Like Paul Krugman, I have long detested the right wing meme that government should be run "like a business." For many obvious reasons this is deeply stupid and Krugman does a better job of course on the economics of why a national economy is not like a business, and the difference is much more than just scale.
That said, let's imagine that we were going to treat the United States as a business. What would that mean for the Big Finance MOTUs?
If you've worked for a big company, you'll probably find that there is a class divide between those whose work brings direct revenue for the company (the "profit centre" people) and those whose work does not ("cost centre"). Profit centre people are usually sales people and other front line workers who interface directly with customers, but they're also the production staff that make whatever product is sold. Basically everyone working in the primary line of business for that company.
Everyone else works in a cost centre. That's where I've always worked. This is IT, HR, mailroom, legal, facilities and all the roles that don't directly contribute to incoming revenue, but either make it possible or otherwise reduce risk, cut costs and so forth. The profit centre people couldn't actually do what they do without some amount of these people to support them, but the class divide is often very stark with greater perks and higher status given to the profit centre employees.
Intuitively this makes some sense, though many companies take it too far and neglect the support trades which ultimately hampers the "productive" people too.
The funny thing is that in United States Inc, the Big Banks, traders, brokers and the like would all be cost centre employees. In their own companies now they clearly walk tall as the drivers of profit for their firms, but in the grander sense of the economy, they're a burden to be minimized. You need a certain amount of HR people to keep down misconduct and enforce policy but only so many and every extra one after that is money wasted. Whereas with the profit centre staff, hiring more can mean more revenue, more profit, more product.
In big companies, employees in the cost centres are very aware of that status, and work to demonstrate their worth to the enterprise by trying to track such metrics that they can, to prove they're contributing to the bottom line.
We should demand the same of Big Finance. Justify your existence. Not just by hand waving about connecting lenders and borrowers or buyers and sellers, a web site could do that. Prove the 15% the economy lavishes on you returns to us somehow.
Of course they couldn't, but that's the point of exercise. Finance has some role to play, and the ideal size of that role varies with circumstances, but when we hit a point where we can't figure out what benefit United States Inc's shareholders are seeing from hiring another big-bonus banker, it's time to clean up that "department."
For me, this is a bad idea from whence any number of other bad ideas flow; not all, but many, and they're substantial.
ReplyDeleteI'm not sure why it is so difficult for the average voter to understand that government finance, or more precisely, fiscal policy, serves to trim the ship of the real economy. The real economy being the place where most average voters acquire their incomes. I get that it's easy to default to the "personal responsibility," or "balanced household budget" images that most Americans claim to adhere to, although the data says otherwise. Else, how did the American public become so leveraged with respect to their personal finances? I think touting the meme, and buying into the meme - by those voters who do - offers some kind of affected identity. And, the identity is very much affected given the array of data which argues convincingly against.
I'm not confused why corporations - particularly the multinationals - would prefer this personal responsibility meme, although it doesn't serve them as well as it does the financial industry subset. And, it is, of course, a myth of epic proportions that the government bailout to the financial industry is anything more than a purposeful expression of an industrial policy which was achieved as nothing more, or less, than fiscal policy. Standard Federal Reserve Open Market Operations were not the source of of their continued access to funds, or the purchase of their stock like they were T-Bills, or something.
*sigh*
Your notions of including more content from Canada - as opposed to Open Left's American-centric emphasis - seems entirely appropriate to me. To the extent that this business of government - anywhere - acting more like a "business" is the essence of the austerity policy that is being touted as the way to put the global economy back on its feet. The issues people face are increasingly global as economies become increasingly intertwined. And, Finance wouldn't have it any other way. After all, capital just wants to be free.
Thanks for setting up this site, Daniel. I'll be following along, and hope to encounter some of those other Open Left refugees, like myself. Best wishes for your blog.
~ bystander
Good questions. It is hard to see what these institutions are contributing - and hard to remember that corporations were originally supposed to exist to server the public, not themselves.
ReplyDeleteFor bystander, I wonder how much of this problem is about the average voter. It's important to remember that most voters support all manner of government actions to provide opportunity and security to the people. It seems to me that it's elites that prefer the 'personal responsibility' trope (albeit one they apply only to non-elites). I don't mean to suggest that regular people don't ever believe in these things. I'm only questioning which is the main force in maintaing the idea.
I used to think on occasion -- such as when I was reading jeffbinnc's education posts, or whenever someone in Democratic Party circles started going on about running things more like a business -- like what business?
ReplyDeleteLockheed Martin? Enron? Lehman Brothers? General Motors?
Oy!