The Bridge to Where We Already Are
Categories: Leadership | Economics | Ethics
Posted by
Dean Zatkowsky
at
9:08 PM
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by Dean Zatkowsky
Politicians in recent years have promoted "a bridge to the 21st century" and decried a "bridge to nowhere." Pervasive fraud and corruption in business and government suggest a more apropos metaphor for the American people: "the bridge to where we already are."
The wealth of the Roaring Zeros was a debt-fueled illusion for everyone except a handful of financial engineers and their accessories on Capitol Hill. And thanks to the marketing prowess of those engineers and their minions in government, many people just want things returned to the way they were. But a re-animated business cycle will do what cycles do: return to where it began.
And it began with massive fraud and corruption. Financial instruments like collateralized debt obligations were explicitly designed to hide bad debts by mixing them into a package with less odorous loans. Wall Street calls that innovation. Decent people call it fraud. Wall Street says that turning the US Treasury over to a series of former Goldman Sachs executives brings expertise to public service. Decent people know it is a conflict of interest and a corruption of our government. Possessed of the same confident arrogance that Jay Gould and the robber barons of the nineteenth century displayed while pillaging the Treasury, Geithner, Paulson and Summers must be laughing so hard they soil their fine silk undies.
Wall Street's financial innovations transformed our economy into Capitalism's evil twin, where Social Darwinism degrades the invisible hand into a sociopathic pickpocket. Business people routinely operate with the understanding that anything not specifically forbidden by statute is ipso facto legal and ethical. And in a pinch, they can buy a change in the statute. Disguised as pillars of society, they are really savages that feel entitled to whatever spoils they can carry off.
A free market is the path to greater world-wide prosperity, but a market free of ethics is not free at all. When "Let the buyer beware" was revealed as the real law of our land, people stopped buying and froze the economy.
I hate to see my beloved Capitalism take the rap for incompetent regulators and mendacious bankers. The massive fraud and corruption destroying our economy are not evils of capitalism, but weaknesses of humanity. Our founding fathers created a nation of laws to address these weaknesses: "...in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."
To secure the blessings of liberty AND prosperity, the government must take a strong stand against fraud in the economy, unless the government itself is corrupt. Today, the Obama administration seems to be proving, as its electoral opponents feared, that elegant oratory is no substitute for firm action. Until words like "fraud" and "corruption" reenter our discussion of economics and politics, we cannot hope to remedy our current financial situation and come out of the experience a better country. Instead, we seem to have progressed from an administration devoted to the welfare of Halliburton to an administration devoted to the welfare of Goldman Sachs. If so, we've completed the bridge to where we already are, at a cost of several trillion dollars.
Dean Zatkowsky, managing partner of Dizzy One Ventures, LLC, is co-author of The Entrepreneurial Investor: The Art, Science and Business of Value Investing, and Two Billion Dollars in Nickels: Reflections on the Entrepreneurial Life.
Comments
Jana Gallus wrote on 04/19/09 10:54 PM
So if the massive fraud and current crisis are a result of humanity's weaknesses - IS Capitalism then a viable option? Or does the need for some regulation, even if exclusively in the juridical sense, make another form of organization necessary? Maybe one whose name is not pegged to the antiquated black- and- white scheme of the Cold War ("Socialism" and "Capitalism", obviously both at odds with the human nature of being fallible).
Benedict wrote on 06/02/09 11:38 AM
The "Honest Ethics" this site's authors speak of are in a situational distress: People spend their lives immersed in a for-profit priority culture; they rarely have contact with the other social priorities for human relational activities.
Honest dealing wins in relationships, over competition to divide corrupt spoils. But those corrupt do Flash in Media, & turnover so quickly, they seem the only success in the MarketPlace.
We are in the start of a computation-&-communication-amplification-revolution, [CCAR] which burbles one phase cost savings in our economy now & again.
Even after Hobbes articulated pyramidal organization, people lived lives under differing priorities. A Free Market-Place delivers a profitable relationship to both one's self and those one serves. A Hospice priority gave away care to the sick.
The revolution's seduction of profit during its one time phase of CCAR savings in the Medical Realm has changed everything. When I started in medicine, every employee of a hospital was offered the care of that hospital - whether a doctor or an orderly or a janitor. They were part of the caring team, and if they needed care, they got it. Today nurses are not covered by health care they provide, because they "cannot pay enough." (After being forced into long overtime hours, getting no benefits beyond a minimized check, many leave.) Who did this?
Profit-justifies-all types. Noting growing medical data & insurance audit costs, citing a one-time savings as to offer a MarketPlace Model of profit, Health Care was happy to get money it always needed, gained from operational savings. Notice the switch in the shell game?
A for-profit model destroys health care availability in California. If an institution loses its vision of priority, it's like Ali Baba's bride trading the old lamp of a geni for a shiny gilded one of profit. Once done, we, like she, only see by the light of the lamp we have. Once we had seven lamps. different priorites in each. It is better to re-light more lamps than to curse the darkness,
Sarah Trumble wrote on 04/19/09 9:09 PM
Nothing about the way the economy has been run in the last few years has been to "promote the general Welfare," and all efforts have been targeted to "secure the Blessings of Liberty to ourselves." But suddenly Americans are realizing how interconnected all sectors of the economy really are. Not only is each worker dependent on the general prosperity of his industry, but that of the sister industries, government support, oil supplies, and international demand. This makes the need for the bailouts more understandable, if not makes them an easier pill to swallow. I just hope that Americans soon realize how truly interdependent we are upon one another, but also on the rest of the world and global peace. Policy must now reflect the general welfare if we are to fully recover from this crisis and swing up in the business cycle.