn’t been enormously creative in dodging taxes, the income available for foreign aid would have been much greater.” Well, sure. But the U.S. spends about 0.7 percent of its budget on foreign aid. If there was more money available, that’s not where Congress would spend it.
Such big spending is a non-starter, anyway. “A key principle of rainbow liberalism is that the solution to working-class woes is hiking taxes on the rich to finance a generous suite of wage subsidies, social services, and, for the truly ambitious, basic-income grants,” Reihan Salam writes in The Atlantic. “But will white liberals be as enthusiastic about sharp increases in their taxes if those increases become something other than theoretical?” To ask the question is to answer it.
Giridharadas also floats, approvingly, the idea that Hillary Clinton’s proposals would have been better for the middle class than Donald Trump’s. But he then spends most of a chapter (rightly) blasting the Clinton Global Initiative, which embodied globalization. CGI also greatly enriched the Clinton family, to the point that Chelsea Clinton was free to say: “I was curious if I could care about [money] on some fundamental level, and I couldn’t.” Well, of course not; because she has it. As for those middle class Americans, it’s fair to say CGI was less profitable.
A key problem for Giridharadas is that he spent too much time marinating in the very system he now seems to hate. “He is an Aspen Institute fellow, an on-air political analyst for MSNBC and a former McKinsey analyst,” the book’s jacket proclaims. Those Americans grounded by job losses might say he’s part of the problem, not part of the solution.
Yet he spends most of the book blasting big globalist organizations such as the Aspen Institute and the Atlantic magazine, also an airport staple and a place where Giridharadas has been published.
Amid the self-loathing, he really offers only one potential solution: Make being good easy by creating B Corps, companies that do good while doing well (financially).
That would replace Milton Friedman’s idea that companies should only exist to serve their shareholders. To be fair, Friedman’s concept made sense in 1970, but it has, perhaps, been taken too far (a point to explore when we review “The Economists’ Hour,” by New York Times correspondent Binyamin Appelbaum.
B Corps may be part of the solution. However, commentators such as Giridharadas will need to come down out of the clouds if they want to offer effective solutions to today’s economic problems.