The Free Enterprise System we admire so much in America promotes the philosophy that everybody should be free to maximize their productivity and after-tax income.
Charging “what the traffic will bear” for products and services is an accepted business practice. We are free to do that as long as our competition doesn’t interfere or constrain us. In our country we vigorously espouse this economic way of life. Outside the United States our traveling business executives strive to achieve a global marketplace for our goods and services. Competition in the world marketplace means that product costs will be minimized. Hopefully, quality will be enhanced also, and the demand for products which are considered the necessities of life will be satisfied. Pricing as always will depend on what customers are willing to pay for something.
In an ideal economy where supply meets demand, or vice versa, people are gainfully employed, wealth is fairly distributed among the deserving, hard-working participants, and a benevolent and benign government keeps a watchful eye on anyone who scoffs at the law. Taxes are determined with the consent of the governed, and there is little room and no reason for corruption, because no one is underpaid or poorly paid or taken advantage of in the overall scheme of things. The “unseen hand” of some economic deity supposedly moves the chess pieces, and the result is prosperity, happiness, harmony, and peace.
Unfortunately, Americans don’t live in an ideal universe, don’t have honest people for leaders and followers, don’t respect the harsh economic laws governing sound investment practices, don’t save our money, nor do we reach out for that gentle unseen hand to guide us. We fall asleep in economics class, ignore the lessons of history, stuff our houses with unnecessary accouterments and decorations, lavish too many toys on our children, and go out to unhealthy fast food restaurants and bars where we eat and drink too much. Most of the time we are desperately running up hill to find the money to pay our credit and debit card debt. For one reason or another, we never have enough income to satisfy our desires. This lack puts enormous stress on everyone competing for the limited supply of dollars available, especially those workers who are not paid a decent salary or a “living wage.”
There are many jobs and services in government and business that are insufficiently “rewarded.” The average consumer shuns stores with high prices, and most taxpayers, already overburdened by other financial obligations, don’t like to pay taxes. No business wants unhappy customers, and no government met a social program it could refuse. Consequently, there is always the necessity to get more for less, or in the Jewish community, get something “wholesale.” The cost conscious mentality is appreciated and praised. Economists will tell you that the largest element of the cost of a product or service is the cost of labor. Surprised? Not really. Businessmen spend a great deal of engineering time and expense in developing cheaper products. What cost is usually eliminated? Executive pay, transportation, advertising, raw materials, taxes? No, the cost of direct and indirect labor!
Now you know why the workers are always looking for some way to increase their take home pay before they are laid off and replaced by robots. A worker’s portion of the “take” or of the company’s “income stream” is severely controlled. Unless there is a powerful union to defend the workers’ interests and rights, the last cost increase to be accepted by management is a wage increase. And the last workers in the economy to receive “inflation compensation” are the government workers: the teachers, the firemen, the policemen, and the military. The public’s resistance to increased taxes to pay decent wages and salaries to these public servants comes from reading and hearing news reports about how poorly bureaucrats spent government revenue.
In this analysis I don’t intend to condone corrupt practices nor justify them. I want to examine why they exist in the first place and place the blame for this outrageous crime where it belongs: on our own naive society. Greed is a very powerful motivator. The financial debacle in the American business community that has been exposed in the past two years grabs our attention. It results mostly from greed and an investment naivete on the part of 401k investors. We read about “corruption” at high levels of business and government – about governmental blindness, outright fraud, and brazen disregard for the law and the moral underpinnings of the law. All of this is spelled out for us in our newspapers and magazines after the fact. However, we could see the same mentality of these greedy “crooks” if we looked closely in our own bathroom mirrors.
The amount wagered each week in the various lotteries by individuals looking for a quick, highly improbable gain illustrates how badly poor people and inveterate gamblers want to throw their money away in search of a huge reward. Is it corrupt for the lottery sponsors to take advantage of these people that way? Is it corrupt for us to give Native Americans the right to the profits of gambling casinos in exchange for the poverty their tribes have experienced as a consequence of our government’s neglect of tribes over the years and refusal to honor treaty commitments?
