Markets in the Casino Economy

...Their constraints on the most predatory opportunities in the market— such as preventing one large firm from taking over all the small workshops—lead to all the firms involved performing much better in the marketplace...

...But why didn't the discipline of the marketplace work its wonders and lead to the failure of these poorly run companies...

...Damage to workers' lives, communities, and other businesses in chaotic upheavals of no redeeming worth aren't counted, either...

...researchers, such as energy-efficient compact fluorescent bulbs...

...If both of these basic markets are so flawed, why should anyone expect a market in corporate control to work any better...

...For example, competition on the price and quality of their products could have led many American businesses to emphasize research and development, investment in new manufacturing techniques, expanding and drawing upon the skills and knowledge of the work force, and improvement of quality as well as price competitiveness...

...Real existing markets" resemble the markets of theory about as much as what some called "real existing socialism" in Eastern Europe resembled the ideals of Marx's 1844 manuscripts...

...But after a period of competitive price-cutting, "the evidence is mounting," reported Business Week in 1986, "that a striking increase in concentration is starting to undermine these benefits...

...Because market failures impinge most heavily on the poorer ranks of society, who are politically disorganized, they do not register forcefully on government or in the market...

...In other words, the productivity of public capital is greater than that of private capital...

...But the market has performed poorly...

...Whatever the market dictates must be right, they assert, and any tinkering will upset its perfect mechanisms...

...Casino Economy The examples of market failures to deliver what society needs in a fair and efficient way could be multiplied...

...Second, as Columbia University professor and former corporate executive Louis Lowenstein argues, the modern corporation's separation of ownership and management means that stockholders, in exchange for the right to easily sell their holdings, surrender some of the traditional rights of owners to the managers...

...Why did the takeover boom strike so hard...

...Third, markets do not account for their spillover effects, or externalities, very well...

...David Alan Aschauer, an economist with the Federal Reserve Bank of Chicago, shows that public investment in infrastructure is now more efficient for raising private profits than greater private investment...

...Better roads, for example, would reduce the repair and replacement costs for a private company's truck fleet...

...First, since the early seventies, the relatively stable economic order established by the Bretton Woods agreements after World War II has unraveled, and at the same time there has been a growing internationalization of the capitalist economies...

...They are all at least structured in some way by governments, as Paul Starr has argued...

...Workers and other stakeholders are likely to have much more of a long-range perspective on corporate welfare but little influence on investment...

...Is it fair game to compete by, degrading the environment or endangering the public or abusing workers...

...Consequently, the question is never whether government will simply step aside and let the market take its course...

...It might stir things up, but at a high cost and with unclear results...

...As a result, he predicted, "I expect to see the State, which is in a position to calculate the marginal efficiency of capital-goods on long views and on the basis of the general social advantage, taking an ever greater responsibility for directly organizing investment...

...While the share of manufacturing in the U.S...

...Some competition, as economist Alec Nove argues, is constructive or at least benign, but other competition is destructive (the most destructive being economic competition that leads to war...

...During the eighties big corporations that had bought up solar energy firms in the seventies scaled back or dropped such efforts, and the federal government drastically reduced research...

...The growth of transnational economic power and of international market forces, such as currency markets, swamped governmental regulation of national economies...

...Yet takeover apologists argue that servicing the crippling new debt burden forces managers to be more efficient...

...It reduced prices (although not uniformly and often to the disadvantage of poorer people) for airlines, trucking, and telecommunications...

...But to leave the choice to corporate managers is to surrender social influence over the nation's economic future...

...And during the eighties, the nation's rate of occupational injuries reversed a previous downward trend...

...Deregulation of savings and loans, precipitated by new market forces and high interest FALL • 1990 507 Casino Economy rates that swamped old rules, obviously contributed to the virtual collapse of the industry...

...The final decision making cannot be left to the markets, however important they may be in creating choices...

...Markets on their own push toward worsening inequality...

...Related expenditures — housing, transit, reduction of poverty, job retraining—also were cut...

...It is safe to say that enterprise which depends on hopes stretching into the future benefits the community as a whole," Keynes wrote...

...Each strategy is compatible with "free markets...

