In two earlier posts I explored capitalism and the ethically-challenged Gordon Gekko’s famous statement in the movie Wall Street, “Greed is good.” I concluded that not greed, but the desire for success and financial growth are good. When they turn into or result in greed, then we have a problem.
When Greed Isn’t Good
Greed (or the desire for success) is not good when it leads to unethical or criminal behavior. Ethics is often in the eye of the beholder, so what might we consider unethical or at least unwise behavior on the part of executives and companies?
-Executives taking government money to keep their company afloat because they failed to run it properly, and then paying themselves big bonuses;
-Executives earning big bonuses and stock options for short-term performance rather than long-term performance (which may suffer because of short-term thinking);
-Executives making obscene amounts of money but cutting back on employees’ benefits, laying off workers, etc. (In my work in business I observed executives taking care of themselves while not always doing right by their employees).
-Engaging in industrial espionage and the like;
-Insider trading and market manipulation;
-Gaining an unfair competitive advantage by unscrupulous means;
-Producing (or importing) dangerous, inferior, or poor quality merchandise.
-Lying, cheating, stealing, ripping off the consumers in various ways.
What’s The Answer?
Any system, including capitalism, can be abused. Capitalism is perhaps more prone to abuse because it can be free-wheeling, highly competitive, under-regulated, and greed-driven. So what’s the answer? Certainly we don’t abandon capitalism just because it has some problems. All other systems, as far as I can tell, have much worse problems.
Because of the human propensity to sin, markets have to be regulated. There is a balance between enough regulation to reduce the risk of fraud and too much regulation that stifles innovation and some risk-taking. Too much regulation and governmental interference and you have socialism. Too little, and you have anarchy.
Companies must be stringently audited to insure compliance with these regulations as well as with Generally Accepted Accounting Principles. Bernie Madoff’s firm was audited, yet fooled the auditors for years. I still don’t know how he got away with it for so long, but the message is clear: auditing standards and procedures must be improved.
So the unctuous Mr. Gekko had a point: our economy is based on the desire to improve your lot, to grow your wealth. But when that desire gets out of hand and results in unethical and even criminal behavior, then the system is being abused. Even if you aren’t a company executive or financial type, this is good advice for everybody: before you make any decisions or take any actions, check to see if what you are about to do is immoral, unethical, against the law, or even questionable. Ask yourself, would I want my mother to know about this? If the answer is no, don’t do it.