Financial Reform Won't Alter Capitalism's Icarus Trajectory

[marmar]

from HuffPost:



Stuart Whatley
Associate Blog Editor

Financial Reform Won't Alter Capitalism's Icarus Trajectory
Posted: May 20, 2010 12:43 PM


My mother used to have a cat that wasn't declawed. As such, most of the plushier furniture items around the house inevitably ended up shredded. She would take the cat to the veterinarian now and then for the claws to be clipped down, which was effective for a time before they grew back, after which point more evisceration would ensue. Cats do this not as some devious Garfieldian machination (the comic strip, not the president), but rather as a means for sharpening, or upkeep, driven by an irresistible evolutionary compulsion. Thus for the maintenance of their claws, they are beholden to an uncontrollable and sometimes destructive urge.

The same can be said for contemporary finance, and for our legally codified concept of the limited liability, profit-driven corporation more generally. The current financial regulatory reforms being hashed out in Congress seek to clip Wall Street's claws, but it is only a matter of time before those claws grow back in the form of increasingly complex financial innovations. Not all of these will be "bad" ideas. Some will efficiently and effectively connect resources to production. But if history shows anything, it's that eventually a profit-maximizing instrument or nascent investment area will emerge that wrecks the system all over again.

Perhaps the most troubling reality in the 21st Century is that our economics now dictates our cultural values, rather than the reverse, where We the People would decide how resources, production, and mutual prosperity should be systematized to achieve the best society for all. Like the cat's claws, the corporation's profit motive is its only tool for survival. The casino culture of the financial system has spawned an expectation for unrealistic year-to-year growth in investors of all forms, demanding that managers increase profits exponentially and unsustainably, lest they be canned and replaced.

To account for that ever increasing demand -- and constrained by laws that prohibit CEOs to take any action that isn't in the direct fiduciary interest of shareholders -- corporations are forced to externalize costs whenever possible, regardless of social or environmental detriment. This process takes many forms, such as shortcuts and cutting corners (British Petroleum), or outsourcing to more unsavory elements (sweat shops), to name just two. ..........(more)

The complete piece is at: http://www.huffingtonpost.com/stuart-whatley/corporation-reform-financ_b_582770.html

[OHdem10]

1. Thanks for posting this---Until changes are made to practices listed

in last paragraph, we cannot expect much in the way of change
in this country.

For National Security as well as improving the lot of our
Middle Class, we must add to this Service Economy , an
Industrial Policy which brings our Mfg to at least
15%. The current Service Economy cannot sustain this
country.

Thanks again for posting this.

[1955doubledie]

2. K&R

:kick: