Link
Part 1 described how Wells Fargo bank and the Atlanta public schools defrauded large numbers of customers and students. At the bank, over 5,000 employees were fired. The bank’s CEO admitted responsibility for the fraud before a U.S. Senate Banking Committee yet the fine levied by federal regulators ($185 million) wasn’t even a slap on the wrist, given the $80-plus billion in revenues that the bank took in last year. Nor did the bank admit in that agreement to pay the fine any responsibility for for their actions. The CEO is still CEO.
The Atlanta public schools cheating scandal found evidence of 178 principals and teachers in over 40 schools tampering with student scores on state tests. Eleven teachers were indicted, tried, and convicted (over 20 other educators took plea deals). Those 11 are in prison.
Two questions occurred to me as I read and pondered these instances of corruption Wells Fargo and the Atlanta public schools.
First, why did employees scam customers with bogus bank accounts and educators tamper with test scores?
The familiar answer is: some bad apples caused the problem–which is basically saying it was individuals acting badly not an organizational problem. Over 5,000 fired at Wells Fargo is a lot of “bad apples, however.” Over 40 schools and 178 educators is also a lot of “bad apples.” The “bad apples” answer side-steps the pervasive culture in Wells Fargo and Atlanta public schools that top leaders shaped and drove unrelentingly.
Top officials created an organizational culture of producing results at any cost. Ample evidence exists of top managers setting very high performance goals that were difficult to meet; the company and district created fear among employees who didn’t meet those goals. Penalties for low performance and retaliation for those who complained fostered a culture of fear. Compliance to do what expected even if it disadvantaged customers was a powerful reason to keep a job. In short, the culture caused employees to peddle bogus accounts and fix test scores.
But–you knew a “but” was coming–not all of the lowest paid employees engaged in the fraud. While cultural pressures can be strong and influential, they do not always determine individual action. Sure, 5,300 Wells Fargo employees were fired but many more retained their jobs by figuring out ways to perform and not defraud customers. Similarly, all Atlanta educators experienced the same intense pressure to raise students’ test scores but many principals and teachers followed the rules and did what they were supposed to do in administering and scoring tests. Yes, organizational culture surely shapes behavior but it does not determine how every individual acts.
Top officials were greedy; they thought they could get away with the fraud and cheating and boost the reputation of their organizations. Over the years, bipartisan policies deregulated industries (e.g., financial companies, airlines) creating a climate where profit seeking is highly prized. Billionaires become American heroes dispensing donations, advice, and encouragement to aspiring millionaires. The language describing unvarnished greed has softened, euphemisms abound describing the unceasing chase for more and more money (e.g., “being entrepreneurial,” “individual enterprise”). Not only in the corporate sector, this profit-seeking culture has now spread across public institutions such as schools, hospitals, and prisons (see here, here, and here).
None of this should surprise any reader since individual profit-seeking is in the DNA of a capitalist democracy. From John Jacob Astor to John D. Rockefeller to Cornelius Vanderbilt, billionaires made their money in trade and real estate, oil, and railroads. They became legends in their own time. They were admired, inspiring their fellow Americans whether they were poor, working class or just got a hand-hold in the middle class to get rich In the U.S., the job of curbing the unrelenting search for profit has been the role of government, as it has in most developed countries. We have lived in a mixed economy where both business and government have interacted constantly checking and balancing one another for nearly two centuries.
When that partnership breaks down or one side becomes too powerful—too much government regulation or too much business influence on governmental policy then shifts in political power occur to correct that imbalance. Consider the New Deal following the Great Depression of the 1930s. Or deregulation of industries since the 1980s and reforming the tax code to benefit the wealthy. The U.S. is in such a moment now of inequalities in wealth that call for restraining the richest of the rich from re-shaping government policies to make it easier for them to become even wealthier while leaving middle class families trail far behind in increasing their salaries.
Second, why are there differences in holding public and private employees accountable for their crimes?
Since the late-1970s, The U.S. is in a moment when business success, corporate entrepreneurs, and keeping government regulation at arm’s length has dominated public policy. “Government is the problem,” as Ronald Reagan put it. Getting rid of government rules and bureaucracy, conservatives argue, will unleash business owners to invest and create more jobs for Americans. Anti-government rhetoric morphed into state and federal laws–e.g., tax cuts, incentives for investors to locate their monies in off-shore accounts and not pay taxes, low interest rates, fewer IRS audits– that benefited those who ran companies and had large investment portfolios.
Corporate leaders, backed by large sums of money, hired lobbyists to influence legislators to deregulate airlines, banks, pharmaceuticals, and other industries so that more money would flow to the already rich. To the rich, public institutions were feeding at the tax-payer trough and were not as efficient and effective as private sector companies. Accountability was needed, business leaders said, to hold public officials in schools, hospitals, and prisons to be responsible for student outcomes, curing illnesses, and punishing criminals.
And that is how I explain why no CEO of a company heavily involved in the chicanery of the Great Recession of 2008 has gotten convicted while some Atlanta school employees went to jail.
via IFTTT
No comments:
Post a Comment