Sometime over the past couple decades it feels like people appear to think it’s OK to take advantage of people to make themselves wealthy. From late night infomercials promising “my book cures cancer”, to the wealthiest elite who seem to have no morals whatsoever when it comes to trading, investing, and writing big checks to themselves.
In fact, I’d go so far to say if people had a moral compass and weren’t so ridiculously greedy we would not be in the financial disaster we’re in now.
Why did this come to pass? What changed in American society over the past few decades to say, “Get rich quick even if it hurts others is OK”?
The number of sleaze-bags who are ridiculously wealthy is depressing and no length of jail-time is enough for people who have destroyed the livelihood of so many.
I haven’t been sleeping well lately, and one thing that gets me is the late-night commercials. I can see how elderly can be so easily taken advantage of by these schemes and I do NOT understand why they are allowed to advertise en masse’ when they’re obvious scams. These people prey upon the sick, the elderly, or those looking for hope.
I agree with you jpinard, but Kael is also correct. This type of stuff has always been around. Fifty years ago, instead of advertising on cable, you would get salesmen at your door.
Oh, and greed is definitely one of the major reasons we are in this financial mess.
Financial managers and CEO’s are not becoming more corrupt. If anything, they are becoming less corrupt. If for no other reason than the emphasis on internal/external controls over the past decade. Just the media attention and impact of the bad ones have been magnified over the past couple years.
There have always been bad people, there will always be bad people. CEO’s, etc, just tend to be smart enough (or have the skills) to get them ahead in business. When bad people get the power to do bad things, stupid shit like these scandels happen.
Financiers over Producers (this is the biggest one today).
Liberal ideology that free market = political freedom (Clinton years).
Conservative ideology that free market = free of government regulation (Reagan / Bush).
It’s reflected in, (this is going to be hard for me to relate properly) i don’t know how you’ve seen it or heard it, but things like talk radio, NASCAR ads, ect, in which these small time radio hosts or B grade drivers are not only pitching some product like a sleepnumber bed but are self-consciously proud of their salesmanship. Choose your sleep number! Try gold bond powder.
Celebrities have always pitched products for decades, but there is this wierd new, southern-y, conservative-y, folksy, “look i’m working hard and paying my own way” vibe in minor celebrity ads today.
A lot of times these products and their marketers do get turned in (you’ll notice that the famous guy who did the male product enhancement ads is not on the air anymore because he’s been charged by the government). Unfortunately as soon as one is swatted down a dozen more show up. Jason M. posted an interesting analysis on why some of these sleaze balls get away with what they do. When they are prosecuted, many of them don’t get significant sentences because they’ve never been in trouble with the law, the crime they committed is not a violent one, and so they get probation or a minimal time in jail. This makes it more attractive I think to pull off product scams such as the ones you see on late night TV.
I don’t think society changed all that much in terms of personal attitudes. Changes were more mechanical than personal, and human nature just took advantage of the changed circumstances.
So one thing that changed was an increasing awareness that enormous profits were possible in the financial markets using newly available techniques (inducing more greed than usual as a result), along with deregulation and a hands-off attitude from government suggesting that it was appropriate to take risks with other people’s money that could lead to such profits.
I would also say that some attitude shifts seemed to take place as regards officers and their importance to corporations. I think boards used to be more important, and used to reflect ownership more directly, and that officers used to be regarded as less important, and commanded smaller salaries and bonuses. With less stature associated with officer positions, and more board oversight, they had less scope for greed, malfeasance, and peculation in the past. But today, boards are often composed primarily of the officers themselves and stock-free honorary directors who are officers of other corporations, and so with no ownership stake, and no distinction between salaried employees and owners, the oversight that was formerly imposed on officers has to a large extent evaporated.
So with no oversight from either government or ownership, executives who manage large amounts of money, who see others around them making insane profits and getting insane bonuses and salaries, are naturally induced to do what they can to get what they can while the getting is good.
But I daresay that during some previous bubbles that attitudes must have been similar among investors, corporate scammers, and the like. I mean, really, a Tulip Bubble? Who the hell is going to invest in tulip futures? But that’s what they did…
I still think Krugman had it about right with his 2002 article in the NYT magazine.
The short version is “the 1930-1970 period of values and economic structure in the United States - the New Deal era - has been replaced with a return to the robber-baron ethos of the 1920 and before era.”
When I was a teenager growing up on Long Island, one of my favorite excursions was a trip to see the great Gilded Age mansions of the North Shore. Those mansions weren’t just pieces of architectural history. They were monuments to a bygone social era, one in which the rich could afford the armies of servants needed to maintain a house the size of a European palace. By the time I saw them, of course, that era was long past. Almost none of the Long Island mansions were still private residences. Those that hadn’t been turned into museums were occupied by nursing homes or private schools. For the America I grew up in – the America of the 1950’s and 1960’s – was a middle-class society, both in reality and in feel. The vast income and wealth inequalities of the Gilded Age had disappeared. Yes, of course, there was the poverty of the underclass – but the conventional wisdom of the time viewed that as a social rather than an economic problem. Yes, of course, some wealthy businessmen and heirs to large fortunes lived far better than the average American. But they weren’t rich the way the robber barons who built the mansions had been rich, and there weren’t that many of them. The days when plutocrats were a force to be reckoned with in American society, economically or politically, seemed long past.
