The Conscience of American Capitalism (PBS - Bill Moyers' Journal)

[Starfury]

Bill Moyers talks with John Bogle, the founder of Vanguard Funds, about the sorry state of capitalism today in America. Capitalism meets conscience. I strongly recommend watching the video (23 minutes).

http://www.pbs.org/moyers/journal/09282007/watch.html (also includes transcript if anyone's interested)

September 28, 2007

Bill Moyers talks with John Bogle.

BILL MOYERS: Welcome to the JOURNAL.

Every week we hear of another publicly traded company being bought by a private equity firm. Some of those investment firms — like Blackstone, the Carlyle Group, and Cerebrus — have become almost as well known as the brand-name companies they've been snapping up, from Chrysler to Dunkin' Donuts to Toys R Us. But private equity firms have no real interest in toys, cars, or baked goods. What they are after is big and quick returns on their capital. To get it, they buy a company and cut the wages, pensions and health benefits of the employees who work there.

Take a look at this front page story in Sunday's NEW YORK TIMES for a glimpse of how this kind of capitalism works. Thousands of nursing homes have been bought up by private equity firms like Warburg Pincus and Carlyle. Profits were increased by reducing costs, then investors quickly resold the facilities for a big profit Ð leaving and I quote- "residents at those nursing homes worse off, on average, than they were under previous owners."

(...)

It's this kind of capitalism that drives John Bogle up the wall, as you're about to learn. John Bogle believes owners should be in charge — and accountable. He's known and respected world-wide as the father of index funds and the founder of The Vanguard Group, one of the largest mutual funds anywhere, with over a trillion dollars in assets.

(...)

[barb162]

1. The American capitalism of the last few decades has no conscience.

None. We have allowed that by not banding together and demanding that the Congress enact protective laws for consumers, workers, etc. We are going down the hole fast because of what corporations,in conjuction with the government,are doing.

[Starfury]

2. Exactly. Focus on short term profit over all else is incredibly damaging

It didn't used to be like this, just the last generation or so. Even the robber barons of a century ago tended to leave something tangible. But today's brand of "pure" capitalism is fundamentally different (IMO). It's not coincidental that this happens as conservatism is on the rise in our society and our government.

[barb162]

3. You're right. The current CEOs make robber barons look like saints.

The last generation had great pensions, great health care, no offshoring, rising wages,etc. The data for the last 5 yrs. is that wages are dropping each year. I actually remember people complaining about absurdly low deductibles on their health care. Right now the same people would kill to have health insurance of any kind and a full time job that paid well as they had before.

[midnight]

4. The first thing that came to my mind was that I will buy locally, and

as far as investing I will have to think about that some more. Much of my investment over the years has been in Education, Art, and now it will go into local small owned businesses.