(Economic Policy Journal)
Former Treasury Secretary Larry Summers is out with an op-ed in the Washingon Post.
In his essay, he appears to give full support to the Business Roundtable declaration that corporations should no longer solely be seeking profit but have "a fundamental commitment to all stakeholders."
This declaration on its own reveals the lack of understanding of the nature of free markets and the profit and loss system. See: Should the 'Business Roundtable' Change Its Name To 'The Profit-Haters Roundtable'?
But Summers takes things even further down the halls of economic distortion mirrors.
He writes:
If the Business Roundtable is serious about stakeholder capitalism, and if responsible firms are to flourish and spread their benefits, it will not just decree principles according to which its firms will operate but will also push for laws and regulations that support firms’ ability to stand up for their stakeholders. These might include minimum-wage and benefits requirements and broader mandates to protect companies that want to do right by their workers from those competing companies that are ruthlessly pursuing shareholder interests. Or they might include rigorous restrictions on advertising and promotion practices, so firms who are honest and transparent are not placed at a competitive disadvantage. Or universally high capital standards on financial institutions, so that imprudent willingness to take on risk cannot be a competitive advantage.
I am careful about throwing the term fascist around but his call is for economic regulation of corporations in an across the board fashion for the "better of the nation" that can not be labeled anything else.
Under his proposed policy scheme, it would mean that corporations are private in name only and that the true ruler becomes the state. It would be a massive step in the direction of the destruction of free markets and result in the accompanying inefficiencies, suffocation of creativity and cronyism that are inherent in the middle to late stages of a centrally planned economy. Read more
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