AN ESSAY
Lawyers are always in the news. They like talking to the press. And the press likes talking about them. They always have something to say; lawyers are pretty glib. They like free advertising, too. So they are happy to speak up when cameras roll.
But no matter how much press lawyers get, it's usually bad. In most cases, news stories involving lawyers discuss their avarice, moral bankruptcy, hypocrisy or outright criminality. Most recently, for instance, several newspapers reported on the proposed settlement between New York City and 9/11 workers. Apparently, the lawyers in that case (it's a big class action suit) advised the 9/11 workers to settle for around $675 million. That would give the lawyers at least 33%, or $225 million. The 30,000 workers would get the rest. A judge rejected the proposal. The press described it like this: "Judge refuses to bow to greedy lawyers. Rejects 9/11 settlement."
People expect lawyers to be greedy in America. That's their reputation. That's what they do. They intervene in private disputes, work mysterious magic behind the velvet curtain then take their fee. That's just how it works. At the same time, people expect lawyers to break rules as often as they enforce them. Vulgar punners like to cross the word lawyer with "liar;" and the pun is not too far off the mark. When hearing about lawyers, people expect elusiveness, craftiness, dishonesty, theft and nasty-spiritedness. It's all part of the public image. It is no wonder that the public does not respect lawyers. Viewed in the abstract, they are a lousy bunch.
But it's all part of the trade. Lawyering is a lousy business. Government tries its utmost to cultivate respect for the law as a beneficial social construct designed to bring about good. Yet a quick brush with lawyers undermines any respect a citizen might have developed for the law. With lawyers, it's not about doing good. It's about winning. And if winning means subverting good--or even allowing evil to prevail--then so be it. That's business. After all, that's what the client wants. As law firms like to say: "We are result-oriented." How true: Lawyers get results for their clients, even if those results seem despicable to everyone else on earth. The word "result," after all, does not necessarily imply "good" or "ethical." Results depend on who's getting them. A good result for the labor baron is a bad result for the workers. A good result for the State is a bad result for the Defendant. A good result for the employer is a bad result for the employee.
Lawyers sell results. They get them however they can. That is why people don't respect lawyers; they are crass partisans who zealously go to bat for scoundrels. In the process, they milk everyone for money and accuse everyone of lying--except themselves.
Maybe our language has something to do with lawyers' poor reputation in America. Yesterday I thought about the word "lawyer," as well as its interchangeable synonym, "attorney." Then I thought about the German word for lawyer, Rechtsanwalt. I have often uncovered compelling conceptual relationships among English words by comparing their equivalents in foreign languages. Perhaps I could understand why lawyers have such a bad reputation in America by making some linguistic comparisons.
Literally, Rechtsanwalt means "rights advocate." That sounds somehow more detached than "lawyer." Although lawyers are not the most respected members in German society, either, their name reveals something more transcendent than "lawyer." After all, a "rights advocate" is someone who stands up for rights. Rights are principles that mean something greater than individual self-interest. Rights stand for something beyond commerce and winning. Rights symbolize personal worth against government intrusion. Rights are somehow "sacred" and "inviolable." When someone violates a right, the aggrieved person has a claim against the violator. We enshrine rights. They exist beyond life. They encapsulate our deepest values. They express our fundamental expectations as individuals in society. Men have gone to war over rights. They have written philosophical treatises about the "Rights of Man" and launched revolutions to secure "inalienable rights." While rights may just be a human invention, they nevertheless represent something larger in people's lives. People willingly fight for rights. While it is ignoble to die for money, it is noble and just to die for rights.
In this light, a "rights advocate" seems a much nobler name than "lawyer." While lawyers in America--just like Rechtsanwälte in Germany--make their living by defending clients' "rights," their name suggests something far less honorable. "Lawyer" is embarrassingly common. It says nothing about "advocating for rights." Rather, it sounds like just another petty craftsman. In English, after all, the suffix "-yer" historically connotes a street-level artisan, like a "sawyer" (man who crafts wood with a saw) or "bowyer" (man who makes bows). Linguistically, then, lawyers fit into this tradition as "petty craftsmen who bend the law just as a journeyman bends a bow."
This interpretation goes beyond mere mockery. It is surprisingly appropriate in describing the lawyer's role in America. After all, lawyering is all about results in America. It is commercially straightforward. It is no different than manipulating tools to saw planks or build bows. People who want to buy plywood and bows don't care about others' rights. They merely want products to be crafted and built. And lawyers hawk the law in stores, just as sawyers hawked sawcraft in old England.
