End the Value-Extraction Economy

Last spring, an editor at one of the big newspapers asked me to send in an opinion piece if an idea hit me.

Alas, it was a swing and a miss, and it died an ignoble death.

However, the core arguments remain germane today — perhaps even more so. What do you think?

Text is as submitted in May 2020.

End the Value-Extraction Economy

There’s a myth going around. I suspect you’ve heard it. Leaders tell us that U.S. businesses were vibrant and vigorous prior to the onset of Covid-19; that nobody is to blame for the economic fallout. 

The truth is that businesses were fragile — a by-product of a decades-long elevation of value extraction over value creation, and a limitless flow of unproductive debt financing.

The U.S. economy has fallen prey to the leveraged buyout philosophy of investment. During its heyday in the 1980s, Wall Street hailed the LBO as a rejuvenator of capitalism, restoring the primacy of profits to sclerotic conglomerates that had grown disdainful of shareholders. 

We are transitioning from a world of efficiency gains to one of resilience and capacity expansion. There is a lot to build, in many places, and there are millions who need work.

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