What do we consider a corrupt practice to be these days? That is not an easy question to answer. Any dubious ethical practice that is exposed, of course, and anything that smells foul when it is uncovered, I guess. But as our social institutions proliferate and their functions become murky, there is plenty of room for all kinds of shenanigans and dealings that are shady at best and “corrupt” when examined in detail by knowledgeable investigators. The slick people involved are just maximizing their income, however, and taking their customers’ money in exchange for some worthy, but incorrectly valued service. Most of them are acting like the violent prone Mafia when they exploit an opportunity to provide “protection” for a weekly, untaxed fee.
Speaking of taxes, there exists a very complex, codified tax law to define non-criminal expense deductions and legal exemptions which only certain taxpayers can exploit. Legalized corrupt practices allowed by tax regulations and paid for indirectly with campaign contributions abound. Why do big corporations pay such a small portion of income taxes? Why do businesses have special deductions for expenses that the individual tax payer is not allowed? Why is all business interest expense deductible, but only mortgage interest for an individual? Why is the interest paid on “home improvement” loans considered tax deductible when those additional funds can be used for a variety of purposes which don’t actually increase the value of the home?
All these are scams perpetrated by citizens in and outside the government and treated as earned privileges. The discrimination is explained as necessary with phony logic. All action taken is motivated by a desire to improve an individual’s ability to earn money and eliminate the income taxes he or she is supposed to pay on that income. Some foreigners consider income tax as a tax on morality, but that isn’t easy for Americans to understand because we are blinded by the maze of tax regulations and intimidated by the ferocity of the collectors’ rhetoric. We must pay our “fair” share of taxes to cover the costs of the wonderful services our governments render us or be harassed by the IRS until we meet their outrageous demands.
Economists have observed that to purchase, buy, obtain, or acquire something of value, you must give up something of equal or greater perceived value. Since money is our common store of value and an acceptable medium of exchange, it changes hands in most transactions. We learn very early in life that you have to give up something to get something. Trading things of value becomes the basic way we handle satisfying our desires and taking care of our needs. The work, the service, or the ideas we render provide us with the money to acquire life’s necessities. Doing what is required of us to earn this money becomes the major activity of our lives. Normally, it is the primary goal in life to have enough money to survive comfortably without worrying about the adversities which might undermine our feelings of security, tranquility, health, and happiness.
So, each day a vast majority of us sets out to “bring home the bacon.” Our friends don’t ask us how we accomplish that, of course. It isn’t polite. And if they were so bold as to ask us what we did, we wouldn’t be inclined to tell them much. “You got yours and I got mine, so let’s get on with our lives,” is everyone’s attitude. Unfortunately, ignoring what people do “for a living” allows many clever, ambitious swindlers to work their magic. When our investigative reporters finally scrutinize certain activities that might appear marginally acceptable, we are shocked, indignant about the lack of ethics and morality displayed by the “alleged” guilty parties! How could they have violated the trust we have placed in them and taken advantage of their freedom to use their position of power and influence? Shame on them. They should know better!
“You can’t get something for nothing” is an old refrain. Beggars eventually learn that there are no “free lunches.” Panhandlers invest a lot of their time, if not energy, seeking donations, and lawyers know that time means money. More than ever before, it takes money to make money and get things done somehow. Does it really surprise you that with all the effort devoted to maximizing income, that temptation to swipe a little here and there isn’t on many people’s minds? Increasing income is never far from the thoughts of the breadwinners in a family. The pressure of having enough money to placate the wanton desires of every consuming member in the family drives us into strange commercial relationships.
Besides carelessly marketing ourselves, we sometimes are lured into marketing unsafe products, illegal and unproven substances, and environmentally harmful chemicals. Price gouging for major medical procedures in a Bay Area hospital was recently exposed, where the average fees of $50,000 were double those charged by other local hospitals for similar procedures. Was this hospital engaging in a deliberate, corrupt practice or merely charging what the traffic would bear and inattentive HMO claim processor would allow? Were all the medical procedures necessary? Were all the doctors competent? And were the facilities and services worth the expense? Who can tell? Only an expert with professional “inside” experience pertaining to the specific procedure performed should be allowed to offer an opinion. Any non-professional comments are speculative and likely to distort the facts and confuse an uneducated audience.
