Joseph Stiglitz : The end of neoliberalism and the rebirth of history

[Perseus]

4. The real problem has been "deregulation"

Anyone who understands human nature will agree with the old saying that "power corrupts and absolute power corrupts absolutely", a quote based on the understanding of people.

There has to be a balance in what governments can do and what free market can do, and by "free market" it has to be understood that free can not be 100%, the market has to be regulated because humans will want to find ways to get around the rules to enrich themselves by hurting others disregarding the rules and the regulations. Without regulations then it becomes a public shoot-out with those with deep pockets having the advantage over those who are trying to improve their lives.

I had a conversation with a republican many years ago, a week earlier the CEO of Exxon had been awarded a $400 million bonus, and I told him that I felt that was ludicrous, the CEO was not the founder of Exxon, he did not create the conditions for Exxon's improved earnings, it was the oil industry, OPEC to be exact, and the politics of the times (GW Bush/Cheney) that had contributed with the increase in profits. He told me that he didn't care what corporations did with their money, so I answered with a question, "who do you think pays for that bonus?", we do by paying more for gas (gas was close to $3.00/gallon and higher in some places at the time). I also pointed out that if someone like Fred Smith, founder of FedEx, wanted a $400 million bonus then he deserved it because he created the company and he built it to the super power that it is today, (note: Fred Smith does not pay himself that kind of bonuses), but the Exxon guy is just an employee who benefited from being at the right place at the right time. That was the end of the conversation.

These type of bonuses have to be eliminated, unless you are the founder of the company, unless you are the owner of the company, just being an employee does not merit that you are going to make 500 times of what the rest of the employees make, it creates friction, disloyalty, and helps bring demagogues to power. The MAGA slogan, whether true or not (and we know its false), resonates with people big time because when they see the inequality in pay, in bonuses, benefits, while working 10 hours/day to help the company continue making more profits and the increase in profits only benefits those on the top, then messages brought up by these demagogues will resonate and a con man like trump will be placed in a position of power.

We do need to look at other government models, like those that Bernie mentions constantly from the Scandinavian countries and where inequality is not a problem because they have plenty of regulation, they are focused on social services, part of the regulation is salary and bonus caps for high level executives which doesn't mean they don't earn good salaries but it is not the grotesque payments they enjoy in the USA.

DISCLAIMER: I am not trying to sell Bernie Sanders, he has very good points and so the others, but the Scandinavian model is one I have always agreed with him on.