Integrity of our Business Community

We have a serious problem with integrity of American business and industry and it seems to be growing almost exponentially. This is a tough issue to discuss publicly, because any criticism is easily construed by those in the business world as using “too broad a brush” of criticism; and, in large measure they are probably right. I would like to think that most businesses and industries operating in this country are honest, honorable, and have the best interest of their customers at heart. But, there is a growing body of examples where this is not the case. And, some of these examples of failures like our financial industry (Wall Street), energy industry (including off shore drilling), military/industrial complex, auto manufacturers, food processors, etc., are huge and the lack of integrity has had serious negative ramifications on our country’s economy, ecology, reputation, and safety.

This is important because it strikes at the heart of our preferred economic system – the free-market/capitalistic system. Most people understand the underlying driving motive in this system – the need to make a profit. The system works best if it is unencumbered by government limitations and regulation. The ideal situation is where competition amongst those in a business serves as a self-regulating process resulting in good products, good service, growth for those doing it best, and good paying jobs for their workers. And yes, for those who are willing to work hard, have the courage to take the risk, have the ability to properly manage their business, have the intelligence and skills to innovate, the end result is accumulation of wealth. This is how it is supposed to work and we hear a constant litany from supporters of this system championing this theory.

The problem is that there is more and more evidence that the system too often works correctly only in these supporter’s imagination. It sounds so good; claims are made that it is what made this country great, and in their view any criticism of the system is un-American. Too often, any attempt to reign in the capitalistic system to make it safer, more honest, and just is branded as socialistic, communistic, fascist, or whatever terminology that has a strong negative connotation.

But, it seems we wake up everyday with another crisis resulting from abuse of the free-market/capitalistic system. And, when we delve into the reason for these crises, we find that they are the result of greed, illegal activities, unethical practices, shoddy management, abuse of financial and political clout, lack of competition, desire to maintain a small group’s status quo, etc.

We’ve faced very similar crises historically and we’ve worked our way through them. The early industrial revolution in the late 1800’s and early 1900’s was one period when abuses were legendary. Situations where “Robber Barons” controlled whole industries vertically – steel, railroads, and oil are examples. It was rife with abuses like child labor, unsafe working conditions, de-facto slavery of workers, vulgar accumulation of wealth in the hands of a few, control over the political processes (whole state legislatures and many U.S. Congressmen were “bought”), poor and unsafe products, and lack of competition. Two factors saved us. One was that the industrial revolution was in its infancy so that innovation overcame the status quo so quickly that we constantly stayed ahead of the game. The second factor was that the national government courageously stepped in and at least tempered the abuses.

We had a second period, the Great Depression of the 1930’s, where the capitalistic system failed us again. But once again, circumstances shined on us. We had government leaders with the courage to correct abuses, we had enough people with soundly based integrity and can do attitudes, innovation once again played a big role, and a tragic but justifiable war effort (WW II) gave us a unified sense of purpose to pull us together.

I don’t have the final answer of what it will take today to save some of the major tenets of a free-market/capitalistic system. One thing for certain is that it will require government involvement. This, regardless of what some claim to the contrary, is a must. The national government is the only one with the political and economic clout to take on the abuses that are inherit in the capitalistic system. In today’s society, government is not capitalism’s enemy, it is capitalism’s savior from itself. The government is after all our collective selves. The tricky thing is that it will be a narrow line to walk to use the government’s power to save the free-market/capitalistic system. Government can get too expensive and too powerful and stifle the free-market system – we need to guard against this. But, if government is too small, too weak, ineffective, or preempted by big business and industry, it can become a tool of the privileged promoting their interests at the expense of the people, resulting in a plutocracy – government by the wealthy.

History has proven that a democratic/republican system of government and a long term healthy economy can only survive if there is a strong middle class economically. Statistics clearly indicate that we are sliding away from this and part of the reason for this is that an inadequately controlled free-market/capitalistic system combined with a weak or special interest controlled national government are not serving our interests very well. They have the resources to sell their story and the American people had best be prepared to protect their own interests by insisting on a just and balanced system. And, who we vote into office will in large measure determine the result.