We know corruption when we see it, like quality, I suppose. But any judgment about corruption is subjective. All of us don’t share the same ethics, morals, and perspective. We call a person corrupt who takes advantage of a situation for his or her own benefit when we don’t expect them to. If someone has a position of trust and power to take what we believe is inappropriate action, we cry “corruption!” Maybe this “corrupted” person is taking the only action possible under the circumstances. When a supervisor gives a questionable order, how should an employee respond?
Only recently has our government recognized the necessity of protecting the “whistle blower.” Where were all these whistle blowers in Pacific Gas & Electric and Southern California Edison when Enron and others were overcharging them for electricity? Sitting on their hands or shaking in their boots, and thinking, “That’s not my responsibility.” At what level of management is an act of fraud like capitalizing expense in WorldCom a corrupt act? On whose desk does the buck stop? When should an employee resign and begin to look for other employment after he or she finds corrupt practices going on inside the company? And the potential whistle blowers for the government are not covered by the latest legislation. How unusual!
There is no published list of corrupt practices to refer to when you spot something as an employee. Many questionable practices are legal, or sufficiently close to the legal borderline, that the company lawyers won’t recommend taking any immediate action. Maybe the auditors won’t discover what was done with the books, or perhaps they won’t condemn the accounting “treatment.” “Other companies are doing that also, so we are in good company.” I heard that very argument coming from parent corporation lawyers.
“Greasing the skids” with some token payment, gift, entertainment, or outright payoff are often considered as unacceptable practices when exposed. It takes money to get something done, to entice favorable action, to approve a marginal building design, to arrange a timely delivery, etc. Not just in this country, but every country in the world. Corruption is endemic to institutions who have authority to take action favorable or unfavorable to an individual’s or a company’s interests. Any major decision taken by the government has the possible interpretation that a bribe was paid or a political donation will be forthcoming. We don’t trust any elected officials to be above the influence of the very manipulative and wealthy “movers and shakers:” e.g.: the company presidents and union leaders who require political donations from their underlings.
What is the true cost of getting something done that’s urgent? “Whatever it takes” is the rule. Don’t ask, don’t tell-if you are smart! When is too much paid, or too much siphoned off by the influential intermediaries? Only time and access to the final details of the deal would give us a clue. What happened to the bond funds voted to repair the Hetch Hechy water supply system for San Francisco consumers? The money was “diverted” to pay for general expenses like overtime for the police and firemen. Well, at least the money wasn’t wasted, I guess. The deviation of funds was apparently known by the “many” involved, but nothing was said or reported. Were those who did that “criminals?” Has the statue of limitations run out for this “crime?”
Economic practices like good and bad art are condemned or praised based on the subjective opinions of supposedly discriminating “beholders.” We can’t do much about what others do except complain once we are informed about what was poorly and maybe even illegally done by them. It is unreasonable today to expect that all the various police forces and the regulatory agencies have enough sleuths and sufficient financing to identify and prosecute all the corrupt practices that are going on. We swim in a sea of corruption that is as contaminated and contaminating as the murky water in our lakes. Most of us have learned to keep our heads above the water. Some of us have become immune to the illnesses that affect many of our companions. But we are too few, too small, too weak, and too poor to change things without taking big risks.
The ethical and moral among us can only graciously accept the fact that in the scheme of a free enterprise system with too little accountability, corruption is merely a minor redistribution of wealth. Those who obtain a questionable payoff in a dubious business practice pass on this income somehow to their children subject to minimal inheritance taxes. Honestly or dishonestly accumulated riches are bequeathed like our genes to the next generation for better or for worse.
Go back to the mirror and look into it carefully. Then ask the reflection there: Is there a “right” way to earn a living? Or just a few ways that happen to appeal to us? Can we ever acquire enough money to buy all the things that might satisfy our insatiable wants? Finally ask: Is there a finite ransom amount to be paid to others that guarantees escape from this regulated capitalistic economic environment with your dignity and integrity still intact?
I thought not. So, let the sinless who can avoid all those tempting, but controversial economic opportunities cast the first stone-if there are any humans left with spotless records and enough strength to lift a stone after struggling mightily with temptation!