In a word, the word "lawyer" perfectly expresses the commercial nature of legal practice in America. It is not about "transcendent rights for all." Rather, it is about tailor-made products for particular clients who want particular results. The word's origin conceptually places lawyers exactly where they belong: Among street peddlers and common craftsmen.
But what about "attorney?" Does the synonym save the concept "lawyer" from moral destitution? To determine this, we must examine its etymology. "Attorney" derives from French. It takes its form from the French verb "tourner," meaning "to turn," then adds the Anglicized prefix "at-", meaning "to" or "toward." In French, the past participle of "attourner" is "attourné," meaning "turned to." The suffix "-ey" indicates that at some point an Englishman changed the French past participle into letters he could pronounce: He transformed the foreign-looking "é" into "-ey." Behold: Attorney. Literally: "Person turned to."
So how does this differ from "lawyer?" Is it any "better?" Not much. If anything, the word "attorney" refers to the lawyer's role as confidant and advisor in times of trouble. People need to "turn to" others when something bad happens to them. In some sense, the word "attorney" is paternalistic because it implies that people are too weak to fend for themselves and they need a "father-like" lawyer to shepherd them through difficulty. But in another sense, "attorney" implies that a lawyer is a partisan mercenary who will do anything his client tells him. After all, why would you "turn to" a lawyer if not to win your case at all costs?
In my view, the word "attorney" represents the lawyer's role as adversary in the American system. People "turn to" lawyers when they have a commercial problem. They expect their lawyers to vigorously advance their interests, even if those interests stand at odds with all the world. As a partisan, the attorney will "bend the law" in whatever way he can to win. In this way, the words "attorney" and "lawyer" mutually reinforce the commercial--and result-oriented-- nature of legal practice in America. People expect lawyers to do their bidding, so they "turn to" them. And once they do, they expect lawyers to sell them a ready-made product without quibbling over larger issues like conscience or ethics.
This is not to say that some American lawyers are not "rights advocates." On many levels, they are. Every legal case involves rights. But not all rights are noble. In fact, most legal rights involve contracts, property and other social mechanisms designed to maintain private ownership. As a consequence, legal rights perpetuate unfairness because those who can assert them generally have much more power than those who do not. To speak broadly, those with more riches often have substantially more legal rights than those without riches.
But these are merely "technical," private legal rights. There are public rights, too. And those rights have a largely positive connotation. Most people think about public (constitutional) rights when they hear the word "rights," like the right to free speech and the right to equal protection under law. That is why the German word Rechtsanwalt conveys a more positive connotation with regard to the law than the English words "lawyer" and "attorney." It focuses on rights, not commerce or craftsmanship.
In America, people "turn to lawyers." Yet that is the reason why lawyers always get bad press. No one likes a crafty, small-minded, contentious partisan who bickers and backstabs for a fee. Yet that is what lawyers do here. They are crafty craftsmen who bend bows for a set price, not noble "rights advocates." They sell products, just like any other peddler. But unlike other peddlers, they are paid to fight for one person's "rights"--and trample you if you get in their way.
Showing posts with label Greed. Show all posts
Showing posts with label Greed. Show all posts
Monday, March 22, 2010
Tuesday, September 8, 2009
NEW YORK RENTS & THE FREE MARKET : A LITTLE PROFIT IS NOT ENOUGH
OESTERHOUDT STRIKES
Most people know that it is expensive to live in New York City. But most people do not realize just how expensive. Rent in Manhattan is truly exorbitant when you consider how little your money buys. While it has always been relatively more expensive to live in New York as compared to any other city in the country (exception: San Francisco), prices have accelerated especially quickly over the past 15 years. One-room studios in Greenwich Village used to cost $900 a month in the mid-1990s. Now they can cost up to $2900. That is acceleration, baby.
What caused this? Do landlords suddenly deliver more value in 2009 than they used to deliver in 1994? Do you get free champagne service and a complimentary shoeshine with your apartment now? No—you get the same thing you got in 1994: a semi-trashy walkup with old fixtures. Your landlord is just making a much bigger profit than he used to. Real estate markets in other States took a beating in recent years. But not New York. Things just kept on marching skyward here. And now virtually no one can afford it except wealthy publishing heirs, Japanese industrial magnates, Hollywood celebrities and various prematurely gray, professional workaholics with no lives who hire nannies (weekends included, because they work then, too).