Daily experience confirmed the sense of a fairly equal society. The economic disparities you were conscious of were quite muted. Highly educated professionals – middle managers, college teachers, even lawyers – often claimed that they earned less than unionized blue-collar workers. Those considered very well off lived in split-levels, had a housecleaner come in once a week and took summer vacations in Europe. But they sent their kids to public schools and drove themselves to work, just like everyone else.
But that was long ago. The middle-class America of my youth was another country.
We are now living in a new Gilded Age, as extravagant as the original. Mansions have made a comeback. Back in 1999 this magazine profiled Thierry Despont, the ‘‘eminence of excess,’’ an architect who specializes in designing houses for the superrich. His creations typically range from 20,000 to 60,000 square feet; houses at the upper end of his range are not much smaller than the White House. Needless to say, the armies of servants are back, too. So are the yachts. Still, even J.P. Morgan didn’t have a Gulfstream.
As the story about Despont suggests, it’s not fair to say that the fact of widening inequality in America has gone unreported. Yet glimpses of the lifestyles of the rich and tasteless don’t necessarily add up in people’s minds to a clear picture of the tectonic shifts that have taken place in the distribution of income and wealth in this country. My sense is that few people are aware of just how much the gap between the very rich and the rest has widened over a relatively short period of time. In fact, even bringing up the subject exposes you to charges of ‘‘class warfare,’’ the ‘‘politics of envy’’ and so on. And very few people indeed are willing to talk about the profound effects – economic, social and political – of that widening gap.
Yet you can’t understand what’s happening in America today without understanding the extent, causes and consequences of the vast increase in inequality that has taken place over the last three decades, and in particular the astonishing concentration of income and wealth in just a few hands. To make sense of the current wave of corporate scandal, you need to understand how the man in the gray flannel suit has been replaced by the imperial C.E.O. The concentration of income at the top is a key reason that the United States, for all its economic achievements, has more poverty and lower life expectancy than any other major advanced nation. Above all, the growing concentration of wealth has reshaped our political system: it is at the root both of a general shift to the right and of an extreme polarization of our politics.
The opening post at his blog has more along these lines.
Focusing on CEO’s is simplistic. There is a large segment of the population that simply thinks all is fair when it comes to making money. Most really successful businesspeople fit that description, though there are some that vary.
The thing is, this crap keeps happening and each time it happens it becomes more cataclysmic. It’s like we don’t learn from history. and the people who really pay are us. You never see one of these mega executives lose everything and are forced to live in a trailer park for the rest of their lives.
[I]<<edit>>
4 posts went up while I was writing this. Will read that article Jason.[/I]
Re the Krugman article: Yes, that makes sense too.
The increasing division of the wealthy money-manipulators from working and even professional classes has certainly contributed to the situation.
Back when there was a 70% tax rate for people with really high income, I think the wealthy were defined as those who already had a lot of money, since it was awfully hard to become super-rich just through compensation, you could only have a prayer through ownership.
Nowadays, CEOs can become immensely rich due to their salaries and bonuses with no risk and no investment at all, and with a 35% tax rate and lots of tax shelters, they keep much more of it. I don’t attribute everything to the tax changes, and I’m not even saying that super-high taxes are good for really high income people (they may be, not sure about that), but times have certainly changed in terms of compensation, taxes, and how the money flows around.
The thing is, this crap keeps happening and each time it happens it becomes more cataclysmic.
That is because as our society becomes less isolated and more interconnected, people’s actions influence those around them more and more. Technology tends to make things happen on a larger scale.
Commercials are definitely a bane. I think they’re symptomatic of what’s wrong with society, even if they aren’t a root cause. I don’t watch commercial TV at all, but I listen to the radio while driving. They get away with a lot of horrible shit these days – lots of ridiculous lies about products, especially unregulated drugs, but for all kinds of other things too. In a society that cared more about ethics, honesty, and that regulated commerce in a sane and rational way, there would be fewer and far less egregious advertisements.
CEOs are like Martha Stewart; visible and easy to hate. Hedge Fund managers can make a cool 1b a year, yet their names will never be heard outside the financial world, as they deal as intermediaries between the world of the middle class and the world of capital, or are so far shifted away from day-to-day capital that they’re nearly invisible to the world of the Morning Show crowds. I think that’s the lack of attention Krugman asserts is being underreported; the titans of industry past had everything built high and large - skyscrapers, railroads, industrial and commericial interests - the royalty of industry.
This new royalty of money exists outside the world of production (financial managers, law firms, speculators, ect) , have no buildings or railroads or other signposts, and can own fleets of planes and yachts and private beaches, and exist, travel, eat, marry, and live in a rarified world virtually detached from the lives of the common man in physical and metaphysical space. Anonymity and exclusivity are more the codes of the filthy rich than before, and the goal is not absolute civic authority but complete civic detachment.
This is a big part of it also. For instance, you didn’t hear about Nigerian scams before the mainstream internet. Why? No one in 1994 would have believed a phone call from Nigeria. More people interconnected = more opportunities for scams = more opportunities to expose and cover scams.
Actually, I think the same number or even more (because of lack of exposure to such cons) would have believed in a phone call back in '94. Your last sentence is much more to the point. A phone call from Nigeria back then (or even from down the street) would be relatively expensive, slow, and easy to trace compared to email. Mass and scripted sending of email enabled cheap and easy cons with very low uptake rates that in the past would have been prohibitively expensive to attempt.
