The Price of Civilization_ Reawakening American Virtue and Prosperity - Jeffrey D. Sachs [8]
Figure 2.7: Rising Income Inequality, 1913–2008
Source: Data from Database for “Income Inequality in the United States” (Saez and Piketty).
Soaring income and power at the top has changed American society. Many of those at the top of the heap have come to look upon the rest of society with disdain. We have entered an age of impunity, in which rich and powerful members of society—CEOs, financial managers, and their friends in high political office—seem often to view themselves as above the law.
The recent cascade of corporate scandals has been unrelenting, often with close links between the scandal-ridden companies and powerful politicians. Dick Cheney went from being the CEO of Halliburton, a company involved in an endless tangle of bribery, contract violations, accounting frauds, and safety violations, straight to the vice presidency, where he used his high public office to coddle the oil industry. And Wall Street firms such as Goldman Sachs, Citigroup, and JPMorgan Chase not only were the central actors in the financial crisis of 2008 but were the very places to which Obama turned to staff the senior economic posts of his administration.
It’s hard to know the ultimate cause of the breakdown in corporate truth telling and ethical business behavior in general. Dishonesty is a contagious social disease; once it gets started, it tends to spread.23 Our “social immune system” has been deeply compromised. Perhaps we’ve become inured to hucksterism through a lifetime of watching the phony claims of advertisements, campaign commercials, and official military statements on Vietnam, Iraq, and Afghanistan. Perhaps the cause is the parade of CEOs who have cheated their own companies, their shareholders, and their customers, giving us the sense that everybody in corporate America is cheating. Perhaps the cause has been the repeated exposés of corporate lies in the drug and oil industries, financial rating agencies, investment banks, and military contractors.
When something goes wrong—a drug proves dangerous in follow-up tests, a drilling practice proves hazardous, or a paramilitary unit engages in murder or torture—the inevitable response is to lie first, cover up next, and acknowledge the truth only as a last resort, usually when internal documents are finally leaked to the public. I witnessed this at Harvard as well, when the U.S. government charged a colleague of mine with insider dealing on a federal contract. The university’s response was to mobilize the PR machinery and fight the charges rather than to search for the truth.
Perhaps the ultimate cause is the nearly complete impunity of lying or costly failures in leadership. Almost nobody at the top pays a price for such behavior, even when the truth is eventually exposed. The bankers who brought down the world economy remain at the top of the heap, sitting across the table from the president in White House meetings or dining at state dinners as the president’s guests of honor. Policy advisers such as Larry Summers, who led the U.S. government to deregulate the financial markets in the late 1990s, have been rewarded with lucrative positions on Wall Street and academia and then with renewed appointments at the top of government.
Those who are actually found guilty of violating the law typically get off with a slap on the wrist, if that. When Goldman Sachs was charged by the Securities and Exchange Commission (SEC) with stoking the subprime bubble through marketing of toxic securities