...For a variety of reasons, then, the market is not on its own leading toward what is clearly the socially necessary—and ultimately quite profitable— energy technologies of the future or even adequately deploying what is rational today...

...The obvious answer is: no, but there should be...

...Sixth, although competitive markets have their own intrinsic characteristics, they all exist in a broader framework...

...But their approach was like trying to reform a local city government by unleashing a motorcycle gang loaded on beer and crack...

...Fifth, market relations are also power relations...

...private property rights are paramount...

...Most defenders of the market reject the downside of market discipline except when it's applied to workers, farmers, and small businesses, and they reject any demands of social responsibility when they're profitable...

...It hasn't worked better...

...But such a mélange is likely to be, with different balances, the real social arena throughout most of the world for many years to come...

...What should be obvious is that markets are good, important tools...

...But societies must beware of the deception suggested by an old folk maxim: if your only tool is a hammer, you see every problem as a nail...

...But the record—such as the studies by Harry Hatry of the Urban Institute—shows that public agencies quite often outperform private contractors, who frequently gain much of whatever competitive advantage they have simply by paying and treating workers worse than government...

...But as with big banks or corporations, like Continental Bank or Chrysler and Lockheed, there was widespread agreement that the public had to prevent a collapse of the whole system...

...The discouraging climate for new investment has made it profitable for financial entrepreneurs to dismantle whole corporations, to siphon funds away from physical production, and to redeploy them in financial investments, such as government bonds, with high and safe returns," Blair wrote...

...Second, markets at best simply apply pressure to business but have no clear effect on the internal governance and strategies...

...In the eighties the trend to shortsightedness was exacerbated by the shift to financial manipulation that the takeover wave represented and by government's own shortsighted policies...

...Failure to enforce federal laws or enact longdelayed standards—part of the Reagan market orientation—played a significant role, but Amalgamated Clothing and Textile Workers Union safety director Eric Frumin claims the major new threat to worker health and safety has been pressures resulting from mergers and takeovers...

...and greed is good...

...I was asked the other day about United States competitiveness," NCR president Gilbert Williamson told the New York Times, "and I replied that I don't think about it at all...

...There seems to be no easy solution...

...But contrary to the takeover rationale, increasingly the targets were relatively well-managed firms that were as profitable as others in their industries, Professors Edward Herman and Louis Lowenstein have demonstrated...

...There were efforts, however, to turn over many traditional government services to private businesses on the grounds that market competition would reduce costs...

...Financial markets especially are prone to speculative bubbles, and the great runup in stock values during the eighties while much of the underlying strength of business was sapped suggests that this bubble, too, will break...

...Unlike Western Europe, the United States had few nationalized firms to sell...

...Contrary to the free-market "law and economics" theoreticians, justice means something other than the efficient operation of markets...

...businesses have failed to take the initiative even with technologies developed by U.S...

...Keynes's observations in the General Theory of Employment, Interest and Money remain incisive...

...Also, waste and fraud associated with government bureaucracies often persist or increase with privatization (examples range from the HUD scandals and traditional military contracting to big-city corruption over contracting parking meter collection...

...Compared to neighbor Canada, the United States devotes nearly half again more of its gross national product to health care but has worse overall health statistics and huge gaps in coverage (with 37 million Americans, nearly one-sixth of the population, not covered by any health insurance in 1987 and many millions more underinsured or suffering massive insurance cost hikes...

...Much of what was spent was misdirected: in stead of investing in research and development of energy conservation and alternative fuels, there were continued subsidies to nuclear power...

...Other studies show that a majority—as much as 70 percent—of mergers over the past several decades have been failures, especially the biggest mergers among the most diverse firms...

...Many pension funds are also in danger now because of declines in junk bond value and potential defaults...

...Stockholders in the target firms usually profited from the big runups in stock prices...

...Others, like the United States, FALL • 1990 • 501 Casino Economy suffered more from stagflation and the social conflicts exacerbated by these forces...

...First, some analysts—including some self-serving corporate executives—argue that large corporations have many "stakeholders" besides their share 504 • DISSENT Casino economy holders: local communities, workers, suppliers, and customers, all of whom have invested their own lives or money in the corporation's business...

