Blogger-SMS | Déjà Vu ~ Times

The Great Con

(or A View from the Pit We Have Dug for Ourselves)

No so long ago:

▪ Owners managed their own small businesses (some of which grew very large);
▪ Then in pursuit of more capital (translating to more power, influence, prestige, capacity, market share, etc.) some owners came to share ownership with total strangers via corporate shareholdings;
▪ These new “invested” owners (disparate and essentially disinterested shareholders—except for the “promise” of dividends) abandoned business management entirely to hired managers;
▪ Then the hired managers began to brand themselves as essential, gifted elites—though at core, they were mostly aggressive, aspiring HyPEs (Highly Paid Employees);
▪ Soon, when challenged about questionable practices by advocates of balance1 or of the common good , these HyPEs (and their shareholder/employers) protested that the corporate system was a “free-market, holy grail” (the foundation of democracy!) and that all they did was for the benefit of deserving, free-market owners/shareholders.

BUT in these latter days, it is becoming increasingly obvious that these “[ladies and laddies of HyPEdom] doth protest too much.” WHY? Because the corporate system has become the almost perfect “con” for management malfeasance—for HyPE-heisting par excellence.

How so? Because even critics of the corporate system still speak as if hired management were fulfilling its (moral? and legal?) duty to its owners/shareholders by an intense (market-holy) focus on bottom-line—on maximizing profits.

Thus, we have THE GREAT CON for two main reasons.

Reason 1: Because these very owners/shareholders have been lulled from eating cake, to eating cupcake, to eating cupcake crumbs, to being happy with bread crumbs vis-à-vis their HyPEs. (Or even worse, as in Enron, Worldcom, etc.) Consider:

a) Escalating HyPE salaries, bonuses, contracts, etc. UNRELATED to performance;
b) Other HyPE bonuses related to performance which often translate into short-term strategies to the detriment of long-term growth and benefits;
c) Lavish expense accounts and HyPE perks;
d) Hush-hush, slush funds;
e) Severance packages UNRELATED to performance;
f) PR & lobby contracts/payouts UNRELATED to performance;
g) Fee-junkies motivated to buy, merge, strip, dismantle, etc. both troubled and viable companies in order to trigger enormous fees via an ever expanding range of corporate/HyPE manipulations;
h) “[Faux-]Citizens United” authority to spend unlimited funds on HyPE agendas and favored-friends without regard to shareholder preferences or values;
i) Etc., etc.

Reason 2: The moral deficit of the present, disengaged shareholding system. Consider:

Most shareholders contribute ZIP, NADA, NIENTE, NOTHING to the business in which they purport to own a share. Except for IPO shareholders (or purchasers of subsequently issued stock in the primary market), all others purchase their shares from other shareholders WITHOUT a dime going to the company they now “own.” The new, noncontributing shareholder then claims a right to dividends and a duty of corporate management (their HyPEs) to maximize profits for their benefit, often to the detriment of the “grassroots” labor that creates such profits. The previous shareholder takes his profits (if lucky) and often runs to the next (NADA) investment in another big business. (Interesting how so many shareholders completely miss: 1) the moral hazard of “nada” shareholdings! and 2) the state of HyPE deception relating to profit maximization as detailed in Reason 1 above.)

As to the argument that “nada” investments benefit the general business climate (i.e., more money to cycle amongst shareholders and thus shareholdings; more money to incentivize/finance/buy products and services; etc.), one might argue, in the alternative, that investment in: 1) fair labor practices, wages, and broader ownership opportunities; and 2) the wellbeing of and better opportunities for the poor and needy would also benefit the general business climate (plus humanity) on an even broader, more long-term and profitable scale. And for those who cannot abide the moral hazard that so-called “socialistic schemes” heap upon the poor and needy, perhaps we should be more cognizant of where the moral hazard now resides. (And mindful, too, of how much CorporateWorld owes its existence to labor and tax-payer subsidization!)

In short, the present corporate system has devolved to one great fraud perpetuated by HyPEs, HyPE beneficiaries, HyPE wannabes, shareholders (however innocently), dupers, dupees,2 inside-traders, and all who manipulate markets via rumor, innuendo, and contrivance.

How long till we see: It’s just our latter-day version of the (déjà vu) mania of money and power swirling into ever greater concentrations and exclusions? But this time, it’s a bottom-line shift from “owners” to HyPEs!

BUT, there are possible solutions,3 even if the tornado forces of the present system are enormous. Change is in the air (and the streets)! SEE ALSO: ;

3.Consider: The Ownership Solution … by Jeff Gates; or Good Capitalism, Bad Capitalism … by William J. Baumol, et al.; or The Post-Corporate World … by David C. Korten; or One World, Ready or Not … by William Greider; or America Beyond Capitalism … by Gar Alperovitz; etc. There are plenty of concerned, warning, and intelligent voices.