Top Quotes: “The Common Good” — Robert Reich
Background: Reich ties the concept of the common good — specifically, a sharp decline in it in the U.S. — to most of the major issues facing us today — from money in politics to healthcare to corporate greed. This book had a lot of stats I’ve seen before but provided a lot more context on how things became the way they are and why things weren’t always as bad as they seem today.
The Decline of the Common Good
“In the last 50 years, our civic life — as citizens in our democracy, as participants in our economy, managers or employees of companies, and members of leaders of orgs — seems to have sharply deteriorated. What we have lost is a sense of our connectedness to each other and to our ideals.”
“Starting in the late ’70s, Americans began talking less about the common good and more about self-aggrandizement. The shift is the hallmark of our era: from the ‘Greatest Generation’ to the ‘Me Generation,’ from ‘We’re all in it together’ to ‘You’re on your own.’”
“History has shown that the more commitment to the common good there is within a society, the more willing are its inhabitants to accept disruptions that inevitably accompany new ideas, technologies, opportunities, trade, and immigration. That’s because these inhabitants are more likely to trust that the disruptions won’t unfairly burden them, and that they stand to gain more than lose by them. This sort of virtuous cycle is more likely in societies that promote political equality and equal opportunity, because people who have an equal voice in setting the rules and an equal chance to get ahead naturally feel more assured that their concerns will be addressed and that changes can work to their advantage.”
“But when that trust is undermined or was never there to begin with, disruptive change can generate widespread anger and fear, and even political upheaval. If those who feel left behind view the system as rigged against them, they can push open societies into becoming closed and autocratic. When a sense of common good is lacking, demagogues can use the anger and fear accompanying disruptive change to turn people against one another rather than address the traumas that made them angry in the first place. Societies experiencing economic crises and widening inequalities are particularly vulnerable to tyrants intent on undermining democratic institutions by lying repeatedly, accusing critics of conspiring ‘against the people,’ fueling racial and ethnic tensions, and inciting rabid nationalism.”
“A love of country based on the common good entails obligations to other people, not to national symbols. Instead of demanding displays of respect for the flag and the anthem, it requires that all of us take on a fair share of the burdens of keeping the nation going — that we pay taxes in full, rather than seek loopholes or squirrel money away abroad, that we volunteer time and energy to improving the community and the country, serve on school boards and city councils, refrain from political contributions that corrupt our politics, and blow the whistle on abuses of power even at the risk of losing our jobs.”
“The sense of the common good embraces public education — but not as a personal investment in getting a good job after one’s education is complete. Education is a public good that builds the capacity of a nation to govern itself, and promotes equal opportunity. Democracy depends on citizens who are able to recognize the truth, analyze and weigh alternatives, and civilly debate their future. Without an educated populace, a common good cannot even be discerned.”
“When education is viewed as a private investment yielding private returns, there’s no reason why anyone other than the ‘investor’ should pay for it. But when understood as a public good underlying our democracy, all of us have a responsibility to ensure that it is of high quality, and available to all.”
“The good that emerged from early Americans’ self-governing was not mainly about generosity toward those in need. It was about giving others an equal chance to succeed. In 1892, social reformer Jane Addams explained that Hull House, her settlement house in a poor precinct of Chicago, was not a charity. Hull House’s purpose — and for Addams, a central obligation of American citizenship — was to help America’s less fortunate make the most of themselves.”
“The good we have had in common has been a commitment to respecting the rule of law, including its intent and spirit; to protecting our democratic institutions; to discovering and spreading the truth; to being open to change and tolerant of our differences; to ensuring equal political rights and equal opportunity; to participating in our civic life together, and sacrificing for that life together. Note that these are not the constitutional rights and freedoms we possess as citizens. They are the essential elements of what we owe one another as Americans, what make us a people. Although we have often fallen short of achieving them, they have informed our judgments about right and wrong and bound us together.”
“The common good is a pool of trust built over generations that makes everyone’s lives simpler and more secure. But precisely because it has so much value and is maintained voluntarily, it has been possible for some individuals to exploit it for their own selfish gain.”
“In any social system, it’s possible to extract benefits by being among the first to break widely accepted unwritten rules. Think about a small town where people don’t lock their doors because of the unwritten rule that nobody steals. Under these circumstances, the first thief to commit robberies operates at a huge advantage. That first-mover advantage disappears as soon as people catch on and start locking their doors.”
“Modern societies are filled with tacit rules that can be exploited by people who view them as opportunities for selfish gain rather than as social constraints. ‘I never thought anyone could do that’ is the typical response of everyone else. But after the exploitation occurs, the rule inevitably changes and everyone has to take steps — often inconvenient, time consuming, or costly — to prevent the exploitation from recurring.”
