Fixing Capitalism - How the Romney / Bain Story Illuminates the Core Problem with Capitalism

In watching recent news commentary regarding Mitt Romney's alleged departure date from Bain Capital, it occurred to me that we are focusing on the wrong element of this story.  The discussion thus far has been about Mitt Romney's role as head of the investment company, and in what decisions did he participate during those questionable years from 1999 to 2002.  To me, this misses the larger point and the more important role Romney played - the investor.  Romney remained as an investor to this day, and therefore I believe he has always maintained responsibility over Bain's actions.  My view is not currently the mainstream view.

Our system is set up today in a way that I believe fundamentally corrupts our capitalism, economy and society - we have separated business ownership from management and liability.  For some reason we believe in a principle that individual investors, regardless of the size of their investment, have no liability, responsibility or accountability for the investments into which they put their money.  It is this notion which has supported laws and regulations that entrench this belief in our financial, legal and economic systems.  We have laws which insulate and indemnify investors against the improper actions of the companies in which they invest, yet at the same time, these owners benefit from increased return on their investment when management takes unethical or even criminal actions to unfairly game the system and increase profit.  These executives are incentivised to do this by outrageous compensation schemes.  It is arguable that such large compensation packages are required to subtlely persuade executives to cross ethical or legal boundaries that will increase investor returns.  Thus, investors are indirectly responsible for the actions of these companies, and I believe we, as a society, need to move that responsibility from the indirect category to the direct category.  It is time that we accept as fact that the simple action of putting your money into a company is an explicit approval of its business practices, its products, its investments, its politics and its ethics.

Mitt Romney argues that because he no longer was running Bain Capital that he is not responsible for its actions.  I argue that because Mitt Romney was simply an investor in Bain Capital he WAS responsible for everything it did, as is every other investor in the company.

I believe we need to re-examine our basic assumptions about the relationship between ownership, management and liabilities of a company.  If investors are made fully liable and responsible for the actions of the companies in which they invest, would they take a more active interest in the behavior of their executives? I am pretty sure they would.  Such an action would arguably completely and quickly re-shape the market, as investors would no longer search for companies that promised the biggest return on investment in the shortest time possible (a clear recipe for fraud and other criminal and unethical behaviors), but they would instead search for honest, integrous companies that provide real value over the long term.  Day traders would be put out of work because no one would be interested in the liability associated with purchasing stock in questionable companies if they knew they had a liability tied to that purchase.  Learning about companies in this depth takes time - time day traders dont have to invest.  Accordingly, investment would become a long-term activity and would involve identifying stability, ethical leadership, good business decisions, long-term trends, and a sense of the collective good, rather than individual riches at the expense of everyone else.

If a company has debts, the investors, owners and managers should all be responsible to pay it.
If a company commits a crime, the investors, owners and managers should all have legal criminal liability.
If a company goes bankrupt, the investors, owners and managers should all be liable to creditors.
If a company produces a defective product or harms the public, the investors, owners and managers should all be liable.

While argument on this point is sure to be extreme, the fix is relatively simple.  By making investors responsible and liable for the actions of the companies in which they invest, the entire investment market would dramatically change for the better overnight.   This one simple correction to an erroneously held long-standing principle will improve our entire economy and the future of our country. 

Whether the law imposes this liability or not, it is still up to each investor to consider their investment carefully.  We will be better investors and have better returns over the long term if we invest as if we ARE legally liable for everything that company does starting as of the date we invest until the day we  sell our last share. I encourage everyone to invest with this mindset, and if enough people do it will be a simple matter then to change the law to be in accord with our new collective understanding.  When we invest in a company because we want to earn the maximum return possible without regard to their ethics, leadership and long-term value we are attempting to increase our wealth at the expense of everyone else (and even ourselves in some cases such as gross pollution of public resources, outsourcing and downsizing), and this is our personal decision.  Its time that we each individually take responsibility for that decision, and stop pretending that our investments are irrelevant to business behavior.  The truth is that our investments drive and create business behavior, and until we realize that and take responsibility for it, our economy will continue to falter and fall into croney capitalism like we see at Bain Capital and virtually every other capital investment operation in existence.