...Many of the takeovers were most hostile not toward incumbent management (who usually could bail out with golden parachutes), but toward workers...

...The issue is always how government will structure the market...

...Now Japan has surged forward with photovoltaic cells, and a German firm last year bought the world's biggest photovoltaic producer, a company that had been acquired by Atlantic Richfield Oil Company in the seventies...

...They easily suckered in banks and institutional investors who preferred a risky and socially unproductive high-interest loan over the uncertainty of investment that might eventually advance industrial strength in manufacturing and new technologies...

...All private property is ultimately a creation of society, which defines its rights and character through informal rules of culture or formal laws...

...That often forces the new owners to sell off valuable parts of the businesses they've acquired (the "crown jewels") and makes the corporation more vulnerable when the next downturn comes...

...they admit no other standard of measurement...

...Most mergers, takeovers, and related leveraged buyouts—as well as the corporate defenses against them—involve saddling the corporation with huge debt...

...In computers and some other high-tech fields, small businesses have been the driving force of innovation, and the giants, like IBM, have often been technologically retrograde...

...In the not-so-long run, it is clear that both because of limited fossil fuel supplies and the environmental damage from burning those 508 • DISSENT fuels, alternatives must be found...

...Recently that's been most clear in the way the social costs of destroying the environment— such as potential global warming—are not counted on the business balance sheet...

...Through the sixties and early seventies, fewer than 20 percent of all shares were turned over annually on the New York Stock Exchange, but two-thirds changed hands each year in the mid-eighties...

...Takeover debt has often precipitated mass FALL • 1990 • 503 Casino Economy layoffs of blue- and white-collar workers, cuts in wages, reopening of union contracts, or spinoffs of businesses, producing the same effects...

...That figure doesn't count the added activity in financial futures, options, and other financial instruments...

...The most fundamental objection to market fetishism is simple: even if markets somewhere resembled their theoretical model (and they don't), even if that model did not have inherent limitations (it does), societies—including socalled "market societies" —cannot be reduced to markets...

...Markets are both useful and necessary, but they are inevitably imperfect...

...It was basically a raw bid for unrestrained power for the wealthy and for managers of corporations and financial institutions...

...When the merger wave first started, some of the targets were modest underperformers...

...Fourth, the effects of the takeover wave raise a question that is always pertinent in competitive markets: What things are legitimately part of competition...

...When the more well-to-do must confront homeless people on the streets or crime in their backyards, or when corporate executives find bridges collapsing and their health insurance costs undermining their competitive position, then the issues get a little more attention...

...Herman, a professor of finance at the Wharton School of the University of Pennsylvania, argues that any "efficiency enhancement comes merely from willingness to be ruthless...

...Also, our awareness of the limits of domestic free markets should heighten awareness of how much more poorly markets work at an international level...

...It is difficult, if not impossible, to prove that these consequences flowed exclusively from the Reagan-Bush free-market orientation...

...Ironically, public investments can pay off handsomely for private businesses as well as government...

...Also, in addition to these negative externalities, there are positive externalities that are ignored...

...Except for South Africa, the United States is the only major industrialized country that still relies heavily on a private market in health care and insurance...

...With real interest rates rising after 1979 to three to four times their post–World War II peaks and with profits declining, the net return on capital started to exceed the real cost of capital in the early eighties, according to research by Brookings Institution economist Margaret Blair...

...Certainly the tax deductibility of interest made it attractive to have taxpayers subsidize economic rapacity, but it appears that the main reason was that businesses did not see investments that they thought would make enough money to surpass either profit thresholds they had established or interest on financial instruments...

...Expanded and open trade is generally good, but it must be managed to take into account other legitimate social interests and to permit smooth adjustments...

...Again, this reflects the broader realization that society consists of more than the economy and the economy involves more than market relations...

...To effectively counterbalance the market, institutions of democracy must be made stronger and more amenable to direct citizen participation and control...

...Third, the antigovernment, promarket strategy undermined public welfare while increasing systemic inefficiencies (poverty-related social problems, poorly trained workers, declining infrastructure, rising health costs, and declining medical care) that added new burdens on individual citizens, private business, and state and local government...