I often write about profit and the “ugliness” of commercial enterprise in general. Rent in New York City encapsulates my views on the subject like no other. Why are rent prices in New York so high? If landlords are not delivering more value now than they did in the past, what entitles them to keep charging more? According to free market principles, price is a function of “supply and demand.” Applying those principles, it is easy to see why New York rent prices increased so much since 1994. There is a very limited supply of apartments in Manhattan (it is a pretty small, narrow island, after all), and demand for them has steadily increased since “Giuliani time” (ie, the era during which many Americans began to feel that hoodlums, bandits and various “minority thugs” no longer ruled the streets).
Not many apartments. A lot of people want them. They’re going to cost a ton. That’s the free market for you. The same thing happens with umbrellas when it rains: Not many umbrellas. A lot of people want them. The hawkers can charge anything they want to exploit the sudden demand. An umbrella that costs a dollar on a sunny day costs $40 in a downpour. People call this “price gouging” when a street hawker does it. But when a Manhattan landlord or industrial baron does it, it’s called “prudently reacting to progressive market trends.” No matter what you call it, it adheres to the same principle: Make as much profit as you possibly can in the circumstances.
I find this all atrociously ugly. In the free market, those with “goods in demand” suddenly obtain the power to screw everyone else simply because they can. I have written about this power in other circumstances. Banks, for instance, charge fees for ATM use—up to $4.00 for taking out $20.00—because they can. They don’t need to charge that much to cover their cost and make a modest profit. In the free market, modest profits are not enough. Those with the power to make a profit want gratuitous, gluttonous, bountiful, excessive, disgusting, fattening, overflowing, sumptuous, fat-dripping profits. They don’t want to make $1 per unit; they want $100 per unit. This is just the way the free market works. When someone has the unique power to provide goods or services in demand, he or she can throttle the public for far more than the goods or services are worth. Modest profits are no good. In the free market mind, only luscious profits are appetizing. After all, why go into business if you can’t really cash in?
At this point, someone will naturally object: “Prices reflect operating costs and factor in some margin for profit, but nothing excessive.” This might be true in markets in which goods are not in special demand. But it is not true in the New York rental market. Consider this example: My friend’s father co-owned an apartment building in Manhattan starting in 1959. In 2001, he said that he could make a decent profit on a one-room studio (450 square feet) by charging no more than $715 per month. He sold the building the same year. The company that bought it began charging new tenants $2900 for the same apartment in 2002.
Overhead cannot possibly have increased that much in one year. The landlord did not increase the rent by over 300% in order to defray new costs. He increased the rent because he could; and demand was so high he could actually get away with it. He was not satisfied with the “modest profit” he could net from $715 per month. He wanted the bulging, luscious profit he could wring by charging four times as much. This is the free market at work: Take demand and drain it for all it’s worth, no matter how shameless the “gouging.”
I do not write all this in order to abolish the free market. I know the Soviet Union failed, so spare me that standardized objection. I mention it only to point out there is nothing at all dignified about free market forces. Some have the good fortune to own goods or offer services at a time and place in which they are in special demand. Everyone else needs the goods and services. This arms those who possess the goods or services with unusually disparate economic power. The party with power has discretion whether to exploit it by overcharging and making a huge profit or acting “fairly” and making only a modest profit. When it comes between big profits and small profits, which one do you think the true free marketeer will choose? This is not just natural human avarice at work; institutional factors come into play, too. Corporations, after all, are fictional entities established for one reason: To maximize shareholder wealth. “Maximize” means “get the most you can in the circumstances.” As such, corporations have a legal duty to “gouge” as much as possible for the goods or services they sell (subject always to laws that would cost more to violate than ignore).
I do not like tilted playing fields like this. That is why my blood boils when I read about New York rents. Landlords essentially charge thousands of dollars for something that is really worth hundreds. I know for a fact that they do not need to charge as much as they do. They do it only because they want to gorge themselves on profit. At the profit table, New York landlords are not content to nibble or even eat their fill. They need to stuff themselves with profit with orgiastic relish. And even then they are not satisfied. The same apartment that cost $4200 a month last year will go up to $4500 a month next year, and on and on until you have to flee, making room for the next fully-bankrolled trust fund heiress. In my view, this is just disgusting.
I do not lightly use the word “disgust.” Generally, I criticize the concept because people use it to underscore perverse moral judgments on many subjects. But I honestly feel disgust when I learn about people who make excessive profits on goods or services that should not yield so much profit. After all, there are so many people who struggle in this country for next to nothing. Millions worry in desperate fear whether they will lose their home or go bankrupt because they can’t pay for an unexpected medical expense. Yet there are those who sit in offices and rake in billions simply because they had the good fortune to own choice property. Their hunger for profit drives everyone else to despair. The irony is that they really don’t need to charge as much as they do, not even close. But they charge $5000 for a $1000 apartment because they can. I find that disgusting.