Opponents will argue that such a proposed change would cause investors to stop investing completely.  This is unlikely, but it is likely that investment would decline dramatically in the short term while investors recalibrate to the new conditions of the market, but investors still want to make money, they will just be more careful about investing in the future.  New tools will be developed and enhanced to respond to these changes, such as increased access to internal documents, meetings, processes and decisions within companies so that investors are directly aware of their actions in a timely manner.  Bad decisions will result in quick de-investment by sensitive and savvy investors, and companies and executives will no longer be rewarded for making bad decisions.  My ultimate argument to opponents of my proposal is that if you are too lazy to learn about the company in which you are considering investing your money, then you have absolutely no business investing any money in any business.

If implemented, this idea would result in investors having a more active role in the management of companies, and this would be a good thing.  Power corrupts and absolute power corrupts absolutely.  The solution is to share power between different entities.  However, power and responsibility go hand in hand.  Yes, investors need more power in relation to executives but with it comes more responsibility and liability, it cannot be avoided.

What Republicans Stand For

I was watching the news today and it suddenly struck me that today's Republican party is disturbingly reminiscent of the old Nazi party of WWII. I dediced to google the question and found that many other folks have had the same thought.

If you take a moment to consider the similarities, it is extremely concerning that the Republican Party has come to stand for, in essence, the same positions on most subjects as held by the Nazis, with some modern adjustments. For example, instead of hating and rallying against Jews, the modern Republicans hate and rally against primarily Blacks, Hispanics, foreigners, homosexuals, and Women, among other groups. Of course another major difference is that today outright racial or sex discrimination and hate is criminalized activity, so therefore modern Republican-Nazis need to make all public statements absent statements of hate, but if you look past their deceptive public statements, the policies they create and promote embody and encourage the discrimination and multiple disparities which have come to define today's racial and socioeconomic divide and which were part and parcel of Nazi discrimination circa 1940.

I am not the only one who has noted this disturbing correlation. Here are some other articles by fellow bloggers or writers who have point out these similarities:

http://journals.democraticunderground.com/Sarah%20Ibarruri/21

"1) The scapegoating of, and prohibition of unions;

2) Allowing the confiscation, removal and arrest based only on suspicion of acts 'against the
state;'the torture of mega-millions without trials;

3) Allowing corporations to use prisoners as free or nearly-free labor;

4) The torture and murder of anyone socialist, Communist, or in disagreement with right
wing fascism;

5) The fooling of the population through propaganda, as well as deceptively named groups;

6) The promotion of certain groups (an uber-race, or an uber-group) to the exclusion of others;

7) The murder of mega-millions without trials;

8) A contempt for democracy (Hitler said Democracy was corrupt and soft, while Bush said being a dictator would be easier than being president);

9) The association of patriotic symbols as propaganda (so that anyone in disagreement with the regime could be scapegoated as 'unpatriotic');

10) The scapegoating of the poor, the colored, the unusual, the disabled, the helpless, the handicapped, the gay, the feeble-minded;

11) The use of religion to promote regime and thought control - xenophobia (God is seen as Republican, and German Nazis had belt buckles that read, “Gott Mitt Uns” (God is with us)); a love of war;

12) The use of distractions (Reichstag fire used to suspend liberties. GW Bush lied about WMDs in Iraq, so he could attack the country);

13) A love of radio propagated propaganda (nowadays we have that as well, hosted by many Joseph Goebbels);a worship of authoritarians (strong, sociopathic leaders feigning patriotism, who are blindly followed by their followers, even when the truth is exposed);

14) No compassion; and,

15) The abolishment of abortion. "

Some of the below articles note the same correlations but others have additional similarities.

http://www.politicalarticles.net/blog/2009/03/06/10-similarities-between-ultra-conservative-republicans-and-nazis/

http://aborovkoff.wordpress.com/2011/06/29/does-the-tea-party-the-new-nazi/

http://www.abovetopsecret.com/forum/thread654503/pg1

http://www.abovetopsecret.com/forum/thread654503/pg1

http://anglachelis.hubpages.com/hub/Are-The-Republicans-Fascist

http://authorbob.blogspot.com/2011/02/nazi-tea-party.html

I think that last one is my favorite.

