Trump, Bankman-Fried and Musk are the monsters of
American capitalism
Robert
Reich
For them, and for everyone who still regards them as
heroes, there is no morality in business or economics. The winnings go to the
most ruthless
Sat 24 Dec 2022 06.00 GMT
If this
past week presents any single lesson, it’s the social costs of greed.
Capitalism is premised on greed but also on guardrails – laws and norms – that
prevent greed from becoming so excessive that it threatens the system as a
whole.
Yet the
guardrails can’t hold when avarice becomes the defining trait of an era, as it
is now. Laws and norms are no match for the possibility of raking in billions
if you’re sufficiently ruthless and unprincipled.
Donald
Trump’s tax returns, just made public, reveal that he took bogus deductions to
reduce his tax liability all the way to zero in 2020. All told, he reported
$60m in losses during his presidency while continuing to pull in big money.
Every other
president since Nixon has released his tax returns. Trump told America he
couldn’t because he was in the middle of an IRS audit. But we now learn that
the IRS never got around to auditing Trump during his first two years in
office, despite being required to do so by a law dating back to Watergate,
stating that “individual tax returns for the president and the vice-president
are subject to mandatory review”.
Of course,
Trump is already synonymous with greed and the aggressive violation of laws and
norms in pursuit of money and power. Worse yet, when a president of the United
States exemplifies – even celebrates – these traits, they leach out into
society like underground poison.
Meanwhile,
this past week the SEC accused Sam Bankman-Fried of illicitly using customer
money from FTX from the beginning to fund his crypto empire.
“From the
start, contrary to what FTX investors and trading customers were told,
Bankman-Fried, actively supported by Defendants, continually diverted FTX
customer funds … and then used those funds to continue to grow his empire,
using billions of dollars to make undisclosed private venture investments,
political contributions, and real estate purchases.”
If the
charge sticks, it represents one of the largest frauds in American history.
Until recently, Bankman-Fried was considered a capitalist hero whose
philanthropy was a model for aspiring billionaires (he and his business partner
also donated generously to politicians).
But like
the IRS and Trump, the SEC can’t possibly remedy the social costs that
Bankman-Fried has unleashed – not just losses to customers and investors but a
deepening distrust and cynicism about the system as a whole, the implicit
assumption that this is just what billionaires do, that the way to make a
fortune is to blatantly disregard norms and laws, and that only chumps are
mindful of the common good.
Which
brings us to Elon Musk, whose slash-and-burn maneuvers at Twitter might cause
even the most rabid capitalist to wince. They also raise questions about Musk’s
other endeavor, Tesla. Shares in the electric vehicle maker dropped by almost
9% on Thursday as analysts grew increasingly concerned about its fate. Not only
is Musk neglecting the carmaker but he’s appropriating executive talent from
Tesla to help him at Twitter. (Tesla stock is down over 64% year-to-date.)
Musk has
never been overly concerned about laws and norms (you’ll recall that he kept
Tesla’s factory in Fremont, California, going during the pandemic even when
public health authorities refused him permission to do so, resulting in a surge
of Covid infections among workers). For him, it’s all about imposing his
gargantuan will on others.
Trump,
Bankman-Fried and Musk are the monsters of American capitalism – as much
products of this public-be-damned era as they are contributors to it. For them,
and for everyone who still regards them as heroes, there is no morality in
business or economics. The winnings go to the most ruthless. Principles are for
sissies.
But absent
any moral code, greed is a public danger. Its poison cannot be contained by
laws or accepted norms. Everyone is forced to guard against the next con (or
else pull an even bigger con). Laws are broken whenever the gains from breaking
them exceed the penalties (multiplied by the odds of getting caught). Social
trust erodes.
Adam Smith,
the so-called father of modern capitalism, never called himself an economist.
He called himself a “moral philosopher,” engaged in discovering the
characteristics of a good society. He thought his best book was not The Wealth
of Nations, the bible of modern capitalist apologists, but the Theory of Moral
Sentiments, where he argued that the ethical basis of society lies in
compassion for other human beings.
Presumably
Adam Smith would have bemoaned the growing inequalities, corruption, and
cynicism spawned by modern capitalism and three of its prime exemplars – Trump,
Bankman-Fried, and Musk.
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