...Clearly there was also a slavish deference to private decisions in the market, a shredding of the welfare-state safety net, hostility to unions, deep cutbacks in already declining public infrastructure spending, retrenchment of spending for research and education, relaxation of regulation, and support for privatization of government...

...FALL • 1990 • 509...

...multinationals' share from their worldwide holdings gained very slightly, according to economists Robert E. Lipsey and Irving B. Kravis...

...But the claims of small-business job creation have been exaggerated...

...Also, without adequate support, small, inventive firms often cannot sustain intense competition with large-scale manufacturers (witness the demise of many small chip makers in battle with Japanese giants...

...They argued that many corporate executives were inefficient managers who wasted money, depriving stockholders of their return on investment...

...It has brought with it an increasing domination of the international economic order by transnational corporations, banks, and other private institutions...

...This obviously hurts the long-run prospects not only of the individual companies but of society as a whole...

...Beyond that, different political traditions and cultures affect how markets behave...

...The structure of financial institutions as well as political and cultural traditions accounts, along with specific government policies, for the relatively long-term perspective on investment typical in Japan and Germany...

...They were recent speculators, arbitrageurs, and inside traders who smelled blood and moved in for the kill...

...The recovery was long but regionally very uneven and marked by an unusually high rate of bankruptcies, expansion of private debt, and a dangerous proclivity toward speculation (the savings and loan collapse being one of the more costly consequences so far...

...The benefits to consumers of deregulation are fleeting, as businesses try—they always do—to confront competition by figuring out how to avoid it...

...Second, this approach accelerated a shift away from long-run investment and encouraged financial speculation at the expense of manufacturing...

...Instead, argues investment banker Malon Wilkus, the takeover process "destroys pension plans, sends jobs overseas, liquidates company assets rather than selling companies whole, attacks and busts unions, and in the whole process builds up debt so dramatically as to make it difficult for companies to compete...

...government expenditures declined for basic infrastructure, research and development, and education, some of the classic forms of public investment in human and physical capital...

...But the federal government rushed to sell off Conrail, just as that public corporation had succeeded in transforming a bankrupt inheritance into a profitable, efficient rail line...

...Besides the hardship such inequity produces, it ultimately undermines the base of consumption for products on the market...

...In many ways the Reagan-Bush regimes may be described as antigovernment, antiworker, and prowealthy as much as promarket...

...The debt has endangered the health and safety of workers and the general public...

...In broad terms, this conservative, market oriented approach—buttressed by tax, mone tary, and fiscal policies—resulted in a radical 502 • DISSENT increase of inequality in both income and wealth...

...Such critiques of the market do not mean that the alternative is some discredited model of central planning...

...Only government regulation worked to force U.S...

...In What's Wrong With Wall Street...

...Corporations, stock markets, bonds, tax policies, banks, and the other components of the market are defined by law...

...Finally, the takeover wave shows how markets can be structured in ways that greatly emphasize short-term speculation at the expense of long-term investment...

...they might even make better use of markets by relying on them less...

...That inevitably influences a decision on whether to buy an existing enterprise or launch a new one, Keynes noted...

...Gross National Product slipped (and if manufacturing resulting from the military buildup were properly factored out, the decline would be greater), the financial market frenzy increased...

...The wave of takeovers and mergers—valued at more than $1 trillion from 1980 to 1988—was hailed by many free-market ideologues as a vital new "market in corporate control...

...This was a reminder that in practice market relationships are at least as much about power (starting with the unequal power of employers vis-a-vis workers) as about exchange of goods...

...There could hardly be a stronger recognition of the failure of free markets...

...For example, the U.S...

...There are at least two rejoinders...

...They involve other institutions (churches, for example), other values (justice, equality, community stability, cultural tradition), other forms of relationship (families and friendships), and other means of making decisions (political democracy) that at times clash with the market...

...Several substantial studies show either no clear gains or even losses in internal efficiency after takeovers...

...But the market itself makes no such distinction...

...For example, more worker training and research can benefit the society as a whole, but businesses are loath to make such investments unless they can quickly recoup all the returns...