I have no solution to this. Perhaps it is humanity’s fate to endlessly seek maximal profit at others’ expense. Perhaps there is nothing we can do to temper the human urge to maximize profit when opportunity permits. Perhaps this is just the way we are. Commerce, after all, is warlike. By nature, man is a violent creature. He seeks to dominate his fellows. But in civilization, he can’t assert his dominance with brute force, so he uses “civilized” means, such as economic tyranny and legal oppression.
Commercial struggles replace the struggle for survival in the wild. And just as survival in the wild requires total victory over natural foes, so too does commercial dominance require total victory over every conceivable foe. The urge to maximize profits reflects that desire for “total commercial victory.” Modest profits simply do not cut it.
What would the world come to if landlords only charged “what they needed to survive plus a little extra?” Sadly, people only take risks in our society if they know they’ll get a chance to gorge themselves at the profit buffet. No one would risk all for a mere chance to nibble or snack. Although this hunger for excess might lead to “progress” and “prosperity,” it sure makes life bitter for everyone else who has to tribute food to the buffet.
Most people know that it is expensive to live in New York City. But most people do not realize just how expensive. Rent in Manhattan is truly exorbitant when you consider how little your money buys. While it has always been relatively more expensive to live in New York as compared to any other city in the country (exception: San Francisco), prices have accelerated especially quickly over the past 15 years. One-room studios in Greenwich Village used to cost $900 a month in the mid-1990s. Now they can cost up to $2900. That is acceleration, baby.
What caused this? Do landlords suddenly deliver more value in 2009 than they used to deliver in 1994? Do you get free champagne service and a complimentary shoeshine with your apartment now? No—you get the same thing you got in 1994: a semi-trashy walkup with old fixtures. Your landlord is just making a much bigger profit than he used to. Real estate markets in other States took a beating in recent years. But not New York. Things just kept on marching skyward here. And now virtually no one can afford it except wealthy publishing heirs, Japanese industrial magnates, Hollywood celebrities and various prematurely gray, professional workaholics with no lives who hire nannies (weekends included, because they work then, too).
I often write about profit and the “ugliness” of commercial enterprise in general. Rent in New York City encapsulates my views on the subject like no other. Why are rent prices in New York so high? If landlords are not delivering more value now than they did in the past, what entitles them to keep charging more? According to free market principles, price is a function of “supply and demand.” Applying those principles, it is easy to see why New York rent prices increased so much since 1994. There is a very limited supply of apartments in Manhattan (it is a pretty small, narrow island, after all), and demand for them has steadily increased since “Giuliani time” (ie, the era during which many Americans began to feel that hoodlums, bandits and various “minority thugs” no longer ruled the streets).
Not many apartments. A lot of people want them. They’re going to cost a ton. That’s the free market for you. The same thing happens with umbrellas when it rains: Not many umbrellas. A lot of people want them. The hawkers can charge anything they want to exploit the sudden demand. An umbrella that costs a dollar on a sunny day costs $40 in a downpour. People call this “price gouging” when a street hawker does it. But when a Manhattan landlord or industrial baron does it, it’s called “prudently reacting to progressive market trends.” No matter what you call it, it adheres to the same principle: Make as much profit as you possibly can in the circumstances.
I find this all atrociously ugly. In the free market, those with “goods in demand” suddenly obtain the power to screw everyone else simply because they can. I have written about this power in other circumstances. Banks, for instance, charge fees for ATM use—up to $4.00 for taking out $20.00—because they can. They don’t need to charge that much to cover their cost and make a modest profit. In the free market, modest profits are not enough. Those with the power to make a profit want gratuitous, gluttonous, bountiful, excessive, disgusting, fattening, overflowing, sumptuous, fat-dripping profits. They don’t want to make $1 per unit; they want $100 per unit. This is just the way the free market works. When someone has the unique power to provide goods or services in demand, he or she can throttle the public for far more than the goods or services are worth. Modest profits are no good. In the free market mind, only luscious profits are appetizing. After all, why go into business if you can’t really cash in?
At this point, someone will naturally object: “Prices reflect operating costs and factor in some margin for profit, but nothing excessive.” This might be true in markets in which goods are not in special demand. But it is not true in the New York rental market. Consider this example: My friend’s father co-owned an apartment building in Manhattan starting in 1959. In 2001, he said that he could make a decent profit on a one-room studio (450 square feet) by charging no more than $715 per month. He sold the building the same year. The company that bought it began charging new tenants $2900 for the same apartment in 2002.