“Trust can disappear altogether. If honest used car dealers can’t differentiate themselves from dishonest ones, they may figure there’s no point in making sure their cars are reliable. Eventually, no one trusts used car dealers. If a few members of Congress retire to become well-paid lobbyists for industries they once oversaw, other members will have fewer qualms about doing the same. Eventually, so many turn to lobbying that the public stops trusting members of Congress to act in the common good when they’re in office.”
Corporate Greed Overtakes the Common Good
“If exploitation isn’t contained, competitive forces can erode standards. After one pharmaceutical company jacks up the price of a life-saving drug, CEOs of competing companies will be pressured by their investors to do the same. If one corporation awards its CEO an unprecedented large pay package, other companies will be under pressure to match it. If a candidate is elected because she broke the unwritten rule not to flood the internet with fake information about her opponent, future candidates will feel less hesitant to do the same.”
“If there are no consequences, norm-breakers can reap enormous gains while the costs of the norm-breaking are shifted to everyone else — locks that have to be purchased, laws that have to become more detailed; added red tape that hobbles all transactions; and the enmity and distrust that can begin to envelop an entire economic and political system.”
“Around five decades ago a few people with wealth and power began exploiting social trust in order to gain even more wealth and power. Then, seeing how easily it was done and how richly they were rewarded, others followed. As America produced a wave of Martin Shreklis, the unwritten rules that once defined and enforced the common good began to erode.”
“A chain reaction that undermined the common good was set off in the ’80s as ‘corporate raiders’ mounted hostile takeovers of corporations, financed by risky bonds. The raiders made fortunes, Wall Street became the most powerful force in the economy, and CEOs began to devote themselves entirely and obsessively to maximizing the short-term value of shares of stock. The new rule was: Do whatever it takes to make huge profits. Before then it was assumed that large corporations had responsibilities to all their ‘stakeholders’ — not just their shareholders but also their workers, the cities where their headquarters and facilities were, and the nation. The raiders targeted companies that could deliver higher returns to their shareholders if they abandoned their other stakeholders — fighting unions, cutting the pay of workers or firing them, automating as many jobs as possible, and abandoning their original communities by shuttering factories and moving jobs to a state with lower labor costs, or moving them abroad. The raiders pushed shareholders to vote out directors who wouldn’t make these sorts of changes and vote in directors who would. During the whole of the ’70s, there were only 13 hostile takeovers of big companies. During the ’80s, there were 150. As a result, CEOs across America, facing the possibility of being replaced by a CEO who would maximize shareholder value, began to view their responsibilities differently. The corporate statesmen of previous decades became the corporate butchers of the ’80s and ’90s — slashing their American workforces.”
“Over the years corporate raiders have morphed into respectable ‘private equity managers’ and ‘activist investors’ and hostile takeovers have become rare. That’s only because corporate norms have changed. It is now assumed that corporations exist only to maximize shareholder value. All of this has meant more money for the top executives of big companies, whose pay began to be linked to share prices. CEO pay soared from an average of 20 times that of the typical worker in the ’60s to almost 300 times by 2017.”
“As a practical matter, shareholders are not the only parties who invest in corporations and bear some of the risk that the value of their investments might drop. Workers who have been with a firm for years often develop skills and knowledge unique to the company. Others may have moved their families to take a job with the firm, buying homes in the community. The community itself may have invested in roads and other infrastructure to accommodate the corporation. When a firm abandons their workers and these communities, these stakeholders lose the value of their investments. Why should no account be taken of their stakes? Executives claim they have a ‘fiduciary obligation’ to maximize investors’ returns, which assumes that investors are the only people worthy of consideration.”
“The goal of maximizing profits has leached into sectors of the economy that once been based on the common good, such as healthcare. A century ago, hospitals and health insurers had palpable public responsibility. The original purpose of health insurance plans, devised in the ’20s, was not to generate profits. It was to cover as many people as possible. The nonprofits Blue Cross and Blue Shield accepted everyone who wanted to become a member, and all members paid the same rate regardless of age or health. In the ’70s and ’80s, though, some entrepreneurs saw ways to make big money by exploiting this common good. They founded for-profit insurance companies like Aetna and Cigna, unhampered by the Blues’ charitable mission, accepted only younger and healthier patients. This reduced their costs, enabling them to charge lower premiums than the Blues while still pocketing big profits. The Blues couldn’t possibly compete. So in 1994, Blue Cross and Blue Shield succumbed and became for-profits — marking the end of non-profit health insurance — turning the American healthcare system into one that eagerly insured healthy people while trying to avoid sick people.”
