Mr. Potter is Back
During the holidays, no doubt many of us had the chance to see “It’s a Wonderful Life.” In the movie, Jimmy Stewart’s character, George Bailey, runs a small bank, and has to contend with the hard-hearted Mr. Potter, who owns just about everything else in the small town of Bedford Falls. Fortunately, with the help of the community, George Bailey wins. By the end of the movie it’s clear that America wins, too, since the Mr. Potters of the world aren’t allowed to run the show.
But now Mr. Potter is back, with a vengeance.
Five days before Christmas, the employees at Customized Structures in Claremont were informed that the plant was closing the next day. No severance pay was offered (although that was changed once New Hampshire Governor John Lynch intervened).
It turns out that the Customized Structures is owned by a private equity firm called Watermill Ventures. Watermill buys distressed companies, fixes them, and then sells them to make a profit for their investors. The upside of this kind of arrangement is obvious. A company in trouble can get a new lease on life and the investors can make money. The employees are expected to do their part to make it all work out. But it’s the downside that doesn’t get enough attention. If things go wrong, who loses big? Watermill? The investors? Or the employees and the town of Claremont?
This same dynamic is working on a global scale. Capital can move easily around the world. Multinational companies have the flexibility and resources to transfer operations to whatever locations seem most profitable. But towns and families can’t turn on a dime. When companies close or move out overnight, community members are often left to deal with lost jobs, lost pensions, lost health care, and lost opportunities. Workers face the risks a global economy creates; multinational corporations have the strength and flexibility to minimize their risks while reaping greater profits.
The ethic in “It's a Wonderful Life” was one of shared risk and shared opportunities. George Bailey took a chance making his loans, and his depositors took a chance on his ability to run the bank. But if they both worked hard and succeeded, they would both profit.
By contrast, Mr. Potter tried to minimize his personal risk. He wanted to control the all the businesses in Bedford Falls, make all the decisions, and reap all the profits. Mr. Potter didn’t like George Bailey because George refused to go along with his plans.
We have a lot of potential Mr. Potters on the world stage right now. Most of our media enterprises are owned by a handful of large companies (Disney, Viacom, TimeWarner, News Corp, Bertelsmann AG, and General Electric together own more than 90% of the media holdings in the United States). A few major players (ExxonMobil, ChevronTexaco, ConocoPhillips, BP and Shell) dominate the US petroleum industry. By itself, Wal-Mart is a major force in the retail market. This means that these major corporations have tremendous power and can, if they want, make life difficult for individuals or groups who disagree with their plans.
The counterweight to this power is our democracy. Our democratic, representative government is the only organization with the power and resources to challenge powerful global economic interests. Whether through anti-trust laws, environmental regulations, or trade policy, the government can level the playing field for those without the resources of a Mr. Potter. America didn’t become great by nurturing old established corporations, but by encouraging the new vibrant ones. It should be the place where George Bailey can make things happen. It should be the place where employees could be given a shot at buying a company that might otherwise close. That’s why the power of money and special interests in our political system is so important. If Mr. Potter owns the town and runs the government too, then George Bailey doesn’t have a chance.
So when I hear that someone is promising to get the government off of our backs, I wonder, are they working to get the government off of my back or Mr. Potter’s?
But now Mr. Potter is back, with a vengeance.
Five days before Christmas, the employees at Customized Structures in Claremont were informed that the plant was closing the next day. No severance pay was offered (although that was changed once New Hampshire Governor John Lynch intervened).
It turns out that the Customized Structures is owned by a private equity firm called Watermill Ventures. Watermill buys distressed companies, fixes them, and then sells them to make a profit for their investors. The upside of this kind of arrangement is obvious. A company in trouble can get a new lease on life and the investors can make money. The employees are expected to do their part to make it all work out. But it’s the downside that doesn’t get enough attention. If things go wrong, who loses big? Watermill? The investors? Or the employees and the town of Claremont?
This same dynamic is working on a global scale. Capital can move easily around the world. Multinational companies have the flexibility and resources to transfer operations to whatever locations seem most profitable. But towns and families can’t turn on a dime. When companies close or move out overnight, community members are often left to deal with lost jobs, lost pensions, lost health care, and lost opportunities. Workers face the risks a global economy creates; multinational corporations have the strength and flexibility to minimize their risks while reaping greater profits.
The ethic in “It's a Wonderful Life” was one of shared risk and shared opportunities. George Bailey took a chance making his loans, and his depositors took a chance on his ability to run the bank. But if they both worked hard and succeeded, they would both profit.
By contrast, Mr. Potter tried to minimize his personal risk. He wanted to control the all the businesses in Bedford Falls, make all the decisions, and reap all the profits. Mr. Potter didn’t like George Bailey because George refused to go along with his plans.
We have a lot of potential Mr. Potters on the world stage right now. Most of our media enterprises are owned by a handful of large companies (Disney, Viacom, TimeWarner, News Corp, Bertelsmann AG, and General Electric together own more than 90% of the media holdings in the United States). A few major players (ExxonMobil, ChevronTexaco, ConocoPhillips, BP and Shell) dominate the US petroleum industry. By itself, Wal-Mart is a major force in the retail market. This means that these major corporations have tremendous power and can, if they want, make life difficult for individuals or groups who disagree with their plans.
The counterweight to this power is our democracy. Our democratic, representative government is the only organization with the power and resources to challenge powerful global economic interests. Whether through anti-trust laws, environmental regulations, or trade policy, the government can level the playing field for those without the resources of a Mr. Potter. America didn’t become great by nurturing old established corporations, but by encouraging the new vibrant ones. It should be the place where George Bailey can make things happen. It should be the place where employees could be given a shot at buying a company that might otherwise close. That’s why the power of money and special interests in our political system is so important. If Mr. Potter owns the town and runs the government too, then George Bailey doesn’t have a chance.
So when I hear that someone is promising to get the government off of our backs, I wonder, are they working to get the government off of my back or Mr. Potter’s?
posted by Jay Buckey at
1:04 AM
1 Comments:
The increasing trend is for communities, and individual customers, to keep companies socially acccountable. The American consumer is much more aware of social abuses and much more willing to hold companies accountable.The recent Fisher-Price lead-laced toys issue might have played out differently if were not for the consumer's demands for transparency and accountability from the corporate world. Candidates such as Buckey can represent this kind of community accountability, and can help spearhead the counterforce against abuse of multinational's excessive powers at the expense of local communities, thus making the voices of community-based labor and consumers heard by global business.
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Jordan T., At
January 6, 2008 10:24 PM
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