The United Airlines Debacle and the Morality of Capitalism
The video of the United Airlines passenger who was recently dragged out of his seat screaming from an overbooked flight was seen around the world. The debate has centered around the practice of overbooking seats in the industry and the legal responses of airlines. Here is why United Airlines kicking off and countenancing the assault of a paying customer is a big deal: It helps to reveal how corporate America often puts rules before people and how capitalism often places profits before human dignity. Overbooking is a device that most airlines use to maximize their profits. A customer’s inconvenience is subordinated to profits.
This is because the goal of the corporation is not to reduce the price of tickets and provide savings for customers, but to maximize profits for shareholders. If corporate rules and the laws of capitalism lead to this, then they are unjust rules and laws. Those rules said this: First, we may sometimes overbook because we want to maximize our profits. The same economic calculus that says profits are the most important metric in decision-making leads to victims being dragged along the floor of an airplane and eking out an existence on the floor of a hovel in the slums of Nairobi. The privileging of profits over people leads to unjust wages, poor working conditions, the degradation of the environment and assaults on human dignity.
As long as profits are seen to be the only measure of success, employees will subordinate everything – including compassion – to that goal. Some companies and managers may be too blinded by the pursuit of profit to behave compassionately.
The rise of state capitalism
These are all monuments to the rise of a new kind of hybrid corporation, backed by the state but behaving like a private-sector multinational. State-directed capitalism is not a new idea: witness the East India Company. In 2009 China Mobile and another state giant, China National Petroleum Corporation, made profits of $33 billion-more than China’s 500 most profitable private companies combined. State giants soak up capital and talent that might have been used better by private companies. State companies are good at copying others, partly because they can use the government’s clout to get hold of their technology; but as they have to produce ideas of their own they will become less competitive.
State capitalism works well only when directed by a competent state. Everywhere state capitalism favours well-connected insiders over innovative outsiders. Thus the model produces cronyism, inequality and eventually discontent-as the Mubaraks’ brand of state capitalism did in Egypt. Rising powers have always used the state to kick-start growth: think of Japan and South Korea in the 1950s or Germany in the 1870s or even the United States after the war of independence. For emerging countries wanting to make their mark on the world, state capitalism has an obvious appeal.
Both for their own sake, and in the interests of world trade, the practitioners of state capitalism need to start unwinding their huge holdings in favoured companies and handing them over to private investors. If these companies are as good as they boast they are, then they no longer need the crutch of state support.
The Pope and Poverty
Pope Francis has come to the United States, bringing with him more criticism of capitalism than a Bernie Sanders rally. The pope’s emphasis on the needs of the poor is important, especially in today’s politics, where poverty is often a public-policy sideline. In calling attention to the problem, he fails to understand that free-market capitalism is not a cause of poverty, but a solution. In 1980, less than 1 percent of Argentinians lived in extreme poverty, while in neighboring Chile, the extreme-poverty rate exceeded 15 percent. Today, while the proportion of Argentinians living in extreme poverty has risen slightly, to nearly 3 percent, Chile has seen the most dramatic reduction in poverty in Latin America.
Fewer than 2 percent of Chileans now live in extreme poverty. The reality is that free-market capitalism has done more to help the poor than any other force in history. Consider that in the last 20 years, as much of the world has embraced free markets, more than a billion people have been lifted out of poverty, while the number of people worldwide living on less than $2 per day has been cut in half. In China alone, even the partial adoption of a market-oriented economy has saved more than 650 million people from poverty. Almost 84 percent of Chinese lived in extreme poverty in 1987.
Throughout most of human history, most of mankind lived in truly abject poverty. Given the remarkable compassion that this pope has shown on so many subjects, it would be a bitter irony indeed if his ill-informed critique of capitalism condemned more people to a life of poverty.
Mass shootings and the moral hazard of capitalism – People’s World
A body is covered with a sheet after the mass shooting in Las Vegas, Sunday, Oct. 1. To the injured, we send our best wishes for a quick recovery. To deliberately take, or attempt to take, a human life is a grievous thing. Once again, with our hands raised in mourning and our heads bowed in grief and introspection, we ask how and why such a thing can happen. To answer that question, we do not need to know what particular loathsome whispers and poisonous thoughts introduced finger to trigger, and bullets to innocent flesh.
It is enough to look ourselves, and our society, squarely in the face. It happens because we learn more from bad examples than from good advice, and because we live in a society where life is cheaply held. Only this: that under capitalism, the decision to protect life or take it, to inflict suffering or to relieve it, is an individual decision about the use of property, to be made without the interference of the state. In the law, the concept of ‘moral hazard’ designates the danger of bad examples, the idea that allowing someone to get away with something sets a precedent for harmful behavior. The epidemic of mass shootings is evidence that we have disregarded the moral hazard of capitalism.
We have rubbed for so long against this perverse and inhuman system that the distinction between citizen and executioner, between order and violence, has been worn away. Teaching love, and tolerance, and respect is good.