Politics
“Once a few large corporations ramped up their lobbying and campaign contributions, competitors felt they had to do the same or lose out. The number of corporations with public affairs offices in Washington ballooned from 100 in 1968 to over 500 in 1971. In 1971, only 175 firms had registered lobbyists in the nation’s capital. By 1982, nearly 2,500 had them.”
“In 1980, the richest 1/100 of 1% of Americans provided 10% of contributions to federal elections. By 2012, they provided 40%. Both political parties have transformed themselves from mainly state and local organizations that channeled the view of members upward, into giant top-down fundraising machines. In the ’80s, Democrats reached parity with Republicans in contributions from corporate and Wall Street campaign coffers. Once hooked on corporate money, Democrats couldn’t unhook themselves. The Democrats’ dependence on big corporations became evident when, months before the party’s trouncing in the 1994 midterms, many congressional Democrats voted against Bill Clinton’s healthcare plan because their corporate sponsors opposed it.”
“After Trump’s charitable foundation made a $25,000 contribution to a campaign organization linked to Florida’s attorney general, she decided not to open a fraud the office had been considering.”
“In the ’70s, only 3% of retiring members of Congress went on to become lobbyists. By 2016, fully half of all retiring senators and 42% of retiring representatives had turned to lobbying, because the financial rewards from corporate lobbying had ballooned.”
Labor & Taxes
“A few states have enacted ‘noncompete’ laws making it impossible for employees to leave their jobs for new ones unless they can show that the move wouldn’t ‘adversely affect’ their current employer. Securities laws have been relaxed to allow insider trading of confidential information, and to let CEOs use stock buybacks to boost share prices when they cash in their own stock options. Tax laws have been altered to create loopholes for the partners of hedge funds and private equity funds, special favors for the oil and gas industry, lower marginal income tax rates on the highest incomes, and reduced estate taxes on great wealth.”
“Bankruptcy laws have been loosened for large corporations — notably airlines and auto manufacturers — allowing them to rip up labor contracts, threaten closures unless they receive wage concessions, and leave workers and communities stranded. Notably, bankruptcy has not been extended to homeowners who owe more on their homes than the homes are worth, or to graduates overburdened with student debt. The result has been to shift the risks of economic failure onto the banks of average working people and taxpayers.”
Housing & Education
“Membership dues pay for services in exclusive private residential communities while local property taxes pay for them in public townships like Vail or Greenwich, but in neither case, is the endeavor common; it is for people with the same high incomes.”
“Public schools in exclusive communities are ‘public’ in name only because tuition payments are disguised within high home prices, local property taxes, and parental donations. In November 2016, school officials in Orinda, CA, determined that a 7-year-old whose single mother worked as a live-in nanny for a family in Orinda, did not ‘reside’ in the district and should not be allowed to attend the elementary school she was attending there. Orinda’s schools glean extra revenues from a local parcel tax and parental contributions to the Educational Foundation of Orinda, which ‘suggests’ donations of $600 per child.”
“An upsurge of private ‘parents’ foundations has emerged in the wake of court decisions requiring richer school districts to subsidize poorer ones. Rather than pay the extra taxes, upscale parents have quietly shifted their support to these charities so they can keep more of their money in the schools their kids attend. As these parents become increasingly efficient at passing their economic status on to their children, they create an ever more rigid class division in America.”
The Future
“Patagonia has organized itself as a ‘benefit corporation’ — a for-profit company whose articles of incorporation require that it take into account the interests of workers, the community, and the environment, as well as shareholders. Benefit corporations are certified and their performance is regularly reviewed by nonprofit third-party affiliates. By 2017, 31 states have enacted laws allowing companies to incorporate in this way.”
“CEOs who understand leadership as trusteeship could use their outsized political influence to push for laws that resurrect stakeholder capitalism — requiring CEOs to consider all their stakeholders; giving workers greater voice in management decisions, as in Germany; requiring companies to make ‘severance payments’ to communities they abandon; and limiting the tax deductability of CEO pay. Rather than reflexively seek tax cuts, they could push to raise taxes on corporations as well as on people like themselves and other wealthy Americans, and dedicate the funds to better schools for all American kids. They could fight for a higher minimum wage and laws that make it easier for workers to unionize.”
“If this sounds far-fetched, that’s because of how far we’ve come from the era when the heads of American business viewed themselves as ‘corporate statesmen’ with responsibilities for the common good. In the ’40s and ’50s, CEOs of major companies like GM, Coca-Cola, and Kodak joined to lobby for measures to expand jobs. They even argued that unions ‘serve the common good.’ In the ’60s, many of these CEOs lobbied for stronger environmental protections.”
