I know that a lot of people are upset about the growing power and influence of the wealthy. In and of itself this does not bother me. If the pie was growing for everyone I would be inclined to view the concentration of capital into fewer hands as a good thing.
Here is one reason why. From CNBC
Influential hedge fund manager David Einhorn has called for Microsoft Chief Executive Steve Ballmer to step down, saying the world’s largest software company’s long-time leader is stuck in the past.
Einhorn’s Greenlight Capital hedge fund has been a recent buyer of Microsoft stock, which at under 10 times expected earnings is regarded by many as undervalued.
Einhorn is buying up Microsoft with the intention of firing Ballmer and getting the company to do something constructive with its pile of cash. Perhaps, pay it out to investors who can put it to use elsewhere? One can only hope.
However, even if they actually bring in some new folks who can drag Microsoft into the 21st century that’s a win.
In a world owned by Index Fund 401(k)s this sort of thing isn’t possible. Investors with an interest in actually allocating capital are a key part of this whole capitalism thing. That almost necessitates a concentration of wealth.
Why this has to be inconsistent with a quality education system, high investment in domestic infrastructure and decent state-provided retirement package for Joe Six-pack, I have no idea.
If there were any grand bargains to be struck wouldn’t this be the one we want?
7 comments
Comments feed for this article
Thursday ~ May 26th, 2011 at 3:36 pm
Wonks Anonymous
You are a rare bird. Too rare.
Friday ~ May 27th, 2011 at 12:39 am
Seth
“Why this has to be inconsistent with a quality education system, high investment in domestic infrastructure and decent state-provided retirement package for Joe Six-pack, I have no idea.”
It doesn’t *have* to be. But our plutocrats are a callow bunch and are content with the Reader’s Digest condensed version of Adam Smith, which reads (in it’s entirety): “Greed is Good”.
Friday ~ May 27th, 2011 at 1:32 am
chris murphy
“Why this has to be inconsistent with …” etc.
Because concentration of capital enables the wealthy to buy more then just influence over the allocation of capital in the private sector. It enables them to buy the political system. And once they have bought the political system they can and do insist on lowering the tax burden on themselves so that we can’t fund things like quality education, investment in infrastructure and decent state-provided retirement packages for Joe-Sixpack. And not only do they use their control of the political system to largely immunize themselves from taxation they also use this power to extract rents paid for by the rest of us.
Friday ~ May 27th, 2011 at 5:04 am
Endgame « colbypenning1128
[...] The case for plutocracy strikes me as weak, but the case for less 401(k)s and more Social Security is [...]
Friday ~ May 27th, 2011 at 8:15 am
Barry
I second the last two comments, but disagree with Seth – I think that it has to be. As wealth is increasingly concentrated, there is a very small minority which (a) doesn’t live like the rest of us (to an extreme degree), (b) has far, far more political influence than the rest of us, and (c) can trash the rest of us with little or no payback.
At that point the things mentioned (‘a quality education system, high investment in domestic infrastructure and decent state-provided retirement package for Joe Six-pack’) are money which is being left on the table, from the view point of the plutocrats. They can and do take that money, because they can, and because taking enriches them, while the damage done is felt only by the rest of us.
Friday ~ May 27th, 2011 at 11:57 am
Seth
I’m not sure what Einhorn’s personal net worth happens to be, but it’s worth noting that he’s using his *investors’* money to pursue ‘shareholder activism’. I like the idea that a billionaire CEO like Ballmer can be held accountable by *someone*, and it could only be an activist shareholder under present law.
So I don’t think Einhorn personally represents the ‘inevitable’ conflict between concentrated economic power and a social welfare state. Nor do I think “billionaires” in general are invariably going to chase every last dollar available to them by any means necessary (inluding political chicanery, etc.) regardless of cultural norms. Our norms lately are fairly lax (‘greed is good’, etc.).
I do agree that constitutional government requires that there be an institutional check on the arbitrary power of money. The “rest of us” need to be able to vote to impose rules that limit plutocratic power. It isn’t clear that we hold such a veto these days. But then, I’m not sure we ever have — outside the covers of civics textbooks. Past trust busting and 91% marginal tax rates sound like tough populist measures, but they weren’t the decisive victories for the little guy that we’re tempted to take them for.
Sunday ~ July 31st, 2011 at 8:58 am
Yglesias Endgame « Politics
[...] The case forplutocracystrikes me as weak, but the case for less 401(k)s and more Social Security is [...]