Part of the problem is related to a change in the bankruptcy laws. This is documented in the 1992 book "America What Went Wrong".
Before 1978, bankruptcy laws were set up so when a business could no longer pay its bills, it declared bankruptcy. The business was dissolved, and its assets sold off and the proceeds given to the creditors.
In 1978, this was fundamentally changed to the idea that a bankrupt company could continue to operate with a judge acting as CEO. It's hard to imagine a person less qualified to run a huge corporation than a judge with absolutely zero expertise in business, finance, or the field the company is in. The result was ineptness, and a general looting of the company's assets by the lawyers.
The process of creative destruction was severely blunted by this, and the economy has suffered the consequences ever since.
(The book is rather hysterical, and its conclusions silly, but it well documents what the change in bankruptcy laws did.)
Before 1978, bankruptcy laws were set up so when a business could no longer pay its bills, it declared bankruptcy. The business was dissolved, and its assets sold off and the proceeds given to the creditors.
In 1978, this was fundamentally changed to the idea that a bankrupt company could continue to operate with a judge acting as CEO. It's hard to imagine a person less qualified to run a huge corporation than a judge with absolutely zero expertise in business, finance, or the field the company is in. The result was ineptness, and a general looting of the company's assets by the lawyers.
The process of creative destruction was severely blunted by this, and the economy has suffered the consequences ever since.
(The book is rather hysterical, and its conclusions silly, but it well documents what the change in bankruptcy laws did.)