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The Myth of Corporate Greed: Are Corporations greedy or could it be all of us?

October 17, 2011 at 11:54 pm, by Rich Kirkpatrick


The “Occupy Wall Street” protests have been getting a lot of press. One has insinuated that it is a “moment” not a “movement” since there is no vision, just protest. Others, may say it is a swelling populist movement against what is know as corporate greed. I disagree with both statements or ideas. First, there is more than a moment happening since a vision for a more equitable and accountable business culture is being forged in the conversation. Second, I believe the whole idea of “corporate greed” is a myth. People are greedy, not corporations. 

Whether we can agree on the vision or not, there is a huge shift in our thinking when CEOs of large companies can make huge sums while failing at running these financial institutions. We have been failed in trust because of seedy operations such as lending money to people who should not have been given home mortgages in the first place. And, there are worse things as well. The vision is to see accountability. Perhaps, the vision is to see equitable redistribution of wealth or a more “socialist” bent in either regulation, taxation or both. People are mad. I admit that I am, too. I am not for giving money away to redistribute wealth as an ideal. However, I am for accountable practices. One thing hard for some to understand is that today’s movements are not top down affairs. They are tribal and viral and very real.

Now the idea of a corporation being greedy is just not true. People are greedy. The financial barons, CEOs and board members who oversee these institutions in many cases have enriched themselves at the cost of hard working people. Wall Street was bailed out, and the average home owners who pay their bills were not. We lost. They were too big to fail. But, we also have our pensions, 401Ks and investments in these very same companies. Think of the teachers, firemen and shop keepers who have money in mutual funds. Are we greedy, too? Perhaps.

Occupying Wall Street is an effective symbol at getting attention, but who is the real enemy? Are not we all? We buy the iPhones and the Tom’s Shoes and shop at Target. We are employed a lot of the time by these greedy corporations. So, are we not as part of these institutions culpable for the behavior as well as the guys and gals at the top of them? Perhaps.

I am not ready to cheer the protesters on, but I will not discount them either. I am not ready to cry foul that corporations are greedy, but I will not allow status quo to persist. If we are going to protest then lets do it to those who can really make a difference. Might that include an honest look at ourselves as well as the logo bearing yet faceless corporation?

What do you think: are the corporations greedy or could it be all of us?

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  • Tom Spears

    Rich, it should come as no surprise that corporations are, in fact, greedy — they are designed to be that way.  They are owned by shareholders who care only about their personal returns, and the shareholders and board members work hard to align behavior in the organization to try to maximize that return.  If your looking for corporations to have a heart, and care about something else, then you’re wasting your time — they will do so when it is in alignment with their primary objective, which is making money for shareholders.

    Not surprisingly, many (but not all by a long shot) senior managers spend a lot of time and effort looking out for their own personal gains.  But the corporations are set up to align management’s personal motives with what is best for the shareholders .  The majority corporations realize that the way to provide the best returns is to satisfy their customers (whomever they are).  There are volumes written on this subject.

    The people that sometimes get “shortchanged” in this equation are employees.  If there are cheaper alternatives (lower labor rates, mechanical replacements or what have you), management will be quick to capitalize on them.  They are provided incentives to do exactly this.

    On the other hand, employees are not exactly over-brimming with loyalty to their employers, either.  Many complain incessantly as if the corporation was their mother,.  They whine for fairness and more rewards themselves.  A telling statistic is that 90% of employees believe they are a top 10% performer at their company.  Somebody is certainly deluded here, and it isn’t just employers.

    And you must be careful not to paint all corporations with the same brush as the large banks.  There are some significant differences.

    On the so-called bailout — most of the money lent to banks has been repaid to the federal government, and with interest.  Don’t forget that couple of very large banks did go out of business.  The “bailout” was designed to prevent a run on banks like the U.S. experienced in the 1930′s. For a while, we teetered on the edge, and the government stepped in and successfully prevented a long and painful depression (IMHO).  It was definitely the right move at the time — I would hate to think what the U.S. would look like right now, two years after the melt-down, if we didn’t have a functioning banking system.

    The occupy movement is, as you said, viral and unfocused.  I worry it may be easily co-opted and used for any number of damaging purposes.  We should all watch what is going on there carefully, and make judgments as it develops.

    • http://rkweblog.com Rich Kirkpatrick

      Hi Tom!

      Thanks your very informed thoughts!

      “And you must be careful not to paint all corporations with the same brush as the large banks.  There are some significant differences.”

      Your statement there was one the main reasons I wrote this post/conversation-starter. Things should not be painted in such broad strokes. Banks failed and they failed us and we failed in how we borrowed as homeowners. (Think that nice ski boat bought with the third mortgage). Obviously, not all of us behaved badly. But, we all are paying for it, apparently.

      Now as far as greed, our institutions simply reflect our values don’t they? People make this so. Perhaps there is a need to rethink designing a system that only serves itself full of people who serve themselves. Socialism is not the answer. Greed is not as well. 

      Are there ways to improve at the very least what we have? That is what I hope to hear talked about. Rather than that, we hear the drama of ridicule of protesters or demonization of banks.

      -RK

      P.S. I also worry about the protest becoming co-opted. It is the same worry I have for the extreme on the tea party side.

      • Tom Spears

        I think socially conscious investing makes us all collectively feel better when we contemplate it, but the fact is it is a minute speck in the sea of money out there seeking a return.

        Sorry to say it, but I think businesses simply have to be forced (regulated) to behave in any way other than toward the purpose for which they were created — making money for shareholders.  Don’t want them to pollute — create penalties and incentives that make it in their best interests to do so.  Want them to contribute more to the poor?  Show them where the payoff for their shareholders is, and they will.

