Opinion

Chrystia Freeland

An elite deserving of the name

Chrystia Freeland
Jun 13, 2013 16:32 UTC

This book review originally appeared in Democracy: A Journal of Ideas, and is reprinted with permission.

As the twenty-first-century American middle class gets squeezed, with little relief in sight, liberals are wistfully remembering something about the postwar era that they had energetically forgotten. That age of suburban conformity and institutionalized sexism and racism was also a time when big business believed in government and worried about the common good, and was willing to pay for both.

Reminding us of that era, and documenting the engagement between the corporate class and the state during the 1940s, ’50s, and ’60s, is the most valuable contribution of The Fracturing of the American Corporate Elite by Mark Mizruchi. The University of Michigan business school professor, who has written three previous books about the practices and culture of the American corporation, offers a compelling history of how the American corporate elite reconciled itself to the New Deal, and then, in the aftermath of World War II, signed on to a vision of America in which government played a muscular and essential role in steering the economy and underwriting the well-being of the middle class.

The business heroes in this narrative are the leaders of the “moderate, pragmatic corporate elite [that] had emerged, based primarily in the largest American corporations” by the end of World War II. This elite and its views were “epitomized” by the organization whose history forms the backbone of Mizruchi’s narrative, the Committee for Economic Development (CED). Formally incorporated in 1942, the CED brought together engaged, moderate businessmen from across the country and advanced their views in the major national debates of the subsequent decades. They were an illustrious group: As of July 1945, the CED’s trustees included a senior partner at Goldman Sachs, the chairman of Coca-Cola, the president of General Electric, and the presidents of the Federal Reserve Banks of Boston and St. Louis.

The CED, in Mizruchi’s telling, thought the days of untrammeled free-market capitalism were gone, and that both private and government-led economic management would be necessary for a market economy to survive. In order to maintain the system from which their privileges derived, they believed it would be necessary to attend to the welfare of the broader population. This meant supporting a high level of employment, the alleviation of poverty, the amelioration of racial disadvantage, and the provision of sufficient purchasing power in the population to consume the goods that American business was so proficient at producing.

Interview with Christine Lagarde at the IMF

Chrystia Freeland
Jan 18, 2013 16:27 UTC

Managing Director of the IMF Christine Lagarde sat down for an interview with Chrystia Freeland yesterday, January 17th, following the IMF’s New Year Press Briefing.

CHRYSTIA FREELAND:

Thank you for joining me, Madame Lagarde.

CHRISTINE LAGARDE:

My pleasure.

CHRYSTIA FREELAND:

One of your themes as we enter 2013 is that financial reform must continue.  And you have just said that you’re concerned, you see a waning commitment to financial reform.  What do you see going on?

CHRISTINE LAGARDE:

I see a lot of pressure coming out of the industry.  Which is clearly part of their job.  They will naturally lobby to support more flexible, more accommodating regulations.  I think, you know, the financial sector is so particular and so special because of the confidence factor associated with it and the role played by the authorities sometimes in order to support that sector, that it warrants stronger regulations.

Obama, the super-rich and the election

Chrystia Freeland
Nov 9, 2012 18:03 UTC

Among the losers in the United States this week are the super-rich, who spent unprecedented millions to evict President Barack Obama from the White House. The investing class turned sharply and vociferously against the president many of them had supported in 2008. On Tuesday night, the plutocrats lost their shirts.

“Boy, they threw away a lot of money,” Theda Skocpol, a Harvard professor, told me. “It was very interesting to hear on Tuesday night about all the corporate jets packed in Logan Airport” for Mitt Romney’s party in Boston.

One of the important questions in the United States today – and, eventually, in all democracies where income inequality has risen sharply, which is to say in pretty much all democracies – is what impact the political ineffectiveness of the super-rich at the ballot box will have on how the country is actually governed.

Colonial America: How Swede it was

Chrystia Freeland
May 3, 2012 21:52 UTC

America used to be Sweden: According to new research, the America of the Founding Fathers was ‘‘more egalitarian than anywhere else in the measurable world.’’

That’s an important finding, and one that will surprise most Americans today. Both inequality and American exceptionalism are high on the national political agenda. One idea that brings those issues together is the belief that Americans have an exceptional cultural tolerance for income inequality. Unlike Europeans, the thinking goes, most Americans are confident that they are ‘‘soon to be rich.’’ As a result, the conventional wisdom has it, Americans in the middle look up to their 1 percent and are loath to tax them.

But historical research by the economists Peter H. Lindert and Jeffrey G. Williamson shows that when it comes to inequality, this American exceptionalism is an inversion of the conditions that prevailed at the time of American Revolution. In that era, which is so often invoked in today’s political and social battles, America was the world’s most egalitarian society – and proud to be so.

Americans favor more income equality

Chrystia Freeland
Nov 30, 2010 22:52 UTC

Behavioral economist Dan Ariely of Duke University came into Reuters today to talk to Chrystia about his new book and some of his recent research on income inequality.

Ariely, along with Michael Norton of Harvard Business School, conducted a survey to determine what level of inequality Americans tolerate if their incomes were randomly assigned, an equilibrium that philosopher John Rawls called the “just society.” The duo asked nearly 6,000 Americans to guess what percent of wealth they thought was owned by each of the five quintiles of income levels in the United States and what their ideal level of income distribution would be. Then, Ariely and Norton presented the respondents with three unlabeled charts showing–unbeknownst to them–the distribution of income in a perfectly equal society, the United States, and Sweden, respectively, and asked which society they would choose to live in.

The results were quite shocking:

First, respondents vastly underestimated the actual level of wealth inequality in the United States, believing that the wealthiest quintile held about 59% of the wealth when the actual number is closer to 84%. More interesting, respondents constructed ideal wealth distributions that were far more equitable than even their erroneously low estimates of the actual distribution, reporting a desire for the top quintile to own just 32% of the wealth

The Mumbai consensus

Chrystia Freeland
Oct 22, 2010 14:14 UTC

They call economics the dismal science, but Larry Summers, one of its pre-eminent public practitioners, is anything but dull. That penchant for intellectual controversy means he hasn’t always won popularity contests, but he is unfailingly stimulating, as he proved in a speech in India last week, when he hit on one of the biggest issues in the world economy today, and coined a snappy catch-phrase to describe it: the “Mumbai Consensus”.

The Mumbai Consensus, Summers said, is “people-centric.” He contrasted it both with the Washington Consensus, the U.S.-led, free-markets-and-democracy formula that seemed to have conquered the world after 1989, and with the Beijing Consensus, China’s state capitalist approach that today is winning fans in emerging markets and in some developed ones.

Summers thinks the real model to watch is India’s, the world’s largest democracy. Partly because of its political system, India’s economic rise has been powered as much by the voracity of its domestic consumers as it has by the country’s push into foreign markets. That’s a sharp contrast with China, where the focus has been on working for the rest of the world, while the Chinese people, who are poorer on average than those of Albania or Jamaica, nonetheless save more than half of their GDP.

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