Where Do You Stand on the Cultural Divide?

I recently read an article in The Wall Street Journal, January 21, 2012, entitled “The New American Divide,” which discussed the increasing differences between the working class and the upper class in America. In 1960, these two groups participated in cultural institutions such as marriage, full-time employment (at least for males), and religion at much more similar rates than they did in 2010.

“For most of our nation’s history, whatever the inequality in wealth between the richest and poorest citizens, we maintained a cultural equality known nowhere else in the world—for whites, anyway,” says the author, Charles Murray.

But, Murray argues, there is now a great cultural divide between classes in American society, which means that we no longer have cultural equality. The article is worth reading simply for its explanation of the cultural differences now permeating our society.

But the article also raises issues for us to think about concerning the solutions to the increasing cultural differences. Murray believes that it is primarily up to the upper income class to resolve the cultural divide. He says the upper class should take action to maintain the cultural equality that has made America a land of opportunity.

First, Murray says that “married, educated people who work hard and conscienctiously raise their kids shouldn’t hesitate to voice their disapproval of those who defy these norms.” The upper class must preach what it practices. Which is hard to do in our "anything goes" society.

But beyond practicing what they preach, Murray suggests that the upper class should rethink their priorities to increase the cultural connections between classes.

Ask yourself whether you are willing to change the following in order to increase your exposure to people of other classes:

• The neighborhood where you live
• The school you choose for your children
• What you tell your children about the value and virtues of physical labor and military service
• Whether you are an active member of a religious congregation
• Whether you are involved in your community beyond attendance at charity events.

Where do you stand on the new cultural divide? Should we work to close the cultural class gaps? If so, what will you do?

Bain Capital v. Benefit Corporations – Where Would You Invest Your Money?

After I heard that Bain Capital had earned its investors an 88% return on their money while Mitt Romney was CEO, any concerns I had about his management of the private equity firm vanished. 

Beth Healy of The Boston Globe said of Bain on the PBS NewsHour on January 11, 2012, 

“And they [Bain] made 88 percent a year for their investors under Romney's tenure, which is -- was one of the best records in the business at that time, from '84 to '99.”

As long as the profits were not obtained illegally, it seems that Bain did exactly what its shareholders and other investors expected – it maximized their returns and increased wealth.  Nothing shameful in that.

What investor wouldn’t want an 88% return on his or her money? And remember that investors in firms such as Bain Capital frequently include large pension funds.  The money distributed to these pension funds benefits many individual wage-earners, not just wealthy individuals like Mitt Romney.  Again, nothing shameful.

Even Democrats are lauding the work of Bain Capital.  Jeff Bussgang, in a recent blog post on CNNMoney, asked 

“should hard-working pensioners and retirees be allowed to invest their savings in an asset class that outperforms nearly every other one available? Private equity has an important role and should be lauded, not lambasted.”

Bussgang labels himself a “card-carrying Democrat” who will vote for President Obama again in November.

Because it seems to me the attacks on Bain and other private equity firms have been unfounded, or at least over-wrought, I was interested to see the article in the January 19, 2012, Wall Street Journal on “benefit corporations” now authorized in seven states.  This new type of for-profit corporation is specifically authorized to have goals other than maximizing profits for shareholders, and to consider social or environment objectives ahead of profits.

Is this a good idea or not?  Should corporations be allowed to deviate from seeking the maximum legal return for its shareholders?  I suppose transparency is key -- what have the corporate managers told their investors about how they will run the company?  The Wall Street Journal article states that these corporations must set out their social and environmental goals in their bylaws and publish an annual "benefit report" to measure itself against those goals. Critics argue that management of these benefit corporations will not be accountable to shareholders, and that there will be little shareholders can do if their investment does not do well.

What do you think? Where would you invest your money -- with a company with a track record like Bain Capital, or in a benefits corporation that might not focus on profits but might suit your view of the world?