Friday, October 11, 2013

ECONOMIC INEQUALITY AND THE CHEATING CULTURE

By Ronald Fox


The notion that each American has the right to pursue happiness and the freedom to strive for a better life through hard work and fair aspiration lies at the heart of the “American Dream.” This idea, which drove the hopes and aspirations of Americans for most of the country’s history, begin to be transformed in the late 1970s when wealth began to steadily ascend to the top of the economic hierarchy. According to David Callahan, in his book, The Cheating Culture: Why More Americans are Doing Wrong to Get Ahead, the soaring income gap has given rise to a fundamental value shift in America: the time-honored commitment to community, self-reliance, fair play, truthfulness, compassion for the less fortunate, and rule-following, has morphed into selfishness, hedonism, greed, jealousy, and an excessive preoccupation with materialism. It has also inspired a growing number of American institutions as well as individual citizens to cut corners to get ahead.

The growing income gap has divided Americans and weakened our social fabric—undermining the notion that we’re all in this together and no person is above the law. The lavish and ostentatiously displayed lifestyles of the super rich, relentlessly displayed everyday on TV and in movies and magazines, has transformed perceptions of what it means to live the good life. Instead of aspiring to a standard of living relative to one’s peer group, the proverbial Joneses, a growing number of Americans now aspire to emulate the lifestyles of the rich and famous. Everyone wants not just a better life, but one filled with jet-setter luxuries. In an earlier time when there was less wealth at the top, Americans aspired to get a “fair share;” now they seem to want it all, whatever it takes. America is now engulfed in a greed-driven, money culture that has reshaped the moral climate of corporate America as well as the personal ethics of American citizens.

The quest for personal gain is of course the grease that makes a capitalist system work. It has become abundantly clear, however, that American businesses, especially the biggest ones, have carried this ethos to an extreme. All down the corporate chain of command, from owner to CEO, top management, and the lowest employee, everyone is pressured to do whatever it takes to advance the company’s bottom line. Profit growth boosts the company’s stock price, the main indicator these days of business success, and disproportionately pads the pockets of owners and top executives.

We’ve all witnessed the results of this “winner-take-all,” “whatever-it-takes,” mentality. Goldman Sacks bets against its own, toxic securities, while telling customers they’re good investments, its case boosted by the triple-A rating its client, Standard and Poor, gave it. To cut costs, a British Petroleum defies safety requirements for a deep sea oil rig drilling operation, leading to an explosion and oil leak, causing an environmental catastrophe. Enron purposely withholds supply to jack up price, leaving low-income people in the winter cold. The Xerox Corporation wildly overstates its earnings to mislead investors about the company’s profitability and thus boost its stock value. Managers at USIS tell employees to swiftly complete investigating security clearances for the government in order to reach its monthly revenue goal and get paid quicker, which results in a failure to flag and deny clearance to an emotionally unstable employee, who later shoots up a navy yard.

The case of the giant accounting firm, Arthur Andersen, is illustrative of how the drive to maximize profit has reshaped business practices in today’s money culture. As Andersen grew from a close-knit partnership to a global enterprise, pressure to boost profits became intense. The company’s executives pushed partners to become salesmen -- upsetting the delicate balancing act any auditor must perform between pleasing a client and looking out for the public interest. Its intensified bottom line pushed Andersen to, among other things, misrepresent the earnings of clients, which would allow the client to hide debt and report a favorable performance. Such conflict-of-interest practices ultimately contributed to the downfall and criminal prosecution of Enron, as well as Arthur Anderson itself, which lost its license to practice public accountancy.

I could go on and on, but you get the point. The obsessive drive to maximize profit by whatever means necessary has institutionalized corruption throughout the American corporate community: the larger the company, the greater and more impactful the corruption. Why? Because you can! It is rare that corrupt, corporate profiteering gets detected, let alone punished. And, if punishment is dished out, it is usually a fine that amounts to only a small fraction of a company’s assets. Even though companies occasionally do get punished for malfeasance, it is extremely rare when a top executive is held accountable for criminal behavior.

This isn’t supposed to happen, not because we expect company executives to be honest and public-minded, but because government is supposed to protect the public interest on matters relating to the economy and consumer protection. That’s why we have a regulatory system. Economic inequality, however, has eviscerated regulatory government. With regulators earning less in a lifetime than a large company CEO probably makes in a year, the regulatory arena is an unequal playing field. Whatever regulations the super rich are unable to beat back at the legislative level, either by preventing or weakening regulations, or ensuring regulatory agencies are underfunded, they can usually count on soft enforcement by government regulators themselves, either because of an institutional reluctance to go after fat cats, or because these people have their eyes on landing a job with the company they’re assigned to regulate. The evisceration of the regulatory system was on display recently when the EPA halted its investigation into fracking-related, water contamination in Dimock, Pennsylvania, Pavillon, Wyoming, and Parker County, Texas, after being pressured by the oil and gas industry. The lax regulatory system not only fails to stem rule violations, it actually incentivizes them.

The widening gap between the super rich and everyone else is also having a lethal effect on personal integrity in America. In a society where winners win bigger than ever before and losers struggle just to make ends meet, an increasing number of people will do anything to get ahead, including cheating. Students cheat on tests, tax payers on their taxes, citizens file false insurance claims, young people steal music and software from the internet, lawyers overbill clients, doctors prescribe a medicine not because it’s best for you, but because of a financial incentive from a pharmaceutical company, athletes take performance enhancing drugs, journalists plagiarize, and on it goes. Cheating to get ahead academically, professionally, or financially is rampant in our culture. And why not, there’s much to be gained by breaking rules. The people who climbed to the top of the income ladder in the last three decades found that cutting corners made it faster and easier to move up. With the rewards for winning increasing, people have become more willing to do whatever it takes to be a winner. It makes sense. Everyone’s doing it, it works, and it’s easy to get away with. If corporate crooks can steal millions and go virtually unpunished, why should ordinary Americans value obedience to the law?

In the early decades of the postwar period, there was comparatively little cheating in business and other sectors of the American society. To be sure, this reflected more effective government regulation, but more importantly a different set of values and ethics than the nastier, more cutthroat ones ushered in when the obsession with money and market ideology invaded American life beginning in the late 1970s. In the new climate, behavior that would have been scorned in earlier periods as despicable greed, duplicity, and criminality became easier to rationalize because it was usually rewarded, often highly so. Long-standing social norms and professional cultures has given way to a cheating culture, which intrudes on business, accounting, medicine, academia, publishing, journalism, sports, and other fields. It has also engulfed even our most upstanding, law-abiding citizens.











1 comment:

  1. Yes - all symptoms of advanced Capitalism. We are suffering from end-stage greed. ST

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