From the original Robber Barons of the 19th century to the soldiers of fortune of the 21st century, corporate governance has not seen much of an ideological evolution. While it is important to distinguish between entrepreneurial capitalists and their political counterparts, the Barons’ logic has virtually been similar, unchanged: employ the principles of Ethical Egoism to drive their bottom line. The former used private monies to monopolize particular industries; the latter influenced the government as a mean to that very end. Political entrepreneurs gamed the system through lobbyism, which usually resulted in huge subsidies from the government and/or regulations that either helped crush competitors or allowed them unfettered access to unlimited resources. Some of them, more recently, have destroyed reputable companies diving off the cliff of profitability while trying to feed their enormous appetite for cash. Lehman Brothers Holdings Inc. is a perfect example of exploitive capitalism. Experts concurred that their filing marked the largest bankruptcy in U.S. history.
Over the past two decades, people have watched in horror as “too big to fail” empires turned into sinkholes, literally. The list of these companies is rather extensive with Enron at the very top, Bernie Madoff, WorldCom, Lehman Brothers, HealthSouth, Tyco, Satyam, AIG, Waste Management, Freddie Mac, Adelphia Communications, Arthur Andersen, InClone Systems just to name a few.
First, some novice on Wall Street would pitch a green idea: one that would make investors rich. As a result, financial gurus would line up like migratory birds, would abandon previously held values, and would follow the money. Initially, ideas would be greenest and they would bathe in vast piles of money. Consequently, novices would be called geniuses, pioneers, innovators and the like. However, once ideas would start to bleed, names such as mercenaries and robber barons would start to float around. Inevitably, people would be left distraught and bankrupt.
In the case of Enron, greed overshadowed any scruples the hierarchical leadership may have had. At the pinnacle of their success, investors became tropical flamingos seeking favorable climates during winter months. With the wind at their tails and a cloudless sky, Enron executives flew at very high altitude avoiding predatory eagles, governmental regulations.
According to Bethany McLean, the Fortune magazine reporter who was the first to question how energy giant Enron made its money, there was a linear relationship between profitability and the confidence level of Enron executives. Increases in the company’s profit margin, an elaborated scam, emboldened their confidence level, created a false sense of invulnerability, and gave birth to an Everest of arrogance. Hence, what might have seemed unethical and/or even demented to common criminals constituted ingenious strategies to Enron elites. Nevertheless, when gravity got hold of this floating feather, the company’s free fall outdid Newton's Law of Universal Gravitation. Naturally, the ripple effects were an avalanche of lawsuits, scapegoats, suicides, reactive policies, shocks and dismay, anger and distrust. Some were accused, arrested, trialed, convicted, and jailed while the stolen moneys exchanged hands from culprits to lawyers, judges, and the like.
More recently, towards the end of 2006, green ideas flooded the financial sector causing an unprecedented migration. These ideas were not indigenous to US investors because flamingos around the globe caught the wind of tropical climates and followed the mainstream. Predictably, like in all previous Wall Street exploitive scams, Armageddon came. The only difference was that it showed up in the form of $700 billion. The usual suspects played their roles until the stories outlived its cycle in the headlines. Meanwhile, anguish and distrust lingered.
Rarely mentioned though, is the fact that at the heart of all corporate greed and disappointments lay the theory of destruction, Ethical Egoism. Virtually, any corporation that has touched that model has fallen to its inevitable death, yet time after time the theory reincarnates as a new, innovative paradigm. While in fact, there is nothing new under the sun of that theory. Rapadoo
Part 2 follows.
No comments:
Post a Comment