Not very long ago, anything with word American was associated with quality and class. Now it is all moving towards poverty and crass.
Lynn Parramore of INET points how Wells Fargo crisis is hardly a single event. It is all part of broad American business culture:
Just about everyone wants to hold Wells Fargo accountable for a scheme in which sales quotas drove employees to set up phony credit card and bank accounts without customer knowledge. A Donald Trump advisor declared the behavior “stupid” and “greedy,” while Hillary Clinton proposes to make it easier for consumers to take companies to court for such behavior. So far, over 5,000 regular workers have been fired at Wells Fargo, and the Consumer Financial Protection Bureau has fined the bank $185 million. “Hold Wells Fargo Accountable” even has its own Facebook page.
Will it make any difference? Not much, warns William Lazonick, a leading expert on American corporations and co-author of a new study on CEO pay sponsored by the Institute for New Economic Thinking. Until critics truly understand why companies have strong incentives to create such schemes in the first place, they will go on doing so, hurting workers, customers, and taxpayers. The entire economy will be dragged down and economic inequality will continue to rise.
As Lazonick explains, the Wells Fargo cross-selling scandal and other scams that ripple across the headlines are born in a business culture in which executives are focused on jacking up stock prices in the short term so that they can cash in on stock options and awards. As long as this continues, the urge to cheat will be too tempting for most to resist.
Three things are common across American businesses:
1) American businesses have become stock manipulation machines
2) Focusing on short-term stock prices leads to corruption
3) Punishment means little until executive pay is understood
What was once associated with other world firms has become so central to American ones as well.
As this blog has been saying for a while now. The 2008 crisis is not just about economic growth collapsing and so on. It is much deeper than that. What we are seeing is sharp decline in values in a system which have for long been eulogised by others. It is now showing cracks in all forms of life- politics, economics, business etc. The list is endless…