...he argues that "shareholders aren't the purpose of the game, industry is...

...Instead of "directly organizing invest Casino Economy ment," government was largely hostile to any policy to strengthen important industries...

...And why didn't the stock market operate efficiently in valuing the companies...

...Now, with the junk bond market very shaky and defaults rising (like that of Campeau Corporation, owner of two department store chains that previously had been quite healthy), the excesses of the takeover craze may threaten not only many big corporations but the banking system as well...

...There are many other areas where marketoriented policies failed tests of either economic or social performance in the eighties...

...The obvious question is whether there is any mechanism through which these stakeholders can make corporate managers accountable...

...The ideologues' solution for faltering real markets was always purer, less contaminated markets...

...in stead of supporting a wide range of civilian high technology fields, money was poured into Star Wars...

...First, markets often do not work very well...

...But he also concluded that "there is no clear evidence from experience that the investment policy which is socially advantageous coincides with that which is most profitable...

...In the two declining world powers, Britain and the United States, the market counterattack was fiercest...

...In advanced capitalist countries the promarket enthusiasm is complex...

...The appeal to markets was not, however, based on some deep-seated commitment to Pareto optimality (markets under a condition such that no change would make everyone better off) or more efficient service of consumers' needs...

...Such inequality also skews the market: people with little money have no way of showing their needs as consumers...

...The issue of who represents long-term social interests in investment has taken on a new dimension in the past decade or more: as major corporations become more transnational, who tends to the national economy...

...Often they also claimed that the stock market greatly undervalued these corporations, making them targets for takeover...

...But the market turmoil cost workers in the deregulated industries heavily in income, employment, safety, and quality of work life...

...Competition should be channeled into productive ends, not financial speculation or devastation of workers and the environment...

...corporate research and development spending overseas grew nearly three times as fast as domestic R&D in 1988...

...Multinationals have thrived while the domestic economy weakened...

...regulation is bad...

...But that is worsened by the financial markets, which are increasingly dominated by big institutions, such as insurance companies, pension and mutual funds, and brokerage houses, that engage in high-volume, short-term stock trading...

...Political scientists have long recognized that blue-collar Americans, for example, support specific public policies that restrain private economic power and the dictates of the market while retaining a belief in "free enterprise...

...Most depend on a high degree of cooperation, along with beneficial competition, and local governmental support...

...One dollar spent to keep kids in school reportedly saves $4.75 in later remedial education, welfare, and crime costs, with similar high returns for other investments in early childhood care, Head Start, the Job Corps, and other social programs...

...Michael Piore and Charles Sabel, in their Second Industrial Divide, praise the small manufacturers of several European industrial districts that are able to compete internationally and adapt to a changing market by emphasizing continuous innovation and a skilled work force...

...In any case, we can look at a few market mechanisms to see how well they performed...

...Takeover defenders argue vehemently that the whole point of business, as economist Harvey H. Segal states in Corporate Makeover: The Reshaping of the American Economy, is to "maximize present shareholder value...

...yet many of those shareholders were not longtime owners...

...And the National Science Foundation found that U.S...

...In the eighties, the idea of the market triumphed...

...share of worldwide manufactured exports declined from 21.3 percent in 1957 to about 14 percent in the eighties...

...Democratic control must be extended downward, with increased decentralization, but ironically also upward, with greater international cooperation...

...The organized development of investment markets threatens to turn serious enterprise into a "bubble on a whirlpool of speculation," the kind of "casino" that Business Week feared the United States had become in the eighties...

...That is even more true today, especially with airline prices rising rapidly while service and competition have declined greatly...

...Even if this were true (and the efficiency and profit studies suggest that it generally isn't), the argument on behalf of debt as discipline is an admission that competitive product markets either don't exist or don't provide the discipline they're supposed to under normal circumstances...

...Left to its own devices, the market says, yes, by all means...

...This muddled mixture of institutions, often clashing with each other, may not resemble very closely utopias of either the free marketeer or many past socialists...

...But in the eighties, bowing to the free market, U.S...

...From the mid-sixties to mid-eighties the U.S...

...Instead, it was more typical for U.S...

