America’s government is run like a Fortune 500 company – in other words, it functions as a plutocratic oligarchy with a sole focus on profit. The parallels exist at every level of the system, from the lowest-skilled employees to the boards of directors.
At the lowest level, you have the uneducated and unemployed who don’t participate in the political system or make a dent in GDP. This group survives on some combination of government welfare and corporate charity. Next you have immigrant workers. According to the NYT, 8 million people are working illegally in the U.S.. This group contributes to GDP but has no voting power in our political system. These workers are like the lowest-skilled workers at a Fortune 500 company, who have no influence over how the company operates or who is in charge.
Moving up the ladder you reach the undereducated citizens of the blue-collar class who often perform manual labor or work in the service industry for Fortune 500 companies. Voter turnout directly correlates with education level, which indicates that this group has the ability to vote but often abstains. Just like at work, they contribute to GDP but have no influence over the political system or who is in charge. They are cogs in a wheel that churns irrespective of their individual perspective.
Then comes the middle class, which includes the majority of Americans. Members of the middle class typically have achieved higher level degrees and often assume management positions within their companies. They participated in the 2016 presidential election at a rate of 70%, so they take an active role in the political sphere. Still, a recent Princeton study showed that the probability of policy change remains at 30% regardless of public support from median-income voters. In contrast, Americans in the 90th income percentile achieve their policy goals with significantly more effectiveness. As of April 2016, nearly 80% of the middle class were shareholders of public companies. In the political sphere as in their professional life, the middle class seems to have a greater influence over decisions. And yet, the NYT reports that large institutions own 70% of public company stock, compared to 30% by small investors. And in terms of turnout, 91% of institutionally held shares were voted, compared to 29% held by individuals. Point in fact, the middle class still has very little influence over the governance of our country or our companies.
Finally you reach the governing bodies of both corporate and political administrations. CFOs, cabinet leaders, etc... This elite group is managed by a single figurehead, the President or CEO. And yet both individuals answer to a higher body – corporate interest groups and the boards of directors, where there is typically significant overlap in representation. In terms of GDP and corporate earnings, this faction manipulates both our political system and economy to a singular goal – increasing profits.
From a corporate perspective, this mechanism works exactly as it should in a capitalist system. Profits should take priority, and management will be handled by the wealthy few who have proven their ability to maximize net income. Moreover, political cooperation facilitates profit maximization, and therefore should be a priority for any board of directors. In other words, even as statistical analysis affirms this dynamic, it shouldn’t come as a surprise. It is a natural consequence of our economic design.
However, I’m just not sure that maximizing profits should be the goal of a democratic government, even in a capitalist society. According to the Constitution, the basic functions of the United States government are: 'To form a more perfect Union'; 'To establish Justice'; 'To insure domestic Tranquility'; 'To provide for the common defense'; 'To promote the general Welfare'; and 'To secure the Blessings of Liberty.' Nowhere on this list does it say, “to maximize economic profits.” And in fact, there are many good arguments to be made, and that have been made, that a government that maximizes profits actually is counterproductive the essential functions it was established to provide. I’m not saying one way or the other is correct, but I am saying to be a Capitalist and Constitutionalist is fundamentally hypocritical.
This conversation should be politically mainstream, considering the facts of our circumstance. This topic explains much of the frustration with our political system. I hope it becomes a key talking point of the next presidential election.
Which brings me to Andrew Yang, 2020 Democratic presidential candidate. He has tangentially latched on to this issue with his proposal of UBI. His goal is to make every American citizen a shareholder in our economic profit. From that perspective, maximizing GDP would be valuable to every citizen, not just the privileged elite. The idea is a romantic one. It brings to mind images of lower-class laborers cheering on the boards of directors and cabinet members as they work to boost margins. When everybody gets a slice, the bottom-line is everyone’s priority. Still, I think the challenge becomes fairly dividing the pie. I don’t mean equally, I mean relative to the value of each participant or faction. Yang’s initial pitch is a $1000 check for every American, every month. To me this number and allocation seems arbitrary. If this allocation and amount is not adequate, it will be difficult to make any significant changes that favor the lower end of the income spectrum. Why? Because control over our political system is in the hands of the elite. I imagine Yang’s hope is that this initial step will yield net positive results for our GDP, and thereby appeal the profit-focused mindset of the plutocracy. TBD.