Ok, so what does this mean?

So, the correlation is pretty clear. The Nazi party and today's Republican party stand for the same thing: hatred, racial and class warfare, war, loss of liberty, loss of democracy, tyranny. Their mode today is to promote hateful policies while denying any hate. They promote laws to suppress voting while denying they are doing any such thing. In fact, they argue they are solving a problem with voter fraud despite no evidence of any significant voter fraud anywhere.

These are not the views of radical right-wing extremists, this is the position of VIRTUALLY ALL of the republicans in or seeking public office today. This is also the position of ALEC, the secret ultraconservative group that creates model Nazi-ish legislation to promote thought the state legislatures around the country (notably, voter suppression laws, the "stand-your-ground" law in Florida, the Citizen's United decision, and many others).

If you are a Republican, are you also a Nazi? Don't answer too fast. You'd better think about it. I ask you - nay, I DARE you - to respond with your justification for how you can continue to support a party whose ideology is most similar to Adolf Hitler, Joseph Lenin and is responsible for the worst mass murders in recorded history. Had you lived in 1939 Germany, would you have been a Nazi then? Would you have voted for Hitler? I think that if you have been brainwashed by Rush Limbaugh, you surely would have been brainwashed by Adolf Hitler then. If you hate Blacks and Hispanics today, you surely would have hated Jews then. If you are willing to dictate to a woman what she can or cannot do with her body (i.e. abortion) today, I suspect you would have approved forced sterilization of Jews and the retarded then, and you would have undoubedly supported the Nazi ban on abortion then as well. If you think that God is on your side today, you surely would have believed Him on your side then as well - that is the nature of believing in God. I don't know any religion which holds a belief in God but also believes that God is NOT on their side.

So, I challenge you. I challenge you to either stay in the Republican party and admit that you are really a modern-day Nazi, or renounce your connection to the Republican party and prove that you are not.

Government Mandates

What is legitimate when it comes to government action is still controversial even though we have been having this same debate for over 200 years. The current Supreme Court case regarding Obamacare is the latest to attempt to legitimize or de-legitimize a requirement that all Americans have health insurance starting in 2014.

I don't think I am alone when I say that I am not particularly impressed with the Supreme Court or its recent track record in decision-making, and therefore I don't feel this debate should be left to this panel to decide, nor is it ultimately. We have had this debate many times already and it seems that every generation needs to go through this exercise for itself. This is unfortunate because it slows progress to a crawl. Our society today should be far ahead of where it is in terms of social policy, but continuing to debate settled issues is holding us back.

It is already settled law that the government can do many things, some of which we have decided it should not do, but that it has the power to do nonetheless. The internment of Japanese citizens during WWII is a great example of a power that was adjudicated by the SCOTUS to be legitimate, but which later was viewed public opinion to be an abuse of power. That power still resides within the President, and today we are still struggling with the similar issues around ongoing detentions in Guantanamo Bay. Yet, we have decided as a nation time and time again that the government has this power and may use it when it determines the welfare of the nation requires it.

If I think about this example of extreme government power, it seems a bit ridiculous to think that the government can legitimately take innocent people from their homes to protect the public welfare but can not make people buy health insurance to protect the public welfare? How is the demonstrably unsustainable rise in healthcare costs to this country less of a threat to the public welfafre than the potential of peaceful U.S. citizens to possibly commit a future crime based solely on their race or national origin (today a protected class!)? I would argue that the unavoidable pending disaster of failing to address healthcare costs for this nation is a far bigger threat, one that is certain as opposed to a mere possibility, than the Japanese U.S. citizens ever were. And yet, Japanese internment was completely legal, if morally reprehensible. Would it be legal today considering that national origin and race are protected classes? That is doubtful in my mind, but I have no doubt that clever attorneys will argue there are other ways to classify using unprotected classifications. For example, if you couldn't intern just Japanese people, you could intern anyone who had immigrated to the country in the last 50 years, and that would pretty much get you everyone you are interested in. Then, you can just dismiss charges against individuals you like using an administrative procedure, effectively allowing you to handpick who gets relocated, detained or otherwise imprisoned without trial or any rights.

