The corruption and the investor exploitation, so widespread in the business world today, are being denounced by everyone and understood by almost no one. What is most exasperating is the robotic ignorance with which our U.S. Attorneys, our politicians, and our professorial cheerleaders in the colleges and universities approach this issue.
The rash of corruption, not only on Wall Street, but throughout the entire economy today is said to be inherent in the capitalist system itself. The system of free enterprise naturally leads to malfeasance, our scholars tell us. And thus it is the capitalist system that must be restructured with much stricter regulation from Washington. A laissez-faire marketplace is dangerous because it unleashes individuals to exploit their fellowmen with greed and misrepresentation. What are needed are larger and more powerful bureaucracies to oversee this potential danger to the people. Prosecutors must be given more leeway and less strict guidelines in legal procedures. Bureaucrats must be given increased funding. The State must be enhanced.
This view is totally upside down! Corruption in the markets is not the fault of capitalism; it is the fault of government intervention into capitalism! Government is not our savior; government is our biggest and most nefarious corrupter.
Listen to what Mr. P. Ogden writes about this issue recently: “So Mr. Greenspan wants the corporations to re-establish trust in the markets…by straightening out their ethics and bookkeeping. Well what wonderful role models corporations have in Mr. Greenspan and the FED, and the US Federal Government (especially the Treasury).
“These institutions and their chief executives have for years been actively involved in ‘influencing, supporting, making orderly’ and in recent years flat out FIXING the markets. Through their departments and practices they interfere with the major stock indexes at key junctures, cap the precious metals markets, run the printing presses at prodigious rates, cancel 30 year government bonds, make extended and excessive rate cuts to manipulate interest rates, manage the financial news, mount astounding levels of debt, and constantly ‘adjust’ the official inflation and employment indicators to downplay any less than positive news.
“These unethical and unwise tactics remove the warning canaries from the economy, create bubbles in stocks, bonds, credit, housing, debt, the US dollar and substitute their personal views and goals for the discipline of the market. And then Greenspan has the audacity to tell corporations to clean up their act! Yes, we’ve been poorly served by many of our major corporations but the standard has been set by our federal government and the Federal Bank. The US public has been duped and misguided in the most important and fundamental ways by the latter, not the former.” [LeMetropole Cafe, April 16, 2004]
Amen! The real criminal today is our omnipresent Federal Government! Its criminality permeates every facet of our lives through its inflation of our currency that insidiously steals our wealth; through its damned lies and statistics of hedonic calculation; through its brazen use of the PPT to manipulate the prices of equities and precious metals; through its egregious fabrication of intelligence reports to justify war and global hegemony; through its violation of our right to equality under the law via its progressive income tax; through its buying of millions of votes with pork and privilege to perpetuate its power; and most despicable of all, through its relentless proliferation of cancerous debt which must reduce the future lives of our children to poverty and misery. The list of corrupt acts is endless. The criminality of our “Washington protectors” is eroding our society like drug lords decimate a clean and thriving neighborhood. Devastation and depravity spring up where freedom and hope are supposed to prevail.
Leave the Marketplace Alone
The important point to grasp about all this is that corruption is not naturally inherent in the free-market as our intellectuals and our politicians so disingenuously tell us. Capitalism is being used as a scapegoat to further enhance the power of government by leftist ideologues and political one-worlders. Capitalism is freedom, and thus it must be smeared as a system of economic organization if the modern day power elites are to succeed in attaining their authoritarian goal of world domination. Economic freedom is not by nature corrupt. On the contrary, it is corrupted by political men of zeal who have lost their moral compasses in a nihilistic modernity that worships the power of raw pragmatism. Let’s take a look beneath the surface events to the real roots of corruption.
Left alone in a true free-market, businessmen must sink or swim, produce at a profit or get into some other business. Where there are no government subsidies to prop one up and no government price controls to protect one from competition, the best product for the lowest price wins the consumer to his door. Bribery gains no buyers. Only quality products and lower prices will. But enter the government with its special privileges, its protective legislation, its arbitrary licensing procedures, its endless regulatory boards — and you have set the perfect stage for corruption.
