Bloom Briefing 14: Consumer Protection; Harvard Business School; Forgetting Genocide

Welcome to the 14th edition of The Bloom Briefing: Notes from the Resistance. This week, the focus is on the significance of United Airlines's assault of one of its passengers, the consequences of corporate culture being the guiding influence of our economy, and the implications of Sean Spicer’s ignorance about the Holocaust. Viva la Resistance!



United Airlines Incident

It will not have escaped your notice this week that United Airlines forcibly removed a paying passenger from a flight because 1) the flight was overbooked and 2) they needed to fly United employees on the flight. The passenger, Dr. David Dao, was left bloodied and stranded, unable to see his patients the next morning.

At the New York Times Helaine Olen wrote about this incident as being reflective of an increasingly antagonistic relationship between companies and all but the most affluent customers, a relationship, she says, which mirrors the political environment, where policy benefits larger corporations and the wealthiest class of individuals who are the primary financial backers of political campaigns.

At the Washington Post, James Downie connected the United Airlines incident with the growing trend towards oligopolies. It’s not just the major American airlines, which have gone from nine to four in the last decade, but also in prescription drug retail, cable, and others.

At Slate, Henry Grabar made the case that the United incident struck at the core experience of modern consumers.

“We have not all been dragged bloody up the aisle of an airplane by the Chicago PD, of course, but there was something familiar in David Dao’s bruising at O’Hare—his limp and futile act of resistance a metaphor for the lack of agency we all feel when flying. Or that we feel elsewhere in our interactions with corporations.”

As Grabar alludes to in the last sentence, it’s not just the airline industry that has consolidated. “The share of GDP generated by the 100 biggest U.S. companies is up from 33 percent in 1994 to 46 percent in 2013.” And there’s a relationship between oligopolistic industries and Americans’ estimation of them. The most loathed industries in the U.S. are: internet and telephone service providers; health insurance providers; cellphones; landlines; and airlines, all low-competition industries.

Consumers’ frustration with oligopolistic industries makes taking them on a potentially winning political strategy. This has been central to Elizabeth Warren’s appeal for the duration of her time in the public eye (she founded and was the first head of the Consumer Financial Protection Bureau), but there are others, like Ohio Senator Sherrod Brown and Minnesota Senator Al Franken who have also made this a focal point of their politics. The fact that Brown continues to get elected in a lean-red state with this strategy augurs well for Democrats’ employing this kind of strategy moving forward.

When I talked about how Democrats should make mass-appeal economic issues the centerpiece of their political platform (while combining it with a strong identity politics) a few weeks ago, this is exactly the kind of policy I had in mind. In oligopolistic industries, there is little incentive for the company to treat the consumer well because customers are often forced to consume a single product (I literally have no alternative to Comcast for high-speed internet). This means that customers can’t impose costs (dropping contracts; switching to a competitor; etc.) on misbehaving corporate entities that a truly free-market would ordinarily allow. Government (since it won't enforce anti-trust laws that would prevent such consolidation in the first place) must be the entity to impose costs on companies that treat consumers badly and limit corporate greed .



Influence of Harvard Business School

Speaking of corporate greed, Andrew Ross Sorkin wrote a review of a new book about the history of Harvard Business School. The Golden Passport “is a richly reported indictment of the school as a leading reason that corporate America is disdained by much of the country.”

The most illuminating passage of the review is actually an excerpt from the book itself, which cites an Aspen Institute study about what students believe the purpose of a corporation is when they enter and exit business school:

“When students enter business school, they believe that the purpose of a corporation is to produce goods and services for the benefit of society. When they graduate, they believe it is to maximize shareholder value.”

This is contrasted with the message of the first Dean of Harvard Business School, Edwin Gay, who said of business that it is, the “activity of making things to sell at a profit – decently.” As United Airlines showed all too well this week, that last word no longer applies.

You might be wondering why this all matters. Why do we care about the culture and perspective of Harvard Business School deans, faculty, students, and alumni? As the article notes, they lead many of the largest companies in America – they set the notion of what the purpose of business is, and notions of the purpose of business have changed.

Many people, and not just business school alumni, now accept the notion that the purpose of a corporation is to maximize shareholder value. Yet it is this notion that provides the foundation for rising income inequality. As Thomas Piketty argued persuasively in Capital in the 21st Century, the growth of capital (i.e., return on investment for shareholders) now outpaces the growth of the economy overall. When this happens, “capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”

There is no particular reason why shareholder value must be the only optimized metric in the equation of corporate action, but the current alignment of incentives and constraints makes it so. Government intervention to impose external costs on companies that mistreat customers or prioritize shareholder returns over employee salaries and benefits is by no means an outrageous solution; it’s more than likely the only viable option for overcoming the current hierarchical orientation that privileges the investments of a fraction of Americans over policies that would benefit the roughly 60% of Americans who have less than $500 in savings.

Why would possibly allow our economy to be set up in a way that explicitly privileges only the best-off minority of citizens? Again, it's my belief that the #Resistance can succeed by positing redistributionist economic policies as the thing for which it is striving.



The Administration’s Insincere Commitment to Humanitarianism

In what even those with the smallest of proclivity for conspiracy theories would describe as an attempt to throw United Airlines a bone, Sean Spicer stuck both feet, hiking boots and all, in his mouth on Tuesday, saying that Adolf Hitler, “didn’t even sink to using chemical weapons.” While Spicer’s chronic (and comic) self-immolation via logical contortion on behalf of Trump is nothing new, the combination of the blatant falseness of the statement and the truly horrific reality of history made the reaction more severe.

Let's be perfectly clear about the significance of Sean Spicer's comments today. He wasn't being overtly anti-Semitic. He honest-to-God just forgot about the gassing of 6 million Jews and 5 million other "undesirables." He forgot.

Our entire world order is built on the premise of never forgetting this moment in history. The creation of the international governmental organizations was premised on the idea of never forgetting. The state of Israel was premised on the idea of never forgetting. Many bilateral and multilateral treaties were premised on the idea of never forgetting. But the spokesman for the U.S. government forgot.

That act, in and of itself, regardless of the many other points of context we have, should be enough to tell you everything you need to know about this administration's commitment to humanitarianism. Its spokesperson forgot about the greatest humanitarian disaster in human history.

This ought to caution us against condoning Trump’s use of force under humanitarian guises, whether it be the launching of missiles into Syria in response to a chemical attack by Bashar al-Assad or the dropping of the inappropriately-named “Mother Of All Bombs” on militants in Afghanistan. This administration knows nothing about humanitarianism. Spicer’s comments ensured that we will never question that lack of knowledge.



Other Reading:

The New York Times and ProPublica combined to report on Trump’s appointments and their connections to lobbying and big business. Conflict of interest is rampant and there is no transparency.

Daniel Drezner published an article in The Chronicle of Higher Education about the rise of Thought Leaders over Public Intellectuals.

Jeff Guo published an article in the Washington Post late last year (but relevant again this week) about how arguments about how Jews and Asians have been successful (the "model minority" argument) undermines the very real racism directed both towards these groups and other minority groups.