Bogle: Capitalism has suffered 'pathological mutation'

[NeoConsSuck]

When John Bogle, a 50-year veteran in financial services, says capitalism is in trouble, there is only one proper reaction: You listen.

First, Bogle's qualifications: He founded the first index fund in 1975 (Vanguard 500 Index Fund). In 1999, Fortune named him one of the four investment "Giants of the 20th Century," and in 2004, Time magazine called him one of the world's 100 most influential and powerful people. A lifelong businessman (and Republican, he likes to add), Bogle is nothing if not the champion of idealistic capitalism.

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With power moving away from owners of securities, this new system has been led afoul by "grossly excessive executive compensation and stock options, part of an enormous transfer of wealth from public investors to the hands of business leaders, corporate insiders and financial intermediaries."

"In 1980, the compensation of the average chief executive officer was forty-two times that of the average worker; by 2004, the ratio had soared to 280 times that of the average worker (down from an astonishing 531 times at the peak in 2000)."

And in the matter of corporate scandal and fraud, it's not a case of a few "bad apples," Bogle writes, but of "a corporate barrel that itself is in need of considerable repair."

http://www.usatoday.com/money/books/reviews/2005-12-11-bogle-book_x.htm