Few businessmen will resist the temptation to urge, cajole, endlessly lobby, and eventually bribe their elected officials into handing out subsidies, or passing protective legislation to safeguard their markets if those elected officials have the power to do so. This is especially so when such businessmen are taught from birth that subsidies to failing businesses and favoritist legislation for their markets are the “proper duties” of a government.
When politicians hold the power of life and death over a business because of legislative controls they decide to pass, or a license they will or will not grant, then businessmen must become corrupt in order to survive. The government, through its power of intervention (and the arbitrary use of that power), has forced them to take part in political payoffs, or go out of business.
A centralized government controlled system must, by its nature, evolve into a sordid game of lobbying, bootlicking, favors granted and bribery, with its rewards going to the sycophants, the inept and the amoral — in contrast to the free-market system of competition, that rewards skill, efficiency, innovative daring, and ever increasing productivity.
Thus, the answer to the corruption, so rampant among our elected officials and corporate heads today, is all too obvious: Get the government out of the economy! End the “mixed-economy” of corporatism and statism, and restore the Founders’ vision of a laissez-faire economy. This means ending the “economic fascism” that is taking over our country.
Mr. Greenspan, you are part of the largest, most corrupt and criminal agency in America, and you have the effrontery to tell corporate America to clean up its ethics! This is rank hypocrisy! You and your government friends are destroying the entire foundation of a free society with your wanton disregard for the sacred principles of our Constitution, the eternal laws of Nature, and the most basic tenets of economics. You know very well that, as slimy as some of our corporations are, they by themselves are not the cause of our crashing and decadent society. You know very well that it is the MANIPULATORY policies that you and your bureaucratic comrades are systematically carrying out that is our undoing.
You know that corporations and banks become threats only by combining with the power of government bureaucracy to receive special privileges — the very power that you so exuberantly wield from Washington. You know that this kind of “corporate-state merging” is ECONOMIC FASCISM. You know this because you and your Objectivist colleagues wrote extensively about it back in the sixties. So Mr. Greenspan, let us not hear from you about corporate responsibility, or capitalism, or freedom. You represent a criminal agency — the Federal Government — that cares not one whit about responsibility, or capitalism, or freedom.
Lest I be misunderstood here, this is not an appeal for economic anarchy. Government has a definite role to play in society. Its duties are to punish criminals who violate the laws of the land, and this means businessmen like Tyco’s Dennis Kozlowski and Enron’s Jeffrey Skilling. But it means that the government should stay out of the area of attempting to control the commerce and the money of a nation. Men work far more productively and honestly when their decisions are left unencumbered to be judged by the rigors of the marketplace and not by the corruptible souls of regulatory bureaucrats. Their efforts are far more magnanimous when their wealth is not stolen from them through currency debasement.
The Moral Factor
Government intervention thus lies at the root of the economic ruin sweeping through our society today. But there is another vital dimension of this evil that needs to be understood. Government intervention is only one-half of the problem. The other half of the blame for today’s corruption belongs in the realm of philosophy, most specifically to the concept of moral relativism that has worked its way into the fabric of our society during the 20th century. Much of what we are reaping today stems from decades of teaching to Americans the doctrine that there are no objective rights and wrongs, that ethics is a matter of personal and cultural preference.
As an example of this, let’s scrutinize further the stock market meltdown of 2001-2002 and its accompanying accounting scandals on Wall Street. Collectivists are converging upon this issue like fleas to a filthy dog to lay the blame on “unbridled capitalism,” and an ignorant media is powerless to dispute their false explanations.
The fervency of the collectivists on this issue (from the academy, to the pressroom, to the courtroom) can be summed up with a bit of Shakespeare: “Me thinks thou doest protest too much.” These institutions of our establishment are screaming bloody murder about the Enron-Tyco-Wall Street accounting scandals when it is collectivism itself that has brought such tragedies about. Is there a bit of scapegoating going on? Me thinks so.
Collectivists are concentrating on just the slimy individual perpetrators and ignoring the basic causes of such corruption. And there is a good reason for this ignoring of the deeper causes and concentrating on only the actual perpetrators. The deeper causes can be traced to the philosophy of collectivism and its economic manifestation in Keynesian economics. We must always ask what are the root causes? Why did such a seedy lot of entrepreneurs spring up on Wall Street? Is this the real nature of free enterprise? Or is it the inevitable result of instilling false moral and economic truths into several generations of Americans?
