The Harvard
Business School just published its annual survey
of its graduates, all of whom are members of The Mogul’s Club, Tragic Commons
chapter. HBS wanted to know what its
alumni thought about the American business environment and the extent to which
they believed prosperity has been shared.
Our
moguls—or at least the ones that work for large businesses—see the world in
rosy hues. They think that our current
business environment is better than it is in other advanced economies, and that
vis a vis other economies, things in the U.S. are likely to become even better.
Among the
reasons they give for this view is that we have strong capital markets,
excellent universities that help stoke innovation and a good communications
infrastructure, all of which are improving.
Of course, our moguls couldn’t help but commend themselves on their
entrepreneurship and the way they are managing their businesses. And they were quite happy about the trend in
property rights protections and their increasing ability to hire and fire at
will.
They were
less sanguine about the distribution of wealth and income, though. Confirming other research, the
respondents were asked how future increases in national income would be distributed and how it should be distributed. Their answers are summarized in Figure 1:
Figure 1
Our moguls
recognize that, additional income is likely to gravitate rather heavily toward
them and away from the poorest element of society. But, like most other Americans, they say that
they’d like to see future income gains more evenly distributed. Just the same, our one percenters say that
instead of the 41% of the anticipated gains (other research says they would
actually get about 55%), they’d accept just 16% of it.
So what are
our moguls prepared to do to shift from would
to should? Not much.
Anyone who
has paid any attention at all to the buzz about income inequality since the
Occupy Wall Street movement knows that income inequality is at least a problem
we should talk about at our cocktail parties.
But when it
comes down to our businesses, well, we don’t see it as much of a problem. As Figure 2 shows, the only distributional
problem a
Figure 2
majority of our moguls see as a business problem is middle-class
wage stagnation. Only about a third of
the moguls said that their companies have done something or would do something
to raise the wages of their employees. They’re
far more troubled by slow growth. And
the way they think we ought to address these problems is through changes in
education, tax reform and regulatory reform.
The survey
doesn’t say how our moguls would reform the tax code or reform regulations, but
it’s a fair bet that they want lower taxes and less regulation.
The report
ends with the authors’ musings about what can be done. After generally dismissing attempts to
address globalization, redistribute wealth and income, boost economic growth by
removing “unnecessary” regulations and simplifying the tax code, and fix the
political paralysis of the federal government (as if the moguls played no role
in paralyzing the federal government), the authors conclude that the best way
to restore shared prosperity “is to repair the commons, especially the parts of
the commons on which most Americans rely.”
“Improving
the commons,” the report tells us, “is not only government’s job but also a
crucial agenda for business.”
With due
respect, this is the Tragic Commons, a
place where we see that we’d be much better off if we’d only all
cooperate. But we can never seem to
cooperate. Instead, we tend to do what
is in our individual self-interests, and so we’re left with much less than we
could have had.
Here in the
Tragic Commons, we like taxes just fine, but only if the other guys pays
them. And we’re happy to contribute to
the common good, as long as our contribution doesn’t hurt our bottom line.
Except
those two conditions aren’t naturally found here. That’s why our politics is
paralyzed, and that’s why what we all agree should be done is rarely done. From a green eyeshades perspective, why
should any of our moguls expend business resources when, in accord with Figure
2, income inequality is not a problem for his or her business?
Addressing
income inequality, or any of the other distributional issues the report
highlights will require a different way of doing in business in the Tragic
Commons. We can’t just educate our way
out of our problems, particularly when nobody is offering to pony up the money
for better schools. We need a tax regime
that encourages a fairer split of corporate profits among labor, management and
capital. We need a labor law regime that
encourages the formation of unions and protects them once they have been
established. And we need a campaign
finance system that discourages any or all of the moguls from investing in
politicians instead of investing in their businesses and their workers.
But more
than anything else, we need less happy talk from the sages at the Harvard
Business School about win-win collaborations between government at all levels
and business and more focus on the idea that if we want to reach a society with
the preferred income distribution, the members of the Moguls Club—each and
every one of them—is going to have to endure some pain.
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