Bernie Sanders favorite whipping boy has been “billionaire bankers.” His denunciations of Wall Street bankers are guaranteed to garner enthusiastic support from large crowds. But to me the criticism has always been sloppy and a distraction from the causes of what is distressing both Sanders and his supporters.
I understand criticisms of bankers, Big Pharm, and Big Oil. Those criticisms stem from an expectation that humans have and should have one set of ethical norms in all aspects of their lives. Those norms include honesty, trustworthiness, compassion, empathy, and fairness. These are the kinds of primary values that most people encourage their children to honor.
By those norms, businesses like Exxon, Goldman Sachs, and Monsanto are often predictably unethical. Prudence and efficiency are certainly values that capitalist businesspeople attempt to exemplify, and for those efforts they should be complimented. But when businesspeople exaggerate the merits of their products, hide the demerits, create advertisements that beguile consumers that the businesses know are ill-equipped to resist the clever pitches, claim that the public has no right to see their balance sheets or profit/cost ratios, move to states where environmental regulations are few and labor unions are denigrated, irradiate small businesses who threaten their market shares, and generally do what businesses are supposed to do in a capitalist/market-centered world, how could any of us be dismayed?
As my undergraduate students cavalierly inform me when I criticize business behavior that is consistent with capitalist incentives, “Oh, Dr. Browne, that’s just business.” I fear I hear a tinge of pity in their voices as if I am an innocent cherub who needs guidance from the worldly 18 year-olds. They are younger versions of the top-level executives interviewed by Jackall in Moral Mazes; both acknowledge that their ethics at home and with friends and neighbors are those they wish the world would embrace. Yet both are comfortable when living a set of egoistic/individualist values when at work for a profit-oriented firm.
What do people believe they are supporting when they celebrate “capitalism”? Banks, mortgage companies and other financial entities behaved in 2007 according to the same rules of the capitalist game as 30% of Manhattan convenience stores who every morning fill their “Elysian Springs” water bottles with public water from their faucets and the 15 pizza sellers in Manhattan who advertise that they sell “New York’s #1 pizza.”
There IS an ethical case for capitalism as the consumers’ friend, but the structural conditions for those ethics disappeared decades ago. Let’s remind ourselves that for capitalism to have these more democratic ethical implications, the following business environment must prevail:
- Many small firms in each industry so that none is capable of charging a price greater than the cost of producing the good or service. In other words, consumer sovereignty prevails.
- Ease of entering any industry when a potential new entrant recognizes that consumers are not being treated fairly. Notice that the motivation here is not kindness, but the same incentive structures that caused existing firms to earn profits in excess of those the new entrant is willing to earn.
- A level of technology and consumer understanding that permits individual consumers to comprehend the dangers of anything they choose to consume. The complexity of modern technology disarms consumers; how can they be expected to have the psychological, chemical and medical abilities to make choices in a manner that is best for their health and well-being?
- Consumers with the critical thinking abilities, time, and appreciation for the goals of sellers such that they can resist seductive marketing.
- Governments that protect consumers when consumers lack the power and know-how to protect themselves.
Consequently, I read with great favor Cody Cain’s recent “Did We Blame the Wrong Villain for the 2008 Financial Crisis?”
Is Bernie Sanders angry at all billionaires, regardless of how they achieved that status? If so, placing “Wall Street” in front of the term when he uses it, creates misunderstanding. If it is billionaires who acquired their wealth through market activities, that he sees as blameworthy, then he is confusing a major example of capitalism with his actual target—capitalism.
Who cares? If all “Wall Street billionaires ” lost their wealth tomorrow, the forces that caused inequality would not be noticeably reduced.
If people find the form of capitalism we have to be repugnant, then they should make that critique. But castigating firms who are both obeying the law and the rules of capitalism reveals a misdiagnosis of the malady they are experiencing.