It is this writer’s view that the roots of the accounting scandals lie in collectivism’s two most fundamental policies — 1) the teaching of moral relativism throughout our schools, and 2) the inflation of the money supply throughout our economy. When the Federal Government intervenes into the economy to flood it with billions of dollars in fiat money (which it did throughout the 90’s), a large portion of that money flows into corporate CEO hands via the stock buying public. When we teach several generations of Americans the ethical dictum that there are no objective rights and wrongs in life (i.e., moral relativism), we create large amounts of corporate CEO’s without any inner moral compasses to guide them in their decisions. Corporations, run by men with no objective morals and flush with the false paper profits of Keynesian economics, will not be rigorously straight-arrow in their financial dealings — that you can be sure of.
Fail to instill moral compasses into businessmen’s minds in their youth, then stuff their pockets with excessive paper dollars in their adult years, and we have created an almost certain mixture for corruption. This is because inflated paper dollars create an illusion of wealth in the minds of the corporate CEO’s, which turns a certain percentage of them into wheeler-dealers who then search out vehicles in which to invest such paper dollars. This creates what is called in economic parlance malinvestment. Mix in a bubble stock market that results from the massive inflation policies of the Fed, and many of these corporate wheeler-dealers are going to start falsifying the earnings and profit pictures of their malinvestments so as to try and impress Wall Street and the bubble frenzy of buyers who are also flush with paper dollars. This is because rosy profit pictures attract buyers for a company’s stock, which increases that stock’s share price. Higher share prices increase CEO salaries and stock option revenues.
It doesn’t take a genius to grasp this. If adequate profits fail to come forth from certain malinvestments, and if there are no moral compasses in the minds of the wheeler-dealer CEO’s who launched those malinvestments, then as sure as outhouses create a stench, we have created a situation that induces bogus accounting. This is the nature of men. Without an objective moral code to guide their actions, they become devious and irresponsible. And if the economy is flush with Fed created paper dollars, they will become all the more devious and irresponsible in pursuit of those paper dollars.
Study the results of the 1929 stock market crash, and you will see the same patterns of corruption — induced by expansionary monetary policy and the acid rain of moral relativism showered upon a new 20th century generation of Americans. Feed paper money (i.e., false wealth) into an economy, combine it with the belief that there are no absolute rights and wrongs for human behavior, and human greed will turn ballistic as sure as politicians speak out of both sides of their mouths.
Modern psychologists tell us that the reasons for human greed are many faceted. It’s a very complex problem, they explain. Baloney! The most important motive is plain old human nature. As the philosopher Richard Weaver so eloquently put it, man has an “immemorial tendency.to do the wrong thing when he knows the right thing. The fact of this tendency everyone should be able to testify to, not only from his observation but also from his personal history.” [Richard Weaver, Life Without Prejudice and Other Essays, p. 146.]
What Weaver is saying is what all great intellects of history prior to the 20th century understood — there is a profound flaw born into men, which is their capacity to blank out on acts of malfeasance in the midst of performing them. The fact that modern intellectuals are oblivious to this flaw is why they can neither understand, nor offer any solution to, the pathologies and corruptions of today’s world.
The present corruption of Wall Street is not automatically built into capitalism as an economic system. It is brought about by mixing human nature with inflationary monetary policy and philosophical relativism — two of the more destructive pillars of political collectivism. Allow such a mix to dominate a society, and a vast, corrupt cesspool in Washington and on Wall Street is guaranteed. To clean up such a mixed-economy cesspool will require elimination of the pipelines that feed it, which means we will have to forsake inflationary monetary policy and restore the teaching of an objective code of ethics in our schools.
In conclusion, the major share of the blame for today’s corporate corruption lies in the nature of government manipulation of the market and the teaching of moral relativism. Capitalism as an economic system is certainly not to blame. Capitalism, left unfettered by bureaucratic manacles and the necessity to buy off the leeches of officialdom, works its miracles regularly and dispenses its rewards fairly — to those who produce the most efficiently. Get the government out of its workings, combine it with an objective moral code, and it would be a clean and superior form of socio-economic organization.