Overhead cannot possibly have increased that much in one year. The landlord did not increase the rent by over 300% in order to defray new costs. He increased the rent because he could; and demand was so high he could actually get away with it. He was not satisfied with the “modest profit” he could net from $715 per month. He wanted the bulging, luscious profit he could wring by charging four times as much. This is the free market at work: Take demand and drain it for all it’s worth, no matter how shameless the “gouging.”
I do not write all this in order to abolish the free market. I know the Soviet Union failed, so spare me that standardized objection. I mention it only to point out there is nothing at all dignified about free market forces. Some have the good fortune to own goods or offer services at a time and place in which they are in special demand. Everyone else needs the goods and services. This arms those who possess the goods or services with unusually disparate economic power. The party with power has discretion whether to exploit it by overcharging and making a huge profit or acting “fairly” and making only a modest profit. When it comes between big profits and small profits, which one do you think the true free marketeer will choose? This is not just natural human avarice at work; institutional factors come into play, too. Corporations, after all, are fictional entities established for one reason: To maximize shareholder wealth. “Maximize” means “get the most you can in the circumstances.” As such, corporations have a legal duty to “gouge” as much as possible for the goods or services they sell (subject always to laws that would cost more to violate than ignore).
I do not like tilted playing fields like this. That is why my blood boils when I read about New York rents. Landlords essentially charge thousands of dollars for something that is really worth hundreds. I know for a fact that they do not need to charge as much as they do. They do it only because they want to gorge themselves on profit. At the profit table, New York landlords are not content to nibble or even eat their fill. They need to stuff themselves with profit with orgiastic relish. And even then they are not satisfied. The same apartment that cost $4200 a month last year will go up to $4500 a month next year, and on and on until you have to flee, making room for the next fully-bankrolled trust fund heiress. In my view, this is just disgusting.
I do not lightly use the word “disgust.” Generally, I criticize the concept because people use it to underscore perverse moral judgments on many subjects. But I honestly feel disgust when I learn about people who make excessive profits on goods or services that should not yield so much profit. After all, there are so many people who struggle in this country for next to nothing. Millions worry in desperate fear whether they will lose their home or go bankrupt because they can’t pay for an unexpected medical expense. Yet there are those who sit in offices and rake in billions simply because they had the good fortune to own choice property. Their hunger for profit drives everyone else to despair. The irony is that they really don’t need to charge as much as they do, not even close. But they charge $5000 for a $1000 apartment because they can. I find that disgusting.
I have no solution to this. Perhaps it is humanity’s fate to endlessly seek maximal profit at others’ expense. Perhaps there is nothing we can do to temper the human urge to maximize profit when opportunity permits. Perhaps this is just the way we are. Commerce, after all, is warlike. By nature, man is a violent creature. He seeks to dominate his fellows. But in civilization, he can’t assert his dominance with brute force, so he uses “civilized” means, such as economic tyranny and legal oppression.
Commercial struggles replace the struggle for survival in the wild. And just as survival in the wild requires total victory over natural foes, so too does commercial dominance require total victory over every conceivable foe. The urge to maximize profits reflects that desire for “total commercial victory.” Modest profits simply do not cut it.
What would the world come to if landlords only charged “what they needed to survive plus a little extra?” Sadly, people only take risks in our society if they know they’ll get a chance to gorge themselves at the profit buffet. No one would risk all for a mere chance to nibble or snack. Although this hunger for excess might lead to “progress” and “prosperity,” it sure makes life bitter for everyone else who has to tribute food to the buffet.
Tuesday, June 2, 2009
THE PROFIT PROBLEM
AN ESSAY
Newspapers often publish stories about corruption and greed. People have an appetite for hearing about well-placed individuals who get caught gorging themselves just a little too much at the profit pot. They relish all the seedy details: The lies, the doublecrosses, the secret cash payments and admonishments to keep quiet. In the end, the public loves these stories because it gives people an opportunity to vent their collective outrage against a villain who “broke the rules” and enriched himself “too much.” After all, only a few manage real success in America; and when they do, they inspire as much envy as respect. When “successful people” stumble into scandal, the public gloats. Finally they get a chance to express their envy. “He profited too much,” they cry. “Now we want his blood.”
