Capitalism vs Something Else?

Disney is a name that resonates with people of my generation. We grew up with Mickey Mouse and as our kids grew up, Disneyland in California and Disney World in Florida became vacation destinations for millions of us. My grandchildren today know the park in Orlando like the back of their hands.

Abigail Disney is the granddaughter of Roy Disney, who, along with his brother Walt, created the world wide brand. She spoke recently at a hearing in Washington of the House Financial Services Committee. The hearings were held in response to growing public concern about income inequality in the US.

She has condemned the Walt Disney Company for contributing to the growing divide between the ‘haves’ and the ‘have nots’ in our society. While she has no role in the company, she said “We have begun to cannibalize the very people that make this economy thrive. After all, no middle class, no Disney.”

Corporate America’s value system puts an emphasis on corporate survival above everything else. And those at the top, in Disney’s case, Bob Iger, can expect to be rewarded with lavish payouts that for the rest of us can only be described as obscene.

She suggested “… it’s time to pull back the curtain on this lavish life and ask ourselves how high a handful should soar as the rest of us watch the American Dream collapse for a large majority of working people”.

It can be argued that it’s this very value system that has grown our economy and made it possible for the middle class to exist in the first place. And I would agree with that.

But the track we’ve been on lately started with Reaganomics. By slashing taxes on the upper income we created a small class of superrich. Just below them is another few percentage points of people that include professionals who keep things running for the superrich. What’s left are perhaps 90% of the population where you find the working poor. These are folks who are in debt most of their lives. Inequality is the default outcome.

But as with so much in life, substantive changes brings new variables, and some of those variables have unintended consequences. At the time, it was assumed that with more money at the top, it would trikle down and create greater wealth among what was then seen as the middle class. Only it didn’t trikle down; if you had it you found ways to keep it, even though you didn’t need it all to have a life that appeared to keep you among the super elite.

Here’s an analogy that surfaced in the media in the last couple of months. Consider the reports out of Nepal about the unexpected deaths of people on the slopes leading to Mt. Everest. Efforts were made by the government to encourage tourism by making it more possible for less than elite climbers to find themselves on the summit. It lead to congestion and delays at very high altitude, something most people are not prepared for which in turn has led to deaths happening that no one expected.

Bob Iger, the CEO of the Walt Disney Company, was paid $65.6 million in 2018. He reached that summit in 2018, something for which he can be rightly proud. But the values that pushes him and others in corporate America to the top also pushed many millions of Americans into a financial abyss from which they have no expectation of recovery. How do you keep someone like Iger motivated without destroying whatever it is that should motivate those near the bottom?

The hearings are intended to bring attention to corporate behavior that while legal, does nothing to help working-class families in a period of what most of us think of as a growing economy. At some point, this disconnect is going to have serious political consequences.

There’s a traditional American Dream that housekeepers and janitors hold dear that motivates them to struggle and raise good families and at the same time have money left over to pay for insulin, child care and emergency expenses. And maybe a trip to Disneyland. Instead of paying Bob Iger $65.6 million, some of that might be better spent paying those same housekeepers and janitors a little more to help them survive and thrive.

Since the 1930’s, our value system that embraces capitalism as a means to benefit most members of society has become corrupted. The idea of a growing middle class that suffused American families in the 1950’s and 60’s, as I was growing up, no longer exists.

At some point, if every dime we make is spent on taxes, food, shelter, and student loans, our ability to enjoy the finer things in life disappear and fade into the background. We’re not all there yet but we’re getting closer.

At what point does it become obvious that paying someone $65.6 million becomes egregious in the face of a reality that acknowledges you can live an extravagant lifestyle on far less and at the same time, push the envelope and help your employees move beyond their struggles to simply survive.

Answers to this problem are not going to appear without a lot of thought. Like surviving alcoholism, the first step it to acknowledge there is a problem. Pretending there is no problem will only result in more chaos and more people dying before they are ready.

by Tony Kendzior \ May 31, 2019