...Economists Walter Adams and James W. Brock conclude in their recent book, Dangerous Pursuits: Mergers and Acquisitions in the Age of Wall Street, "that merger-mania undermines efficiency in production, that it obstructs technological advance, and that it subverts international competitiveness...

...Despite his commitment to capitalism, Keynes lamented that "investment based on genuine long-term expectation is so difficult today as to be scarcely practicable...

...The least affected countries were those that already had well-developed coordination among major institutions (government, business, and, sometimes, labor in a "corporatist" alliance) and a strong export orientation (Japan, Germany, Sweden...

...It can't...

...Clearly many of the raiders and takeover apologists were correct in their indictment of a sluggish, unimaginative "corpocracy" that was feathering its own nest with fat salaries and outlandish perks...

...The alternative is to try to organize them in ways that take advantage of what they do best: instituting responsive pricing, requiring marginal cost accounting, encouraging decentralized initiative and invention, maintaining competition, and providing consumer choice...

...Defenders of the market's formal efficiency are forced into circular arguments about what it finally delivers...

...But studies show that households and businesses fail to take advantage of the best available alternative: increased energy efficiency...

...There are other tools, including investment by nonprofit institutions, government, or quasi public agencies, and government regulation, to structure or influence markets or to provide planned alternatives where markets are clearly failing (such as in health care...

...automakers to come close to catching up with European and Japanese competitors in fuel efficiency...

...There was a knee-jerk support of free trade (contradicted in practice by a growing hodgepodge of restraints) and opposition to anything that smacked of industrial policy or public planning...

...The takeover craze exemplifies several problems of markets...

...This weakened nationally oriented economic strategies for economic stimulus or regulation...

...Emphasis added...

...And those power relations frequently undermine and distort the freedom, choice, and reward for individual initiative that the market ideally promises...

...In a survey of two hundred major corporations, the National Science Foundation found that research and development spending by companies involved in recent mergers or acquisitions decreased by 5.3 percent from 1986 to 1987 compared to a 5.4 percent increase for other companies...

...From Reagan's America and Thatcher's Britain to the crumbling economies of the Soviet bloc, the "market" became a mantra for all occasions...

...True entrepreneurial ingenuity and risk-taking represent capitalism at its creative finest...

...Democracy requires markets, Lindblom argued, but it can also be subverted by the action of private markets...

...Should the Federal Reserve's tight-money Casino Economy policies, for example, be counted as being more "free market" in outlook than loosemoney policies, since tight money had the support of most private financial interests, even though lower interest rates might have spurred manufacturing...

...Deregulation has been a major freemarket initiative...

...The stock and financial markets were designed to permit businesses to raise capital and thus pursue long-run investment aims while stockholders were free to pursue short-term strategies...

...The disruptions of the world economy in the seventies provoked different reactions among business executives and the rich...

...Some Hard Realities of Power But people quite naturally have other standards by which markets or any social institutions are rightly judged: for example, their personal happiness, their ideas of a good society, and the well-being of the natural environment...

...Although, after a deep recession, these "free- market" policies resulted in a comparatively long peacetime expansion, employment did not grow as rapidly as in many past booms, and it was heavily lopsided—producing predominately low-income and upper-income jobs...

...Such inequality is intrinsically undemocratic, even apart from the ways in which inequality heavily distorts political processes and power on behalf of the rich...

...The second, less socially productive one, may even yield more short-term profit...

...businesses to blame and attack their workers, cut back on capital expenditures, move overseas (often to nonunion or low-wage sites), withdraw from one business and buy up another, and seek government tax breaks...

...Although in theory consumers might respond to these destructive effects, FALL • 1990 • 505 Casino Economy often the costs are paid by someone other than the immediate consumer, the damage may be collectively great but small to any individual, and the necessary information may not be available...

...Markets can be made more efficient, just as government should be made more efficient and responsive to citizens, but unbridled competition is not always the answer...

...We at NCR think of ourselves as a globally competitive company that happens to be headquartered in the U.S...

...unions are bad...

...And the decisions about such businesses are more and more removed from daily operations, more influenced by a crowd psychology, and more oriented to the "fetish of liquidity" —holding easily saleable securities—rather than skilled investment hoping to "defeat the dark forces of time and ignorance which envelop our future...

