Steven Pearlstein writes: “The rise in inequality can be blamed on the shift from managerial to shareholder capitalism.”
It was only 20 years ago that the world was in the thrall of American-style capitalism. Not only had it vanquished communism, but it was widening its lead over Japan Inc. and European-style socialism. America’s companies were widely viewed as the most innovative and productive, its capital markets the most efficient, its labor markets the most flexible and meritocratic, its product markets the most open and competitive, its tax and regulatory regimes the most accommodating to economic growth.
Today, that sense of confidence and economic hegemony seems a distant memory. We have watched the bursting of two financial bubbles, struggled through two long recessions, and suffered a lost decade in terms of incomes of average American households.
We continue to rack up large trade deficits even as many of the country’s biggest corporations shift more of their activity and investment overseas. Economic growth has slowed, and the top 10 percent of households have captured whatever productivity gains there have been. Economic mobility has declined to the point that, by international comparison, it is only middling. A series of accounting and financial scandals, coupled with ever-escalating pay for chief executives and hedge-fund managers, has generated widespread cynicism about business. Other countries are beginning to turn to China, Germany, Sweden, and even Israel as models for their economies.
No wonder, then, that large numbers of Americans have begun to question the superiority of our brand of free-market capitalism. This disillusionment is reflected in the rise of the Tea Party and the Occupy Wall Street movements and the increasing polarization of our national politics.
Read the article from The American Prospect.