By Sal Bommarito
The accused perpetrators of income inequality have come under attack in the 2016 presidential campaign. Bernie Sanders is leading the charge against all those that he thinks are depriving the downtrodden of a financially secure life.
The venom directed at big business and specifically Wall Street banks has become so pervasive that even candidates who received fees for speaking to companies are being lambasted.
What is most disconcerting about this political strategy is that Sanders’ targets aren’t responsible for the problems of those suffering financially. The entities that Sanders despises the most are generally the most successful individuals and corporations in the country. The question that needs to be asked is, when an executive of a large bank or corporation earns $5 or $10 million dollars, does it in any way deplete funds that might have assisted poor people?
Denigrating the most successful among us is a backdoor strategy to rid the country of its longstanding commitment and encouragement of exceptionalism. This is socialism at its worst, assigning all members of society to one homogeneous bucket and ensuring that they all have the same salary and the same size home.
For the most part, educated Americans who work hard are productive and have rewarding lives. Those that shun education for any reason (including factors out of their control) generally experience hardship. Correspondingly, those among us that don’t have a strong work ethic will not have productive lives that are consistent with others that do.
The problem with Sanders’ perspective is that the majority of Americans will never adopt it because the drive to succeed is ingrained in our national psyche. Despite this, millennials are easy targets for socialistic claptrap because of mounting educational expenses and the dearth of job opportunities. This group is suffering challenges that have beleaguered young people throughout recent history.
The job situation is the most important reason for the growing distress among many Americans. The dream of finding a job, which is interesting and affords one a life style that improves over time, represents a difficult challenge.
America’s business community is changing rapidly because of domestic and global events. There is greater competition from overseas, and many jobs are exported when corporations determine that they can manufacture products more cheaply in places other than the U.S.
Corporate efforts to reward stockholders with higher returns are not evil or even anti-social. In many cases, CEOs have had no choice but to look outside the U.S. because unions are demanding too much or costly federal and state regulations are making it difficult to operate profitably.
U.S. businesses are not averse to building new facilities and hiring more people domestically. Similarly, CEOs of companies truly want to diversify their work force. But, if it’s more economic to operate elsewhere, CEOs have a fiduciary responsibility to consider it. The large compensation that some CEOs receive is in part based upon their ability to be nimble and creative to insure financial strength.
To be clear, the objectives of corporations are not exactly the same as the federal government. The former have large groups of investors and creditors that finance their businesses. The government has no profit aspirations. It creates regulations to improve and protect the lives of all Americans.
The government is responsible for societal issues such as high employment, a clean environment, safe working conditions and diversity. In its efforts to accomplish these objectives, it seeks the cooperation of the business community appreciating that corporations are simultaneously responsible to their owners and creditors.
The problem, lately, is that the federal government has tilted the balance between corporate profitability and corporate citizenship. Over-regulation in every aspect of business is making it impossible for some companies to earn a compensatory rate of return, and so they look elsewhere for a more favorable and receptive environment.
All the while, populists like Bernie Sanders are screaming that workers aren’t participating in the profitability of their employers, a hypothesis that is debatable. Workers sometimes hurt themselves by demanding too much. They work against themselves by voting for socialistic politicians that make the U.S. business environment more hostile.
Fostering a friendlier environment for business in America is the best way to combat income inequality. Businesses create jobs that are desperately needed. Now, however, thousands of small businesses are closing because they can no longer make a profit.
To be sure, some regulation is good for America. And, all companies should strive to make their workers feel secure; it’s good business to do so. But, there must be a compromise between government, businesses and workers. And opportunist politicians like Bernie Sanders should be exiled back the states from which they came.