Dear ladies and gentlemen,
Let's do a quick scan. Just the past few months.
- Barclay's Bank and apparently many others, rigged the benchmark borrowing rate, LIBOR, to favor their own interests.
- MF GLobal raided (stole?) investor funds and went belly up.
- GlaxoSmithKline pled guilty to a crime and paid a $3 billion fine for illegal drug marketing for, among other things, promoting the antidepressant Paxil for children when, in fact, it can cause suicidal behavior in kids.
- The French drug giant Servier is on trial for selling a diabetes drug for around ten years after it learned it caused heart disease. As many as 2000 people died.
- News Corporation hacked into the phone messages of a murdered kid, paid off the cops and others, and covered it all up.
- Japan's Olympus, the camera maker, cooked its books to hide massive losses.
- JPMorgan secretly pushed mutual-fund clients into its own brand of mutual funds, which performed poorly and charged high fees. (I skipped the $6 billion trading loss scandal)
- Bankers at GE Capital paid and took bribes in exchange for business "in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America," according to Matt Taibbi of Rolling Stone.
- Walmart systematically bribed officials in Mexico to obtain approvals and permits, all of which was approved at headquarters.
- And top it all off, last week we learn that investment analysts have been illegally tipping off the big hedge funds about bad and good news affecting a companies worth.
This is just the recent stuff. It doesn't include the mortgage scandals, or the lying and cheating that provoked the international financial meltdown of 2008. I clearly could go on. And on.
Until now, there's been an unexamined assumption that bad people will do bad things to be sure, but our system is fundamentally honest and open. Capitalism has its excesses, but the free market disciplines dishonesty and it can be controlled by market forces. But there will come a point when people's attitudes will change.
Question are being asked. At what point does this go from being a slew of scandals to systematic corruption? Is business fundamentally dishonest and stacked in the interest of a few powerful insiders while the rest of us pay the price? Are the free markets not really free? Are the thieves running the system? Maybe it's not a few bad apples, maybe it's the whole damn barrel.
And it won't stop with questions. This dynamic is not a matter of law and sober analysis. It is a quintessentially political and social process, in our democracy. The people, now, soon or never, will conclude that our economy is not operating in their interest. The anti-government, anti-regulation, pro-corporation attitudes of the past few years will vanish as quickly as they came. In their place will come a Teddy Roosevelt-like attack on "malefactors of great wealth" and corporate barons, and banks. The rhetoric and policies of William Jennings Bryan, and Norman Thomas and FDR and Occupy Wall Street will reemerge.
This letter is addressed first to the leaders of the corporate community. I don't expect agreement with the analysis or the prediction. But these are smart people. And if there isn't a voice from the business community that acknowledges the tidal wave of corruption in the business community, there will be voices outside the community. And people will listen.
It's also addressed to Obama/Romney. Whether by ideology or political calculation, one of them will seize the moment. Or might seize the moment. Obama's electoral strategy has trapped him in an anti-Bain campaign, when the country is ready for more. And Romney is smart enough to understand all this, but he's trapped in a Republican party that has been bought and paid for by right-wing corporate dollars.
To the Occupy Wall Street people, who politicized this conversation a year ago, you're about to get a second bite at the apple. If this continues, something will change. It's already in the air. Just a few more thieving, cheating outbreaks. Carpe Diem.
As was said years ago, "You don't have to be a weatherman to see which way the wind is blowing." Think about it.