America has more people in jail than any other country in the world. We spend three times more to incarcerate the average prisoner than we do to educate the American child ($30,000 to $10,000 per annum on average per annum nationally). Obama hasn’t done anything to address this. But this is actually an issue that goes far further and is much more fundamental than this.
It speaks to the core rot that has been allowed to fester since really the rise in the predominance of an industry, the banking sector, that has literally become the puppet master of not only domestic business, which has it’s own problems, including still massive discrimination in the workforce, particularly against women and minorities in senior roles and outdated management and infrastructural problems in a shifting business paradigm.
The easiest way to explain this is that it’s cheaper to sell one’s goods as a manufacturer online (wherever one is in the world) through an affiliate program using freelancers who sell said goods through their own e-commerce websites for a commission, on sites that their freelancer workers even build themselves, with a central warehouse to store said product, than to pay for the overhead of distributed storefronts with all the associated overhead and this is a reality faced by stores like K-Mart and Wal-Mart, not to mention everyone else who sells retail or even is a member of the professional class, such as lawyers, who are even being outsourced (for the relatively junior work) who are having to adapt to that reality. With almost NO HELP from the government.
Who’s given the vast amount of taxpayer dollars in terms of grants and bailout money, in the terms of Paul Krugman, although he was referring to the Mega Banks, the “Walking Zombies” of what used to be corporate America. As Peter Drucker, the Father of Management predicted so presciently so long ago, over a quarter of a century in fact, a prediction that was widely ignored, we face a reality that has now come true five years after his death. The modern corporation is dead (quote). And again, to paraphrase him, it was the banking industry that killed it. If in fact he was also right that governments themselves are in peril, then who oversees the banking industry? Do White Collar Criminals Really Ever Pay The Price of Their Crimes?
Even the current browbeating and the first announcement of the first firm to walk the Perp Walk in the aftermath with the announcement of fraud charges against the first of the bailed out Wall Street Firms by the S. E. C. and subsequent grilling of the Firm’s executives in Congress, however, smacks of political theatre, particularly given who the Firm is. As of late April 2010, the most white shoe firm on Wall Street, Goldman Sachs, also the Wall Street firm most known for the revolving door between its highest ranks and high political office (like at Treasury and the Federal Reserve) was named for fraudulent activities by the S. E. C. To add additional fuel to the supposed fire of a government doing its job, three countries, the U. S. , Great Britain and Germany, were also considering filing suit for damages.
But this furor may not in fact be quite what it seems and the fallout may in fact be as ephemeral as the products Goldman Sachs created in the first place – simply because there are beginning to be doubts raised, however unbelievable, that while Goldman may have pulled a few financial rabbits out of proverbial Wall Street Hats, they may actually not have committed the legal definition of fraud. This argument could only have come from a highly sophisticated securities lawyer, again, something that is essential in terms of constructing and maintaining a culture of White Collar Criminal Corporate Culture. (Columbo, 2010) This is the newest development in a dance that no doubt will go on for months and the fallout is far from over. And to the extent Goldman will suffer real damage, much less really reform its behavior has yet to be seen.
But just as the “fraud or not” argument illustrates so handily, Goldman is so well politically connected (they immediately hired former and subsequently ousted Obama Chief White House Counsel Greg Craig to represent them, which should say something about both the incestuous nature of DC and Goldman’s power and sophistication in defending themselves, both domestically and overseas), not to mention they were the main Wall Street backer of the Obama campaign itself, this smacks of political theater. A sort of mock public hanging to appease a furious public that ultimately won’t mean anything. The Congressional hearings so far have been ludicrous. Plus one has to remember Congress also has skin in the game on this issue too. There are five financial lobbyists for every member of Congress, which means PAC funding for re elections. Wall Street, followed closely by the Department of Defense, is the most powerful lobby on Capitol Hill. That is why language is still included about allowing any kind of derivative to be unregulated is still in some versions of financial reform bills.
And why the discussions about capping Executive Wall Street pay are so disingenuous, again to pretend that real discussions about reform are taking place, when in fact this is a farce to mollify a public that in general does not know that most Wall Street bankers, and certainly executives, make most of their money every year not from their salaries, but from bonuses, stock and options. A fact that is never discussed, explained or even brought up as an issue to also be limited if real reform is to take place. Are we to “evolve” from citizens to consumers at it seemed we were and this administration seems still consumed with trying to do, or do we finally put our feet down and say no more? The banking industry is just the culmination and concentration of rot at almost every large corporation in America today, as this graph below demonstrates very well.
While not every CEO may make as much as Jamie Dimon or John Mack, it was Peter Drucker’s idea that the average CEO should make no more than 20 times what the average worker made if for no other reason than to ground them, and to insure that the company both reinvested in itself and its community and that there was not this huge socioeconomic division that exists today between workers and management.
That disparity breeds a host of socioeconomic issues, from race, gender and class discrimination to a feeling that if one is a so-called “Master of the Universe” or a rising star, the law does not apply to you. And that ethics and rules somehow apply to someone else. Peter Drucker called himself a corporate anthropologist. He saw the corporation as a vital part of a society that surrounded it. He wanted to understand how it worked so he could understand how it affected the rest of people’s lives.
The kind of corruption and rot we have seen with the failure of government, large business, in particular the realization as one journalist finally put it “There’s Fraud at the Heart of Wall Street,” but many other places as well in American life, from other corporations to the family dinner table, where such values have seeped, is the ultimate price we all pay for the rise in power, not to mention criminalization of Wall Street. The only way to combat this is to change the structure of our society, which ultimately, whether politicians and the general public have no choice in, whether it’s now or five years from now. It won’t be much longer than that simply because the course America is taking is fundamentally unsustainable from so many levels it will collapse. As it already has begun to. Sustainable economics is one answer.
A re-evaluation of our morals and the role of the individual in a civil and civic society is another. Consumerism as a way of life and value system is a value that cannot and will not be able to sustain itself, simply because people cannot afford to consume products if they are out of work and homeless. And consumer consumption, based on the assumption of ever increasing economic growth and income, has driven the American economy and theories about economics since the 1950’s. It is for that reason that we have seen the trends in the laws, the development of the economic philosophies, the increase in greed, not to mention consumerism (at least in America), at the expense of everything else.
As that falls away out of necessity, something new will emerge from the ashes. We may not become the next Depression Generation, something vaguely hinted at by Paul Krugman in his book “Depression Era Economics,” but the way we were has gone forever. It’s just a matter of time before those most insulated from that reality catch on. In the meantime, the average American citizen, depending on how insulated they were before the crash, will feel the heat, more and more intensely as time wears on, but even they, unless they are extremely well off, will not bear the brunt of this storm unscathed (in fact many have already lost everything with isolated incidents like the Madoff scandal).
Ultimately the socioeconomic and psychological scars of the white collar crime and fraud at the heart of both Wall Street and ultimately much of corporate America if not the rot of values and ethics that lie at the heart of American culture itself, a result of the absorption through media and other visual encouragement to consume in a capitalist economy, will not remain what they were before the crash. And out of the ashes will arise the formation of something different. Perhaps a more traditional society. Perhaps the form of a more traditional American one from the past. Perhaps something new. Perhaps a hybrid. But the scars of the Crash of 2008 are so deep, widespread and cut to the core of every part of life for almost everyone on the planet in some way, that this event will change both our lives forever, and the way we deal with the cause of it in the first place.
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