Democratic capitalism is an oxymoron

Democratic means government by the people.  It is commonly understood that each person has one vote.

Capitalism is raising money for an enterprise with the contributions of a few people or thousands of people.  Each contributor of capital to the enterprise has as many votes as the number of shares he or she holds.  One can argue that this is fair; the person who put one million dollars into the company had a greater interest than the person who put one hundred dollars into the company.

In practice, capitalism becomes distorted to the rule of a few.  Capitalism leads to a plutocracy both in the enterprise and in the various governments.

In the enterprise, members of the board periodically award themselves and the top executives shares in the enterprise, thus increasing the number of votes they have, at no or low cost.

In government, the executives and other large shareholders put a lot of money into lobbying government for laws in their favor and into campaigns of political candidates who they believe will be sympathetic to their interests.  Regular readers of this blog know what Adam Smith thought of that influence.  See "The Invisible Adam Smith".

Capitalism, when there are many companies with similar focus, is a very good idea.  It means that there are many people working on bringing new or lower cost products to the market.  This doesn't mean that government can't produce good ideas; it just does not have enough resources to produce as many good ideas as are needed.  And often government is needed to encourage good ideas in certain fields or to curtail bad ideas that are harmful to the public.  In fact, corporations fall all over themselves to get government contracts to build roads or build more lethal weapons.

You might be able to come up with a better blended phrase that reflects the need for both democracy and capitalism.  My best shot today is balance of democracy and capitalism.  Now the next question is: when will this balance be achieved?

The difference between "greedy teacher unions" and "greedy CEOs"

Have you ever noticed that those who complain about "greedy teacher unions" rarely complain about CEO salaries and that those who complain about "greedy CEOs" rarely complain about teacher salaries?

Well, the teacher unions negotiate with school boards who have some idea about how much money the school district has.  The school board members are elected in often competitive elections and serve only part-time for salaries they wouldn't accept for their real jobs.

On the other hand, CEOs often have a say in who sits on the boards of their companies.  The boards are "elected" by the shareholders as a single slate chosen by the board.  The board also decides on its pay, and in order to justify its six-figure salaries for showing up for five or six meetings a year, grants the CEO seven- or eight-figure compensation.  Some companies even go into debt to maintain this compensation.

About the only way a "greedy teacher" can get a six-figure income for showing up five days a week is having a second job or writing a lot of books.

We used to be able to have very successful companies without six-figure boards and seven-figure executives.  Would we be able to have successful companies without teachers?