The System Looks Like a Con Game, With Most of Us Victims

VW knowingly installed software that cheated on emissions tests. G.M. knowingly sold defective ignition systems that resulted in at least 124 deaths and hundreds of serious injuries, and for years did nothing to fix them. Last May we learned that five giant banks knowingly manipulated the $5.3 trillion-a-day currency exchange market in the biggest price-fixing conspiracy in modern history. Several years ago Wall Street banks made wildly risky investments and deceptive statements that led to the 2008 crash, a taxpayer-funded bailout and, for millions of Americans, the losses of jobs, savings and homes.

But corporations didn’t really do any of these heinous things. Despite what the Supreme Court says, corporations aren’t people. Specific executives did them or failed to stop them. Yet no top executive has been jailed or even indicted for any of this. To the contrary, in most cases their salaries and stock options have soared.

The entire economic system is starting to look like a con game, with the spoils going to the top and everyone else getting conned. Fifty years ago top executives received about 20 times the pay of average workers; now, it’s 300 times. Corporate lobbyists and campaign bundlers are overrunning Washington and state capitals, creating laws that increase profits and the pay of top executives while gutting laws that constrain profits and top pay. And even when executives flout the laws in place, the federal cop on the beat doesn’t enforce them. Small wonder the public thinks government is in the pockets of the powerful. In 1964, just 29 percent of voters believed “government is run by a few big interests looking out for themselves.” By 2013, 79 percent thought it was.

When the game appears rigged in favor of those at the top, everyone else is more likely to view smaller-scale cheating as justifiable. After all, if the big guys can cheat and rake in a fortune, what’s wrong with a little stealing and pilfering from the office, rigging the time clock, over-billing a customer or client and skimming off some of the profits, getting or giving a small bribe or kickback on a contract, finagling with the books, or cheating on income taxes?

Plenty. The cumulative effect of such dishonesty generates huge losses for the entire economy. Companies tighten rules, giving all employees less discretion; time-consuming screenings and security checks are imposed; accounts must be carefully reviewed; more legal steps and picayune procedures are instituted; contracts are more complex. Across the economy, red tape multiplies with the profusion of finagles it seeks to contain. The only beneficiaries from the resulting economic sclerosis are the multitudes of security staff, screeners, accountants, auditors, inspectors and lawyers whose services are increasingly in demand.

The real threat to capitalism is no longer communism or fascism but a steady undermining of the trust modern economies need for growth and stability. When most people stop believing they and their children have a fair chance to make it, while the rich and privileged are not held accountable for bad behavior, the tacit social contract societies rely on for voluntary cooperation begins to unravel. In its place comes subversion, large and small. Economic resources gradually shift from production to protection.

Top corporate executives who knowingly violate the law, or intentionally look the other way when those below them do, erode the moral foundation on which capitalism is built. In so doing, they wreak untold damage to the economy and society. They must be held personally accountable.

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