“Nothing is stopping CEOs from putting an end to the system’s rigging in favor of big corporations and Wall Street except their own parched, self-serving notion of leadership as maximizing profits and shareholder value, whatever it takes. For too long, they have abdicated their responsibility to the common good and we are now living with the consequences.”
“In contemporary America, the meaning of honor has become confused partly because those who bestow honors often have ulterior motives. Government funding has dried up for nonprofits like universities, hospitals, and museums. Research grants are waning. Legislatures are cutting back on university funding. Meanwhile, vast riches have been accumulating in the hands of a relative few. As a result of both trends, non-profits have been using the lure of honors to hook rich donors. Galas are held in their honor. Colleges bestow on them honorary degrees. Awards and prizes are named in their honor. University buildings are named after them, their family names etched for eternity in granite or marble. In all these ways their identities become synonymous with our society’s notions of honorability.”
“Curiously, though, little or no attention is given to how these donors obtained their wealth. They may have violated or skirted laws, paid off politicians, engaged in insider trading or price-fixing, defrauded investors, or even brought the world economy to near ruin. These behaviors are assumed to be irrelevant to the deal at hand. In return for their donation, they are imbued with moral approval. The subtle message is that the common good doesn’t really count. Wealth and power do.”
“Michael Milken was indicted in 1989 for racketeering and securities fraud and sentenced to 10 years in prison. In 2016, the very same man was honored with a philanthropy award. It would be one thing if Milken had publicly admitted that his fraudulent acts were wrong and then openly sought to redeem himself through philanthropy. But to the contrary, he heaped praise on himself for what he did, saying that his illegal tactics helped create millions of jobs.”
“Why don’t we have awards for upholding and strengthening the common good? A Common Good Award for an outstanding whistleblower. A Common Good Award for an exemplary civil servant. A Common Good Award for a teacher or social worker whose quiet and modest work over the course of her career has dramatically improved other people’s lives. Why shouldn’t universities confer honorary degrees on these unsung American heroes? Why doesn’t the U.S., like the U.K., issue honors to a thousand citizens each year who have made significant contributions to the common good? Their purpose would be to continually remind us of what it means to work for the common good, to offer examples of civic behavior we want to encourage, and to raise public consciousness of what we owe each other as members of the same society. Such public honoring could be a corrective to what we currently do — blindly and automatically bestow honors on rich philanthropists because they’re rich and celebrities because they’re celebrated.”
“If we’re serious about restoring the common good, congressional shaming after corporations commit wrongs must be followed by legislation and criminal prosecutions that confirm the standard of the behavior we expect. Such investigations must be directed against individual wrongdoers rather than at companies as a whole. Companies cannot feel shame; only individuals can. There can be a great deal of shame in personally going to jail. Yet these days few executives of corporations and Wall Street banks are ever held personally accountable for illegal acts. No executive of any major bank was prosecuted for causing the 2008 financial crisis, not for lack of evidence.”
“Obama’s Justice Department stopped bringing cases against corporate executives because winning cases against individual executives has become too difficult and expensive for government prosecutors. Corporations have become adept at giving their top guns plausible deniability of any knowledge in any nefarious scheme and prosecutors are routinely outgunned by platoons of high priced corporate attorneys. Young government prosecutors who want lucrative partnerships in prestigious law firms when they leave government often don’t want to jeopardize their career prospects, so they go easy on individual executives. It is often more convenient for prosecutors to give government a PR victory by slapping corporations with a fine and making them promise to behave better in the future.”
“Google pays off academics to help sway public opinion and policymakers in its favor. In 2017, the Wall Street Journal reported that Google has quietly financed hundreds of professors at universities like Harvard and Berkeley to write research papers to help Google defend itself against regulatory challenges to its market dominance. Google has used the resulting research in courtrooms, regulatory hearings, and congressional hearings. Some professors have allowed Google to see the papers before they’re published, enabling Google to offer ‘suggestions.’”
“In the ’08 election, the major TV networks devoted a total of 220 minutes to reporting candidates’ positions on issues of public policy; four years later, the networkers allocated 114 minutes to policy; in 2016, they devoted 32 minutes.”
“As the ’16 election heated up, Les Moonves, CEO of CBS said the Trump phenomenon ‘may not be good for America, but it’s damn good for CBS. This is a terrible thing to say, but the money’s rolling in and this is fun.’ No wonder Trump received more coverage than any presidential candidate in American history. Moonves knew his admission was ‘terrible’ to say because he was aware the common good required a different response, and less coverage of Trump.”
“Civics education used to engage students in thinking about the well-being of our society and our world. It was long ago eliminated from the standard high school curriculum. Higher education has become ever more vocational as students crowd into courses on business or computer engineering. Education is now viewed as a private investment rather than a public good.”
