Capitalism, he says, is slowly committing suicide.
By David Leonhardt
By Peter Georgescu — a refugee-turned-C.E.O. who recently celebrated his 80th birthday — feels deeply grateful to his adopted country. He also feels afraid for its future. He is afraid, he says, because the American economy no longer functions well for most citizens. “For the past four decades,” Georgescu has written, “capitalism has been slowly committing suicide.”
Those are some strong words, so I want to tell you Georgescu’s story – and about what he thinks needs to be done.
He was born just before World War II in Romania, where his father was a businessman and his maternal grandfather was a politician opposed to both the Nazis and Communists. His parents were traveling in the United States in 1947 when the Iron Curtain came down, and American officials told them they would be killed if they returned home. Peter and his brother went to live with their grandparents in Romania’s Transylvanian countryside.
One day a couple of years later, they found their dogs dead, from poisoning. The next night, government agents entered their home and arrested Peter’s grandfather. “We never saw him again,” Georgescu told me recently. “They killed him in prison.”
Peter was 10 years old, and his brother, Constantin, was 15. The government moved them and their grandmother to a town near the Russian border. They slept on hay in a single room, inside an otherwise normal house, watched by a guard. Instead of going to school, Peter cleaned sewers. He was later promoted to a job turning off streetlights before dawn and digging holes for electric poles.
In the early 1950s, a Romanian diplomat approached Peter’s father in New York, where he was living with Peter’s mother. The diplomat brought a recent photo of the boys, both teenagers, and pressured the father to spy for Romania. He went to the F.B.I. instead, and the F.B.I. encouraged him to go public with the blackmail attempt. It would make the Soviet empire look bad.
The plan worked. The “Georgescu boys” became a media sensation. Frances Bolton, an Ohio congresswoman, took up their cause and interested President Dwight Eisenhower in it. Romania eventually freed the boys, as part of a prisoner exchange, and they landed in New York at Idlewild Airport — today’s J.F.K. — on April 13, 1954. (Their grandmother was not allowed to leave until years later.)
Online, you can watch the television clip of Peter’s mother running across the tarmac and hugging them as they got off the plane. She had not seen them in seven and a half years. She didn’t recognize their voices, she told a reporter, because they each had a man’s voice.
From there, Georgescu’s life moved quickly. The headmaster of Phillips Exeter offered him a spot at the school even though he spoke no English and hadn’t attended any school for much of his boyhood. After college and business school, Georgescu joined the advertising firm Young & Rubicam. He spent 37 years there, the last seven as chief executive.
“The hero of my story,” Georgescu said to me “is America.” Over and over, he said, people who didn’t have any obvious reason to care about him helped him: the congresswoman who didn’t represent his parents’ district; the headmaster who’d never met him; the ad executives who mentored him.
All of them, he believes, were influenced by a post-World War II culture that (while deeply flawed in some ways) fostered a sense of community over individuality. Corporate executives didn’t pay themselves outlandish salaries. Workers enjoyed consistently risingwages.
Things began to change after the 1970s. Stakeholder capitalism — which, Georgescu says, optimized the well-being of customers, employees, shareholders and the nation — gave way to short-term shareholder-only capitalism. Profits have soared at the expense of worker pay. The wealth of the median family today is lower than two decades ago. Life expectancy has actually fallen in the last few years. Not since 2004 has a majority of Americans said they were satisfiedwith the country’s direction.
“Capitalism is a brilliant factory for prosperity. Brilliant,” Georgescu says. “And yet the version of capitalism we have created here works for only a minority of people.”
In his retirement, when he’s not spending time with his family, Georgescu has been trying to agitate other corporate leaders. He has published a book, called “Capitalists, Arise!” He has written op-edsand given talks. He talks about the signs of frustration, in both the United States and Europe. He has seen societies fall apart, and he thinks many people are underestimating the risks it could happen again. “We’re not that far off,” he told me.
Some other business leaders are also worried about rising inequality. Warren Buffett is. So are Martin Lipton, the dean of corporate lawyers, and Laurence Fink, who runs the investment firm BlackRock. “There’s class warfare, all right,” Buffett has said, “but it’s my class, the rich class, that’s making war, and we’re winning,”
Georgescu believes that business, more than government, can solve the problem. He told me that executives should resist pressure to maximize short-term profits. Companies could make even more money if they invested in their workers and became more productive and innovative, he says. Costco is a favorite example of his.
I’m skeptical that corporate America will voluntarily fix the situation, because the last four decades have been very lucrative for top executives and investors. To my mind, government action — including higher taxes on the rich and more bargaining power for workers — is necessary to bring back broad-based prosperity.
But I am grateful for Georgescu’s efforts, because the culture and values of corporate America have a big effect on society. Not so long ago, top executives made decisions that took into account not just their own bank accounts but also their workers, their communities and their country. Georgescu is asking them to do so again.
David Leonhardt is a former Washington bureau chief for the Times, and was the founding editor of The Upshot and head of The 2020 Project, on the future of the Times newsroom. He won the 2011 Pulitzer Prize for commentary, for columns on the financial crisis.