...Leveraged buyout loans, reported L. William Seidman, chairman of the Federal Deposit Insurance Corporation, now constitute over half of the equity capital of at least the ten largest multinational banks...

...Now stockholders can evaluate constantly fluctuating share prices, making precise comparisons with interest rates that can be earned elsewhere...

...The stock market fluctuations bear little relation to changes in underlying values of the companies, for example, and the market for corporate control has done virtually nothing to redress inefficiencies of other markets...

...Cooperation goes against the grain of the market ideologies, but it makes the cooperating firms more successful in the marketplace...

...For example, Frank Lorenzo's heavily indebted Texas Air empire has been cited for failures to maintain airplanes adequately...

...Corporate management was already "managing its way to economic decline" by failing to plan and invest for the long haul, as Harvard Business School professors William Abernathy and Robert Hayes argued in 1980...

...Larry Eichler of the Philadelphia Inquirer reported recently that, since deregulation, fares on most ticket classes have increased faster than general inflation or prior regulatory trends...

...Stockholders in the acquiring companies typically lost as the profits of their companies declined in the years after acquisitions were made...

...Markets and nonmarket influences will continue to clash and to complement each other...

...Here are a few: • Privatization was a major free-market crusade of the eighties...

...With the modern stock market, Keynes wrote, businesses are not irrevocably launched "as a way of life" with no "precise calculation of prospective profit," as individual entrepreneurs 506 • DISSENT once did...

...Shareholders are the owners, and anything short of maximizing their wealth amounts to misusing their investment and consequently undermining efficient market allocation of capital...

...In parts of Europe and in Japan both government and corporate strategies tend to give higher priority to pushing energyefficiency innovation, but U.S...

...Clearly the private market is working poorly...

...Much of the runup was a direct result of the takeover craze, which is unlikely to increase efficiency or profitability in the long run...

...Obviously one of the most crucial, continuing failures of markets is their inability to provide full employment under most circumstances...

...Typically both types of consumers fail to take lifetime costs into account and expect a payback on energy efficiency in one to two years—effectively a 50 to 100 percent return on investment...

...The cult of entrepreneurialism and small business, inspired mainly by Silicon Valley stories, has been an important part of the free-market crusade...

...Frequently, in the effort to trim costs, the ax falls first on research and development...

...Chanted long enough it would bring freedom, choice, prosperity, and a ready solution to all pressing issues...

...But in general the new market enthusiasm seems related to two different developments that gave strength over the past two decades to politically conservative movements...

...The boom in large part resulted not from the market-oriented policies per se, but from the federal budget deficit stimulus, which was heavily devoted to dead-end military spending rather than long-term productive public investment...

...They also cannot be relied on exclusively...

...This abandonment of their home bases may make sense for corporations in the global market, but it raises questions about how well the nation is served by unquestioning deference to the market...

...The top 1 percent of the population claimed about 8 to 9 percent of income reported on tax returns for several decades after World War II, but from 1981 to 1986 its share jumped to nearly 15 percent...

...Now, however, even corporate managers have a short-term outlook...

...Under the cloak of defending markets, a broader agenda came along: government is bad (or at best incapable of doing much good...

...The takeover debt has created a ripple effect of destructive consequences...

...Frequently they simply represented a forceful means— backed by threat of bankruptcy or business liquidation—of wringing wage concessions and transferring wealth to bondholders...

...Partly the market does not price fuels to account for environmental depredation or depletion of nonrenewable resources...

...The collapse of major corporations or of entire industries, like consumer electronics, is not comparable in effect to the bankruptcy of the corner florist who bought too many high-priced tulips...

...But with these conditions in place, the force behind takeovers became the dealmakers, arbitrageurs, speculators, attorneys, and empirebuilding executives, all driven more by vast egos and the prospect of very quick, very big bucks than by any conceivable economic rationality...

...Their abandonment of antitrust enforcement undoubtedly weakened competition, and their niggardly support of education and worker retraining arguably made labor markets much less efficient...

...Obviously there are potential alternative strategies that still rely on markets but in a much different framework...