In November, I told the story of DemeTech Corp., a family-owned manufacturer of surgical products in Miami. Although the company had never made personal protective equipment, when the pandemic hit last spring it hired around 600 workers and invested several million dollars to get into the PPE business. It was soon manufacturing N95 masks and other equipment that hospitals needed urgently.

Sales took off. Because of the higher labor costs in the U.S., the company’s masks were more expensive than those made in China. With PPE so difficult to come by, buyers didn’t care. Yet by November, when I interviewed the company’s vice president, Luis Arguello Jr., Chinese companies had started winning back some of that business.

It was a business—like so many manufacturing-based industries—that the Chinese had largely taken over during the previous two decades, according to Marc Schessel, a hospital supply-chain expert. With more and more hospitals owned either by private equity firms or for-profit corporations, “there was a lot of pressure to lower costs,” Schessel said. By the time the pandemic hit, 3M Co., which had invented the N95 mask, was the only significant U.S. manufacturer. Companies in China, Malaysia and Vietnam made most of the PPE used in the U.S.; these companies had become critical components in the hospital supply chain. When that supply chain broke down in the wake of the coronavirus, it exposed a significant U.S. vulnerability.

I was surprised to learn then that as the N95 shortage eased a bit—in large part because hospital professionals were reusing masks meant to be discarded after one use—distributors and hospitals had reverted to buying from Chinese companies. They were putting price ahead of stability, just as they had before the pandemic.

“Despite everything,” I wrote at the time, it appeared to Arguello that “distributors and hospitals care more about saving a few pennies than ensuring a supply of U.S.-made masks.” Arguello said that if the government didn’t get involved, none of the U.S. companies that had begun manufacturing PPE—which they had done to help the country through this emergency—were likely to stay in the business. This not only had national security implications, it also meant the loss of thousands of good-paying jobs that DemeTech and others had created during the pandemic.

In the weeks before the inauguration of President Joe Biden, I kept thinking about DemeTech. Biden has a tremendously ambitious agenda, but his twin priorities, as he has said repeatedly, are to get the pandemic under control and to fix a coronavirus-battered economy.

In the short term, he’ll be pushing a $1.9 trillion stimulus package aimed at helping Americans and businesses survive the pandemic. His stimulus bill includes doubling the national minimum wage to $15 an hour. He wants to raise the top corporate tax rate to 28% and impose an alternative minimum tax on companies with more than $100 million in net income. And, of course, he has talked repeatedly about creating the kind of middle-class jobs that characterized the U.S. economy in the decades after World War II.

These are all worthy and important objectives. But if the Biden administration is serious about transforming the economy, it needs to go further. It needs to enlist U.S. industry in a push to change the values that now dominate American capitalism. It needs to help instill values that, for instance, give more weight to having domestically made hospital equipment over saving a few dollars. To put it another way, the U.S. needs to reclaim the kind of capitalism that existed before the 1980s, when the financialization of American business—and the belief that Wall Street was the only thing that mattered—began. And maybe, just maybe, the experience of the pandemic can help show the way.

The economic story of the last half century in the U.S. has been told and retold, so let me review it quickly. It begins with Milton Friedman’s famous 1970 New York Times Magazine article in which he scoffed at the idea that business has social responsibilities and argued that a corporate executive’s primary responsibility is to “his employers”—the shareholders. By the 1980s, Michael Jensen, a professor at the University of Rochester and later Harvard Business School, created an academic framework that justified “maximizing shareholder value,” as focusing on share price would soon be called. Corporate raiders like T. Boone Pickens and Carl Icahn used Friedman’s creed and Jensen’s framework to justify their attacks on companies with what they considered underperforming stocks.

By the 1990s, corporate America was all in. Increasing a company’s share price became all important, not least because chief executive officers held stock options that could make them incredibly wealthy. For too many companies, pleasing Wall Street mattered more than pleasing employees or even customers. Stock buybacks became one tool for keeping Wall Street happy. Layoffs were another. Private equity firms became dominant institutions, borrowing billions to pay shareholders when they took companies private.

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