Privatized America

A shadow drops over the shared ownership economy.

Proof that Wall Street isn’t cool. (Photo: Getty)

Something that is underappreciated as a democratizing force is the existence of public companies. No matter who you are, you can—instantaneously and without having any special connections and for a modest amount of money—buy a stock that entitles you to a share in the value of the mightiest corporations on earth. You may never work at Apple, and you might not know how Apple products work, and Apple might have you ejected by security if you were to show up at their headquarters, but with a few clicks of a button and a hundred bucks you can become a fractional owner of Apple, and all of the work that all of the people at Apple to make all of that money will make you money, as well. That is, in the history of global economics, a pretty recent phenomenon. It is pretty neat.

The ability of anyone to buy into public companies does not solve the problem of the consolidation of corporate power. It does not solve the problem of corporate union busting. It does not solve corporate environmental pollution or corporate corruption of politics or unjust CEO pay ratios or the way that corporate branding renders our physical world into a landscape of unendurable chain store signs. It does not, by itself, imply that corporations are forces for justice in the world. It does, however, create a frictionless way for regular people to get some of the profits that corporations go to great trouble to produce. It broadens the scope of who corporations are accountable to, and who they can be said to benefit. I don’t want to make it sound like public financial markets are some sort of socialist utopia—but I do think that their very existence has more progressive characteristics than many people on the left have ever considered. If this sounds odd, the easiest way to make the point is simply to say: Consider the alternative.

As a practical matter here in the USA, the main alternative to public companies is not “worker-owned co-ops.” It is “private companies.” If you are a supporter of the idea that massive corporations should be in some way accountable to the public, private companies are much, much worse than public ones. If you are an ultrarich investor or corporate executive, there is much that is attractive about escaping the public markets and disappearing into the world of private money. Fewer investors, fewer disclosure requirements, more ability to do whatever the hell you want with fewer regulators watching over you.

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Not coincidentally, the number of publicly traded companies has declined by half in the past 30 years. (There is research that says that part of this decline can be accounted for by the remaining companies getting bigger and gobbling up their competitors, but that is its own sort of problem.) As the analyst Charles Hall told Marketplace in May, this decline is “really bad” for the basic value of knowing what companies—arguably the most powerful actors in society!—are doing. “I describe having companies quoted as a public good,” he said. “They have to write a big brochure that says exactly what their gender pay gap is, what their sustainability targets are — huge amount of information.”

Besides getting away from disclosure requirements and escaping regulations that might at least modestly dissuade sociopathic behavior, every company that moves away from public ownership means that the portion of the economy that it is easy for regular people to own shrinks. When a company is listed on the stock market you can buy a piece of it easily but when a rich person or private equity firm takes it private, you cannot. The growth of private financing and private ownership is like a shadow swallowing up the portion of the economy that is in any way directly accessible to middle class people. It is a long road from here to socialism. It is a long way from present day America to collective ownership of the means of production. “Companies being traded on the stock market” may not strike you as a step towards the revolution, but contemplate the fact that we are currently moving in the opposite direction.

For those who already control large pools of capital, the shift from public to private ownership and financing of corporate activity is benign, or even beneficial. Huge asset managers can just buy up companies operating in the private credit market, as BlackRock just did. Pension funds with billions of dollars to invest have almost tripled the portion of their assets going to private equity, real estate, and hedge funds over the past two decades. (This has primarily had the effect of rewarding investment managers with higher fees, without meaningfully increasing the returns to the pension recipients, meaning that the public’s most direct contact with these parts of the private investment world have made Wall Street richer but not the public). As William Birdthistle wrote in the New York Times this week, the prize that private funds now have their eyes on is to tear down regulations that prevent regular people from investing the trillions of dollars that they currently hold in their 401(k) retirement accounts into private funds, where they will have far less knowledge of what the hell is being done with their money than they would at public companies.

