Darren Walker, President of the Ford Foundation writes in The NY Times:
No chief executive, investor or rich person wakes up in the morning, looks in the mirror, and says, “Today, I want to go out and create more inequality in America.” And yet, all too often, that is exactly what happens.
Even before the coronavirus, before the lockdowns, and before the murder of George Floyd — during the longest sustained economic expansion in American history — income inequality in America had reached staggering levels. Social mobility, the ability for a person to climb from poverty to security as I did, had all but disappeared.
This contributes to a hopelessness and cynicism that undermines our shared ideals and institutions, pits us against one another, and drives communities further apart. That’s why I am worried about our democracy, deeply and for the first time in my life.
So I feel a profound obligation to state what has become clearer every day: If we are to keep the American dream alive, our democratic values flourishing, and our market system strong, then we must redesign and rebuild the engine that drives them.
Inequality in America was not born of the market’s invisible hand. It was not some unavoidable destiny. It was created by the hands and sustained effort of people who engineered benefits for themselves, to the detriment of everyone else. American inequality was decades in the making, one expensive lobbyist and policy change at a time. It will take a concerted effort to reverse all of this, and to remake America in the process.
I spent the first part of my career on Wall Street, and I believe that capitalism is the best means of organizing an economy. But capitalism must be reformed if we are to save our democracy.
This will require rejecting Milton Friedman’s outmoded ideology: the dogma that a company must put shareholder value above all other objectives. It will require that corporations operate, in the words of the Business Roundtable, “for the benefit of all stakeholders — customers, employees, suppliers, communities and shareholders.”
Reforming capitalism also requires policymakers to transform a financial system that favors short-term returns, gives companies incentives to take on huge amounts of debt, and protects the special tax treatment for carried interest, a gift for private equity.
We must further ask: How can we create new policies that advance long-term, sustainable investment? How do we encourage investment in people and their skills, not just in automation and robotics? What does it mean to write a tax code that reduces inequality?