Profit always lurks behind corruption stories. “The dream of profit” always provides the initial impulse to scheme, double-deal, deceive, swindle and conspire. Profit sets nefarious gears in motion. But who said that profit is wrong? In fact, private profit motivates virtually all economic activity in a free market system, whether beneficial or not. Without hope of profit, no entrepreneur would take chances introducing a new product. Without hope of profit, banks would not lend money to promising new enterprises. And without hope of profit, inventors would be afraid to invest their toil and sweat creating useful new technologies for everyone else. In short, commercial life springs from our society’s universal quest for private profit. If a person works, he wants a profit. Even the lowliest checkout clerk needs a profit to pay the bills and stave off eviction. In word; profit underscores all economic activity. When commercial actors lose their focus on profit, their balance sheets fail and they go out of business. Even employees must think about profit. If an employee’s compensated labor does not generate profits for his employer, he loses his job. In this sense, profit motivates all economic activity in this country, even if the economic actor at issue does not reap the profit he helps to create.
Why then do we condemn profit in corruption/greed scandals? If we all seek profit in our economic lives, why do we castigate those who win fabulous profits? In my view, we do this because most people have a schizophrenic, love-hate relationship with profit. On the one hand, everyone wants to profit; people live their whole lives seeking profit. But on the other hand—and despite all encouraging rhetoric to the contrary—very few people ever find true success in our economic system. This breeds resentment, bitterness, envy and animosity in all those who work hard for a profit, but never win it. This reflects basic inequalities in commercial life: A few succeed wildly; most do not. While this makes sense from a free market perspective—i.e., success would mean nothing if everyone had an equal right to it—it nonetheless propagates negative human emotions. When a child sees another child with toys, he thinks: “No fair. I should have those, too. How come he gets them all and I don’t.” This is precisely how “average people” react when they hear about a person who makes “too much profit.” Profits are adults’ toys. Everybody wants them; only a few get them.
This may oversimplify the profit problem. But on closer reflection, it largely resolves it. After all, human beings are selfish creatures who tend toward avarice and envy. They want to ensure their own pleasure and success, even if it means denying success and pleasure to others. In a competitive economic system with limited resources, this can lead to genuine social trouble. Competition ensures that “only the best” people make the “big profits” and control the resources. Everyone else struggles for handouts (wages), or perhaps a piddling profit, all the while enriching some economic superior. And because human beings are selfish, they feel resentment when one person appears to enjoy all the advantages, leaving them to struggle for almost nothing. In the United States, dominant social classes maintain the status quo by hypnotizing the population with rhetoric about “equal opportunity,” “class mobility” and “universal success.” These myths convince most people that if they “just work hard enough,” they, too, can win the “big profits.” Even if they barely stand a chance to fend off bankruptcy in our economic system, they still grope blindly after the elusive “success mirage.” The mirage keeps them from completely giving up on the insultingly vain pursuit. More usefully, the mirage keeps them from rebelling against the economic order by fooling them into thinking “they have a chance.” Whether duped or not, most people still feel resentment toward those who make more profits than they do. They simply stay their hands, believing that one day they, too, may finally “make it.” But it is all an illusion.
Corruption and greed scandals bring latent public resentments about profit into the daylight. When some unfortunate politician fails to cover his financial tracks and public realizes just how much money he made in a crooked deal, they unbottle their resentments. The politician may not have even violated any law to make his profit; the mere fact that he benefits suffices to unleash pent-up popular resentments about profit. I find this particularly interesting because it appears that public outrage about “excessive profit-seeking” stems not from profit in the abstract, but rather from the fact that enough people discovered it. In other words, profit-seeking is “OK” as long as you are discreet about it. Scandals break when large numbers of people find out about someone’s “questionable behavior.” If no one discovers certain behavior, it will not result in scandal, even if the behavior is undeniably “questionable” or even criminal. Corruption and greed scandals all involve profit. The public condemns the perpetrators for “shameless profiteering.” But they would not condemn it if they never discovered it. In this sense, the perpetrator’s real error is not profit-seeking; it is indiscreet profit-seeking. No one complains about secret, private, discreet profit-seeking. After all, everyone does that; it sustains our economic system. Yet if a person brazenly makes profits for all to see, he can expect social reproach. The sin, then, is not profit-seeking; the sin is indiscretion about profit-seeking.
As a society, we have a bizarre relationship to profit. I analogize it to sex. Everyone seeks and enjoys sex, just the way everyone seeks and enjoys profit. In some way, we “hunger” for both, even we have moral qualms about our quest for them. Moreover, both sex and profit are “touchy subjects” that demand discretion; we can only whisper about them. We expose neither sex nor profit to candid, open dialogue. No one likes to tell others how big a profit he won in a deal; he worries that he will inspire resentment in those who have been less than successful in business. In the same way, no one likes to brag about sexual exploits in mixed company; he worries that he will inspire resentment in those whose amorous pursuits have been less than satisfactory. Yet everyone seeks both sex and profit. And the problems only develop when there is indiscretion about the subject. This is because human beings naturally feel resentment toward those who achieve success in an area in which everyone seeks success. Still, human beings envy only what they see. To avoid difficulties involving either profit or sex, a person must merely cover his tracks and remain discreet about it.