In all ways, the predictable growth of the private money world over the next four years will be of a piece with the degradation of all of the promises that Inclusive Capitalism For All was supposed to deliver on. America’s entire anticommunist proposition to its citizens and the world at large—that capitalism would deliver not only higher wages and living standards for all workers, but also would create shared prosperity in the form of widespread shared ownership of companies via small investors and their pensions—is looking more and more hollow. It has always been the case that Wall Street vultures and their rich investors are poised to redirect all corporate profits into their own pockets as soon as they are able to do so. If companies can skip going public and receive private financing for their needs and not have to tell regulators and the public what they are doing and why, so much the better for them. Private equity firms, which not only take a company’s profits but also frequently sell off everything it owns for a quick buck and leave it for dead, are the purest manifestation of the “Everything, for me, right now” logic of unrestrained capitalism. (Crypto, a pure bubble made up of assets with no intrisic value at all, is not even “capitalism” as much as it is chicanery.) A White House like Trump’s, which has transcended the moderate Republican attitude of “disinterest in financial regulation that might impede corporate profits” in favor of the active con man’s “high interest in enabling ways that my personal cronies can rip off the public,” is going to be a boon for the world of private companies and private finance and the privatization of any public asset that is not tied down. At least for a while. There is a lot of money to be made in the looting phase, before the golden goose is reduced to a pile of dirty feathers and blood.

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Public companies are no panacea, as all the people fired for trying to unionize Amazon can tell you. Publicly listed investment banks are not nice and sunny, as anyone body slammed by a private security guard while protesting Goldman Sachs can tell you. The trend of privatization, though, keeps all the bad elements of these institutions while removing the countervailing forces that might serve to moderate them. Things will get more unequal. The economy will get more cutthroat. Regular people will be ripped off more. The conservative promise that an “ownership society” would produce social justice is going to crash on the rocks not of communism, but of total, unrestrained greed.

If we can all open our minds enough, there is an alliance to be forged between The Left, which has always believed that this is where American capitalism was heading, and the genuine Capitalism is Good For All believers, the Boy Scouts of the economic world, who truly bought into the idea that America’s economic dynamism would benefit the common people by allowing them to own their own little piece of the stock market pie. These two groups—the socialists and the clean cut churchgoing fiduciary retirement advisors, the Occupy Wall Street people and the SEC regulators, the rock-throwing union thug and the union pension manager—are faced with a common enemy: A bunch of unscrupulous bootlickers and their personal strongman who is going to enable them to yank as much wealth as possible out of the public sphere and into their own private accounts before they fuck off to their private golf clubs. I realize I’m speaking broadly here. But the Age of Privatization that is about to be supercharged is equally harmful to those of us who believe in the “workers of the world unite” and those of us who believe in “transparent financial markets and rule of law that allow investors to make well informed choices will provide retirement security to working people who consistently invest in low cost index funds.” Brother, the vultures are coming for us all.

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More

• Related reading: Capitalism’s Washing Machine; Public Ownership of Public Goods; Crypto, as a Political Characteristic; A Salute to John Bogle, a Real Fucking People’s Hero.

• There is a fantastic documentary out called “UNION” which follows the successful formation of the Amazon Labor Union. Highly recommended. Unfortunately, none of the big streaming platforms have picked it up, because of Amazon’s power, which kind of drives home the entire point of the documentary. But you can order and watch the movie at this link, and it is well worth your time. Check it out.

• Another great idea for a righteous place to patronize is RED EMMA’S, an incredible worker-owned bookstore in Baltimore. I did a book event there last night and was so impressed. You can order books and merchandise directly from them! They are a community pillar! Support them by buying your books from them this holiday season! If you didn’t catch me in Baltimore, my last book event of the year will be on Saturday, December 28 at The Lynx Books in Gainesville, FL. My book about the labor movement, “The Hammer,” makes a great holiday gift that will make you look very cool. You can order it wherever books are sold.