In the NY Times, Ben Stein ably defends capitalism but correctly recognizes the glue that holds the system together--trust.
When I see what the top dogs at all too many corporations are now doing to that trust, I feel queasy. Outrageous — yes, obscene — pay. Greedy backdating of stock options, which in my opinion is straight-up theft. Managers buying assets from their trustors, the stockholders, at pennies on the dollar, then forestalling competing bids with lockups and insane breakup fees.
These misdeeds and many, many more are hammer blows at the granite foundation of trust we built in the 1940s and ’50s. How long democratic capitalism can survive these blows before it gives in and gives birth to revolution or to an out-and-out aristocracy, I am not sure.
As I have repeatedly pointed out, capitalism is not a no-holds-barred "greed is good" system as it is often portrayed. The success of capitalism depends on the rule of law, enforcement of property rights, and, yes, trust.
As we approach Milton Friedman Day, it is fitting that we remember that when he said that the social responsibility of business was to increase profits, he added the qualifier,
...so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.
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