American Industry: Over Populated by Cut Throat Capitalists or Just Slimy Businessmen?

Kate Quinlan

honorbound

Is your money ever truly safe in someone else’s hands?

How do you know if you are really investing in the stock market or just paying for another private jet for these large corporations?

With all these mentions of fraud and scandal surrounding numerous American businesses, it’s not hard to rationalize the popular struggle of average Americans regarding their refusal to trust large corporations. Fears of sneaky, lying, smooth- talking businessmen talking you in to giving him all of your hard earned cash has haunted billions of working class citizens for decades and these nightmares are only escalading as each new scandal break loose. Tax fraud. Investment scandal. Ponzi scheme. Most people are clueless when it comes to the true details of these types of corruption, instead they just let the news headlines and radio broadcasts construct the Master Villain businessmen they see in their nightmares.

It’s true, from the birth of capitalism in America, there has been corruption and money hungry business men. Men like Andrew Carnegie, John D. Rockefeller, Cornelius Vanderbilt, Andrew W. Mellon and many more took American industries from small family shops to massive national corporations. They used various tactics, some not as customary as others, to accumulate enormous amounts of wealth to grow and develop new factories of production to leave to an even larger profit. These men were all chasing their imaginations, pushing the limits of industry, and breaking boundaries that average American citizens never thought possible at the time period. More workers moved to factories and started earning wages, small businesses were driven out of business because they couldn’t compete, and it seemed like every able and not so able human being from age 5-65 was working. Tragedies like child labor and unsanitary working conditions became a normal occurrence in factories. Wage strikes and worker unions formed to fight big businessmen. The working class started to realize the danger of these captains of industry and likewise began to fear them, to hate them, and eventually fight back against them.  Men like John D. Rockefeller and his Standard Oil Company formed monopolies, forcing all consumers to buy their products at whatever ridiculous price they demanded since they had bought or driven out all other competition.  Americans soon lost all trust for these large multi-million dollar companies, and thus began the start of Americans’ nightmares of big industry and its leading men.

Men, women, children, workers, company owners, farmers, janitors, philosophers, and everyone else in the entire world has lived their life with incentives to do so. As defined by Steven J. Dudner and Steven D. Levitt, incentives are how people are motivated to acquire what they want or need regarding if that object in abundant or scarce in their situation[1]. These incentives are either: moral, economic, social or a mix of these.  Moral incentives are the most striking regarding the types of deceitful business men was have already discussed from America’s pass. Most people act in accordance with moral incentives, avoiding activities characterized as wrong and certainly avoiding them if others are watching[2], since humans are naturally social creatures that feed off other people’s opinions and treatment of others. A moral incentive not steal from your friends is that they may find out and stop being friends with you, but stealing from a recently met stranger suddenly changes the situation. Is it possible that people are willing to steal from strangers if they will never find out, if their lies and secrets are hidden from the public eye? Many American businesses have come to think so.

Let’s look at the biggest investment scandal in American history: the Madoff Investment Scandal. Released in 2008 to the entire world, this scandal rocked American industry, frightened all people investing in Wall Street, and coincidentally happened just as the Great Recession devastated the stock market. In the world’s largest Ponzi scheme to date, Bernie Madoff at his company, Bernard L. Madoff Investment Securities LLC, used investors’ money to pay other customers off resulting in a huge constant cycle of money circulating from investors to investors instead of ever being invested and producing actual returns. Millions of Americans were fooled by his fraudulent activities and majority of them lost millions of dollars when the whole scandal was revealed. A company that targeted average middle class Americans who wished to invest in the stock market provided another nail in the coffin, sentencing Americans’ trust in industry to what seemed like a permanent death. News headlines went crazy with details of loss and devastation of so many Americans. Radio stations seemed to only talk about the scandal, forgetting about music or other affairs in society. Gossip circles and telephone calls all drifted to topics regarding how Bernie Madoff has tricked, lied,  and stole from over a quarter of all Americans. People pulled their money out of the market at unheard of rates, crashing the market and creating even more disaster. It seemed that the average citizen would never trust a business man again.

But how does something like this start? How does an individual get so mixed up in these sketchy activities? Truth is that these types of businesses don’t start out pumped full of fraud and lies, but they start out as legitimate companies with honest intentions. Incentives of wealth, obsession with company growth and dreams of quadrupling profit marginal lead head CEOs and company owners to take the path of deceit. Incentives drive the human race and since everything in our world in bought, sold, or traded then money becomes man’s most prominent incentive.  Normal companies are turned into monsters and men are turned into villains when the promise of money becomes the only goal. It seems that too many companies are setting profit margins and salary bonuses as their main priority. Maybe they’ve got it wrong, maybe there is no such thing as cut- throat- capitalism, but only money hungry industrial machine engineered without morals.

American businessmen are real people, individuals that live on the same earth as unskilled worker, born with the same four limbs, and generally have the same purpose in life: to achieve happiness. This is where the road differs: at the point of defining happiness. The CEO as the large corporation might define it with several zeros attached to his salary, while the unskilled worker focuses on his lack of happiness because he has not processions or wealth. But which one is correct? Certainty there must be a general definition of happiness for all people to strive for, right? Well Aristotle would attest to that and even offer his own definition. Aristotle defined happiness as the action of living your life in accordance with virtue and Aristotle would define virtue as the trained and natural intellectual reasoning used to make life’s choices. So, technically both the unskilled worker and the CEO’s definitions are wrong because happiness, as the end goal, is never just wealth or the amount of processions one has. Aristotle was upset by this mindset, stating, “as for the money- making life, it is something quite contrary to nature: and wealth evidently is not the good of which we are in search, for it is merely useful as a means to something else[3] “. Money, as an end goal, corrupts a person and corrupts an industry, but happiness as the end goal leaves rooms for growth of business but centers on the good done to the customers and employee much more.

In any industry or company, fraud or corruption is a possibility and sometimes an unavoidable obstacle, but that does not mean all businesses are corrupt, just merely individuals within the business. Economics as whole has nothing to do with morals; it’s completely removed from morals. It is the humans involved and the men behind the decisions that have morals, either more or less. Pope Leo XIII made the distinction between morals in industry and in man, saying that private property is not corrupt, that the land itself and the industry is not corrupt, but rather the owner and the employer of the property is infected by low morals[4]. It is the business men that change the business and not the business itself. Yes, these horror stories of scandals seems to tarnish all names in American industry, but the truth is that every corporation or company or family owned business has as much opportunity to become corrupt just as it has to stay legitimate and maintain an honest business.

Americans are understandably scared and worried about the safety of their money, but living in fears takes away their ability to invest and actually earn a great deal of money investing in companies and their stocks. You never can predict a individual’s true incentive when you hand over your hard earned cash, but Americans should know that these scandals discussed are the exceptions and not the norm, that investing is safe and even worth the money, and that businesses are there to for the customer and not for themselves because without the customer then they wouldn’t even exist.

[1]Freakenomics”, Stephen J. Budner and Steven D. Levitt in How to Find Happiness Without a Free Lunch, edited by Mr. Aparacio, Ursuline Academy, 2015.

[2] ibid

[3]Nicomachean Ethics”, Aristotle in How to Find Happiness Without a Free Lunch, edited by Mr. Aparacio, Ursuline Academy, 2015.

[4]Rerum Novarum”, Pope Leo XIII in How to Find Happiness Without a Free Lunch, edited by Mr. Aparacio, Ursuline Academy, 2015.

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