In my view, this whole discretion complex misses the conceptual point because it mistakes peripheral questions for substantial ones. Why is indiscretion about something worse than the thing itself? Here, we must leave the sex/profit analogy and examine profit alone in the abstract. Objectively speaking, profit-seeking is a much more pernicious vice than sex, if sex can even be deemed a vice. Lust for profit in our economic system leads to far worse social problems than the mere biological impulse to sex. Profit-seeking spawns inequality, unfair competition, disparities in wealth, class discord and pervasive suspicious throughout society. Perhaps worst of all, it disparages human dignity by relegating individual human beings into instrumental “roles” intended to placate a “master’s” greed for personal profit. Given these abstract problems with profit-seeking, we should condemn it more strongly than mere indiscretion about profit-seeking. But that would contravene our entire raison d’etre in a free market system.
Our society, then, maintains its bizarre relationship with profit. After all, if our society candidly condemned profit, it would nullify itself completely. For better or worse in America, everyone lives for profit. We envy those who succeed, but we do not express our resentment until successful people drag their shameless profiteering into the daylight. If they had been discreet about their profiteering, they would have faced no trouble. They would merely have been “good at business.”
What is the lesson, then? The lesson is that everyone wants to make a profit, but no one wants others to know about it. Because when one person gets all the toys, everyone else starts whining. When it comes to profit in our society, it is best to just quietly deposit our checks and shut the hell up. And try not to leave a paper trail on your way to the bank.
Newspapers often publish stories about corruption and greed. People have an appetite for hearing about well-placed individuals who get caught gorging themselves just a little too much at the profit pot. They relish all the seedy details: The lies, the doublecrosses, the secret cash payments and admonishments to keep quiet. In the end, the public loves these stories because it gives people an opportunity to vent their collective outrage against a villain who “broke the rules” and enriched himself “too much.” After all, only a few manage real success in America; and when they do, they inspire as much envy as respect. When “successful people” stumble into scandal, the public gloats. Finally they get a chance to express their envy. “He profited too much,” they cry. “Now we want his blood.”
Profit always lurks behind corruption stories. “The dream of profit” always provides the initial impulse to scheme, double-deal, deceive, swindle and conspire. Profit sets nefarious gears in motion. But who said that profit is wrong? In fact, private profit motivates virtually all economic activity in a free market system, whether beneficial or not. Without hope of profit, no entrepreneur would take chances introducing a new product. Without hope of profit, banks would not lend money to promising new enterprises. And without hope of profit, inventors would be afraid to invest their toil and sweat creating useful new technologies for everyone else. In short, commercial life springs from our society’s universal quest for private profit. If a person works, he wants a profit. Even the lowliest checkout clerk needs a profit to pay the bills and stave off eviction. In word; profit underscores all economic activity. When commercial actors lose their focus on profit, their balance sheets fail and they go out of business. Even employees must think about profit. If an employee’s compensated labor does not generate profits for his employer, he loses his job. In this sense, profit motivates all economic activity in this country, even if the economic actor at issue does not reap the profit he helps to create.
Why then do we condemn profit in corruption/greed scandals? If we all seek profit in our economic lives, why do we castigate those who win fabulous profits? In my view, we do this because most people have a schizophrenic, love-hate relationship with profit. On the one hand, everyone wants to profit; people live their whole lives seeking profit. But on the other hand—and despite all encouraging rhetoric to the contrary—very few people ever find true success in our economic system. This breeds resentment, bitterness, envy and animosity in all those who work hard for a profit, but never win it. This reflects basic inequalities in commercial life: A few succeed wildly; most do not. While this makes sense from a free market perspective—i.e., success would mean nothing if everyone had an equal right to it—it nonetheless propagates negative human emotions. When a child sees another child with toys, he thinks: “No fair. I should have those, too. How come he gets them all and I don’t.” This is precisely how “average people” react when they hear about a person who makes “too much profit.” Profits are adults’ toys. Everybody wants them; only a few get them.