So, the government can make you do lots of things already, why should a requirement to buy insurance be so different? Today the government can require you to purchase a helmet for your bicycle, to put your child in a car seat, to sign up for the draft, to get vaccinated. How can we argue that the government can require vaccination to go to school but cannot require health insurance? A required needle in the arm and a drug in my vein, or tha of my child, is far more invasive than mere legal instructions to purchase a health plan of my choice (with, if necessary, financial assistance from the government) and a penalty if I fail to comply.

One thing that especially doesn't make any sense is the idea that the government has the power to criminalize suicide, the ultimate control over one's own health, yet could not require that same person to get insurance to provide for their health, a much lesser invasion that has many positive and virtually no negatives to the citizen, as opposed to prevented suicide which forces terminally ill patients to live in agony while bankrupting families to pay for unwanted care.

Think about it the argument being made. "The government doesn't have the power to make you buy a commercial insurance product". Our society decided that was untrue while debating auto insurance requirements. If you are a business the law requires you purchase Workers Compensation insurance. Other laws require various insurances for specific circumstances, as do many private contract provisions.

Requiring any kind of insurance policy, regardless of the sector under discussion, is clearly an appropriate role of the government. The government can determine what are minimum coverage amounts that should be in effect to protect the public welfare. The government can determine who is eligible or ineligible for coverage through statute, administration or adjudication.

What about the argument that the states, not the federal government, have the right to require health insurance. I don't really care whether the requirement comes from the state or federal government, but if given the choice, I'd say federal is better because that means that all Americans are treated equally. Moreover, when it comes to the real reason for having a health insurance mandate, we are talking about reducing costs by increasing the size of the pool. Therefore, the maximum cost savings can be achieved by requiring all American's participate, and thus the entire rationale requires total participation.

Logically, the way construction of the supremacy clause works is this: if the federal government is silent on an issue, the states may legislate differently on that issue as long as their law does not violate the constitution of their state or the United States. However, if the federal government legislates on an issue not prohibited by the Constution, then all states must conform to it. In this case, the federal government had not previously legislated in this issue and therefore states were free to legislate their own healthcare laws and mandates. Now that Obamacase is law, the states must conform.

This makes a lot of sense. There is nothing in the Constitution that prevents the federal government from imposing a healthcare plan requirement, therefore they have the power to do it.

There is no conflict with religious beliefs either. You can even purchase a plan from your local church or AAA, if they offered one. Obamacare doesn't require you buy any particular insurance brand. Better than car insurance mandates, Obamacare offers subsidies to those who cannot afford health insurance premiums. To me, this is not an infringement of any basic right of any kind, religious or otherwise, but rather this is the establishment of a system to facilitate enforcement of a basic right to have health care regardless of one's ability to pay for it.

What is the argument against this? People should be permitted to die from lack of healthcare? If that is the case, then why is suicide still illegal? It just doesn't make any sense at all. If the Supreme Court has any morality or rationality left on it, it will uphold Obamacare as constitutional and put the Republican nay-says to bed on this issue finally and forever. Ironically, the insurance mandate was originally a Republican idea - a fact that supports the argument that their opposition to Obamacare is borne more from racism than from policy differences.

The Supreme Court is not the final decider of this question. If the Supreme Court issues a ruling We don't like on this question, We the People can Amend our Constitution and overturn their ruling with a Constitutional Amendment, as we have done dozens of times before and are going to do again soon with their reckless decision in Citizens United. So, rather than argue about what the SCOTUS says or doesn't say, think about what is appropriate for a nation built on the equal value of all citizens. If the lives of all citizens are valued equally, then all citizens should have equal healthcare access and coverage to protect their lives from illness and death. If all citizens cannot afford that coverage, then the government should step in and ensure that they have it anyway. If the way to do that is by an insurance mandate for those who can afford it, then so be it. I actually think a better option is universal european-style of healthcare system, but if we are going to rely on the market approach to distributing resources, then a mandate is the only logical solution to keeping costs down. And keeping costs down is not an option, it is essential. If we don't address this issue now, healthcare costs will bankrupt this nation as the babyboomers continue to age and we will have only deeper and wider financial crises that will plunge us again into recession or worse.