Plunder, Poorism And Profit
By Fazal M. Kamal
10 April, 2014
Countercurrents.org
This is, unquestionably, an ancient question: How much profit is enough profit? Obviously, when profit maximization is the top priority, sometimes the only objective, it may be attained regardless of the costs society has to fork over. This, of course, is no secret; and is practiced with great gusto in most countries where success is measured purely in terms of Mammon’s lust.
Here’s one instance when the pursuit of happiness morphs into pursuit of sheer profit. “Laura Christian's daughter was 16 years old in 2005 when the Chevy Cobalt she was driving hit a tree. The air bag didn't deploy, and Amber Marie Rose was killed. In the last two months, General Motors has recalled more than 2.5 million vehicles worldwide after linking defective ignition switches in similar cars to air bag failures — and to 13 deaths and 31 crashes. And there are indications GM approved the switches in 2002 even though it knew they did not meet specifications.” (USA Today)
Similar issues have been known to occur with other manufacturers and producers, and the primary cause has been the luster of the Bottom Line. Factotums of corporations often cite the pressure to satisfy shareholders as the main reason they have to go to such lengths, including certainly steps that can easily endanger the lives of consumers. It seems companies must demonstrate that every year the profit is moving unrelentingly northward.
For example: if a commercial enterprise earns two units of profit the first year, the following year it has to garner more than two, the year after that it has to be more than that, ad infinitum. If in the third year the number declines to less than the figure for the previous year then it’s believed the company has incurred a loss! Evidently, this is irrational and some may even describe this line of reasoning as absurd. But in the real world of wealth accumulation, this is the reality and more significantly acceptable.
That naturally brings us to Wall Streeters. In an article in The Guardian Suzanne McGee says: They swagger. They strut. They show off. They tweet. … Some of them even compare notes over which TV studios have better green rooms, coffee and makeup artists. (Sad, but true.) …“The system glorifies stars, and billions and billions of dollars are invested on what they do – or what they say they are doing,” McGee quotes Daniel Wiener, CEO of Adviser Investments of Newton, Mass., as saying. And adds, “The system is geared to creating and promoting those stars, too…”
And the system also creates, apparently, people like Jordan Belfort, who wrote about his exploits while serving time in what maybe euphemistically called a low-security prison. And his written life story in turn was utilized to make the very successful movie The Wolf of Wall Street, which exhibited to what outrageous lengths he went to generate money and a lifestyle merely because the existing system allowed him to do so.
Meanwhile, here’s something else to chew on: Wealth in the US rose $34 trillion since the recession though 93 percent of the people got almost none of it. According to a report, “That's an average of $100,000 for every American. But the people who already own most of the stocks took almost all of it. For them, the average gain was well over a million dollars -- tax-free as long as they don't cash it in.”
In addition, another report has this revealing quote: “Like racism – there is poorism. And [businesses] who service low income people are tainted with this sort of prejudice that they must be doing something unseemly down here,” says Joe Coleman, president of RiteCheck, a check-cashing chain that services low-income communities throughout New York City.
All this against the well-known background of the US government helping the financial institutions out of the hole they had dug for themselves. And the rescue came from the taxpayers’ money though the majority of the people received barely any assistance, if at all, while Wall Street honchos not only continued to be conspicuously generous with themselves whilst getting aid from the state but also persisted with the practice of unabashedly showering lavish perks and privileges and humongous bonuses on their star personnel.
Commenting on the now-famous bailouts Sita Slavov of the American Enterprise Institute says in a recent article, “… focusing on whether the bailouts have turned a profit misses the point. The real cost of the bailouts is that they demonstrated the willingness of the government to save large financial institutions that get themselves in trouble. In doing so, they have created a moral hazard problem, giving banks an incentive to be even more reckless in the future.” After all, avarice and ethics have never cohabited comfortably ever.
She goes on to state: “There's evidence to back up this claim. In a study forthcoming in the Journal of Financial Economics, Ran Duchin and Denis Sosyura, both from the University of Michigan, found that banks began making riskier loans and investments after being approved to receive TARP funds. Viewed by itself, this increase in risk-taking doesn't necessarily reflect moral hazard. But a few additional pieces of evidence suggest that moral hazard played a role in the increased risk-taking.”
The economist-commenter concludes by asserting: “Many economists believe that the benefits of the bailouts – limiting the financial meltdown and preventing a much deeper economic downturn – outweighed their costs, including the hidden cost arising from moral hazard. And they might be right. But focusing on that question distracts from the real underlying problem: we have a deeply flawed system in which policy makers and the public are essentially held hostage by financial markets and ‘too big to fail’ institutions. That's not free enterprise; that's bullying.”
The chief point of all this is that what is now practiced and known as free enterprise has lost its moral anchoring. But if a nation or society has to remain robust and healthy and retain its humanism some modicum of ethics must temper the relentless hunt for ever-increasing mounds of lucre at any cost. This irrationality just cannot continue to dominate the human enterprise. At least to some acceptable degree the welfare of the majority has to be computed into the equation. In spite of all its inadequacies and deficits the Obama administration, by diligently attempting to raise the minimum wage and injecting some sanity in the inequality of incomes for men and women, is trying to bring a sense of equilibrium, albeit in comparatively miniscule increments.
The writer has been a media professional, in print and online newspapers as editor and commentator, and in public affairs, for over forty years.
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