This may oversimplify the profit problem. But on closer reflection, it largely resolves it. After all, human beings are selfish creatures who tend toward avarice and envy. They want to ensure their own pleasure and success, even if it means denying success and pleasure to others. In a competitive economic system with limited resources, this can lead to genuine social trouble. Competition ensures that “only the best” people make the “big profits” and control the resources. Everyone else struggles for handouts (wages), or perhaps a piddling profit, all the while enriching some economic superior. And because human beings are selfish, they feel resentment when one person appears to enjoy all the advantages, leaving them to struggle for almost nothing. In the United States, dominant social classes maintain the status quo by hypnotizing the population with rhetoric about “equal opportunity,” “class mobility” and “universal success.” These myths convince most people that if they “just work hard enough,” they, too, can win the “big profits.” Even if they barely stand a chance to fend off bankruptcy in our economic system, they still grope blindly after the elusive “success mirage.” The mirage keeps them from completely giving up on the insultingly vain pursuit. More usefully, the mirage keeps them from rebelling against the economic order by fooling them into thinking “they have a chance.” Whether duped or not, most people still feel resentment toward those who make more profits than they do. They simply stay their hands, believing that one day they, too, may finally “make it.” But it is all an illusion.
Corruption and greed scandals bring latent public resentments about profit into the daylight. When some unfortunate politician fails to cover his financial tracks and public realizes just how much money he made in a crooked deal, they unbottle their resentments. The politician may not have even violated any law to make his profit; the mere fact that he benefits suffices to unleash pent-up popular resentments about profit. I find this particularly interesting because it appears that public outrage about “excessive profit-seeking” stems not from profit in the abstract, but rather from the fact that enough people discovered it. In other words, profit-seeking is “OK” as long as you are discreet about it. Scandals break when large numbers of people find out about someone’s “questionable behavior.” If no one discovers certain behavior, it will not result in scandal, even if the behavior is undeniably “questionable” or even criminal. Corruption and greed scandals all involve profit. The public condemns the perpetrators for “shameless profiteering.” But they would not condemn it if they never discovered it. In this sense, the perpetrator’s real error is not profit-seeking; it is indiscreet profit-seeking. No one complains about secret, private, discreet profit-seeking. After all, everyone does that; it sustains our economic system. Yet if a person brazenly makes profits for all to see, he can expect social reproach. The sin, then, is not profit-seeking; the sin is indiscretion about profit-seeking.
As a society, we have a bizarre relationship to profit. I analogize it to sex. Everyone seeks and enjoys sex, just the way everyone seeks and enjoys profit. In some way, we “hunger” for both, even we have moral qualms about our quest for them. Moreover, both sex and profit are “touchy subjects” that demand discretion; we can only whisper about them. We expose neither sex nor profit to candid, open dialogue. No one likes to tell others how big a profit he won in a deal; he worries that he will inspire resentment in those who have been less than successful in business. In the same way, no one likes to brag about sexual exploits in mixed company; he worries that he will inspire resentment in those whose amorous pursuits have been less than satisfactory. Yet everyone seeks both sex and profit. And the problems only develop when there is indiscretion about the subject. This is because human beings naturally feel resentment toward those who achieve success in an area in which everyone seeks success. Still, human beings envy only what they see. To avoid difficulties involving either profit or sex, a person must merely cover his tracks and remain discreet about it.
In my view, this whole discretion complex misses the conceptual point because it mistakes peripheral questions for substantial ones. Why is indiscretion about something worse than the thing itself? Here, we must leave the sex/profit analogy and examine profit alone in the abstract. Objectively speaking, profit-seeking is a much more pernicious vice than sex, if sex can even be deemed a vice. Lust for profit in our economic system leads to far worse social problems than the mere biological impulse to sex. Profit-seeking spawns inequality, unfair competition, disparities in wealth, class discord and pervasive suspicious throughout society. Perhaps worst of all, it disparages human dignity by relegating individual human beings into instrumental “roles” intended to placate a “master’s” greed for personal profit. Given these abstract problems with profit-seeking, we should condemn it more strongly than mere indiscretion about profit-seeking. But that would contravene our entire raison d’etre in a free market system.
Our society, then, maintains its bizarre relationship with profit. After all, if our society candidly condemned profit, it would nullify itself completely. For better or worse in America, everyone lives for profit. We envy those who succeed, but we do not express our resentment until successful people drag their shameless profiteering into the daylight. If they had been discreet about their profiteering, they would have faced no trouble. They would merely have been “good at business.”
What is the lesson, then? The lesson is that everyone wants to make a profit, but no one wants others to know about it. Because when one person gets all the toys, everyone else starts whining. When it comes to profit in our society, it is best to just quietly deposit our checks and shut the hell up. And try not to leave a paper trail on your way to the bank.
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