        I don’t think the institutions are inherently evil — but we need to understand how they function, what their essential purpose is, and stop expecting anything else.  If we want alternate behavior, we have to arrange things to get it.

        That might be where our own greed gets in the way… Many of us are also investors in these businesses (directly or indirectly), and our greed shows when we don’t want to cut off profitable behavior (like cheaply cutting environmental corners, or opportunistic price gouging) because it cuts into OUR returns.

        So, in that sense, I agree with your thesis — that the “greed” of corporations is a mirror reflecting our greed as individuals.

        Tom

    • http://rkweblog.com Rich Kirkpatrick

      Another thing. Tom, it’s actually an honor to have you comment on my site and help with the conversation. Thanks!

      RK

  • http://proworship.in Gangai Victor

    I wonder if greed alone is the root cause here. Making money is the essence of any profit making entity and they ain’t gonna put a ceiling on how much money to make.

    These corporations should soul search on their ‘ends justify the means’ manner in which they have gone about making money. It’s their ‘anything goes’ policy that’s been a major contributor to today’s plight imho.

    Hopefully lessons were learnt and these horrible business practices won’t be repeated ever…but that’s probably wishful thinking!

    • http://rkweblog.com Rich Kirkpatrick

      I would never want a ceiling, since I am not a regulatory-hungry person. And, we cannot legislate character. However, we can prosecute fraud and perhaps not allow the corporate legal structure to shield the individual in that system who looks the other way.

      • http://proworship.in Gangai Victor

        Yes, I am with you on that.

  • Rich

    Actually, the root “problem” is not that corporations are greedy.   The root problem is that corporations are calling the shots.  The first mistake was made (over the last hundred years or so) by the courts: giving corporations many of the rights of “persons,” e.g. free speech and the right to make political contributions.   Recent Supreme Court decisions make this worse, because wealthy corporations can totally outspend individuals.  

    The second mistake grows from the first one.  The level of deference that Congress shows business will only grow since the Citizens United ruling, and Congress will gut any protective legislation that business boo-hoos about.   (Even if there aren’t enough votes to repeal a regulation, Congress can just starve the enforcement agency of the funds it needs.)   The result is massive weakening of regulation–like repealing the Glass-Steagall act, which would have prevented the 2008 meltdown–to the point that businesses are playing football without referees.   Workers are losing more and more protection under the law, citizens are losing more and more protection under the law, the water we need to drink and the air we need to breathe is losing more and more protection under the law.   And as one singular, creepy example: the entire food supply is on the verge of becoming the sole intellectual property of Monsanto corporation because (a) every GMO crop they come out with is approved despite strong consumer opposition, and (b) once the seeds from those crops spread to neighboring fields, Monsanto comes in and sues the farmers who *didn’t* buy seeds from them on the basis of the genetic evidence.   No “innocent until proven guilty” in civil lawsuits, folks….

    • http://rkweblog.com Rich Kirkpatrick

      Hi Rich!

      I have read abut the Monsanto Corp. seeds thing. That is kinda creepy.

      So, as I am contemplating, we need a revision of what a corporation is. I am guessing huge legal firms have made corporations more powerful because of the onslaught of litigation over everything pushed them in a corner to some degree. No system is perfect and I loathe socialisms stealing from individuals. But, how do we take one step in the right direction with regulation?

      I am looking up the Glass-Steagall act. So, you are saying those protections are what caused the breakdown in 2008?

      Thanks for helping the conversation, Rich!

      RK

  • http://www.contextandvoice.com Vince

    The flawed system that requires the economy to grow built on debt created by money more or less fabricated out of thin air via fractional reserve banking perpetuates the ever widening gap between those who move billions of dollars via usury and the people who clock in and work for their dollars has to change.

    The system of growth needs the gap to grow bigger to survive. the rich have to get richer and the poor have to get poorer or the machine stops.

    Legislation would help but as commenters have noted; the multinational corps effectively make the laws via having the capital to make congress do their bidding.

    What we do have control over is our own debt. If the middle class decided to simply stop playing this hopeless game and refused to take on ANY debt the monster could slow to a crawl has we stop contributing debt to be passed around from one complex derivative to the next making money for each middle man along the way.

    Every time we swipe that credit card we make our own money worth less and at the same time exponentially increase the pieces in their game (and we don’t get to play). We are getting beat up on both sides of that transaction.

    So who’s greedy? We are.

    What’s the solution? I’m afraid to say it, but it must be a revolution of some kind…maybe this is the beginning of it. I hope so.

    Maybe skateboarding dads will save this country.

    • http://rkweblog.com Rich Kirkpatrick

      Hi Vince!

      Thanks for commenting!When we “save” our money it is essentially in the banking system is it not? We own corporations to some degree. Whether we never use a credit card or not, we still will buy our goods and be employed and be part owners (via mutual funds, savings, etc.). So, you are right. How spend and save will make a difference. Our power is also in the ability to hold accountable errant behavior, as Congress is well aware. What some people want, though, is a regulated system that basically lowers the “gap” by taxation or other means. People being rich is not the problem. It is when greed at all level rules the day.So, short of a bloody revolution, I am thinking there are some modest returns to better regulation. Then, let’s look at this thing we call a corporation and make it more accountable while not stripping it of the desire for profit. Profit is good. Every farmer desires to fill his barn. And, that is a good thing.

      • http://www.contextandvoice.com Vince

        I’m all for getting rich. 

        but I still think it is going to take a revolution to fix…I just hope it is sooner than later. I don’t think it will have to be violent.

  • Me

     Corporations are definitely greedy.   Too many contract jobs are opening
    up today- a way for companies to take health insurance, paid time off
    and other benefits other fields outside of IT get more often, than not.

    The only reason corporations offshore is because they can pay people- less money.  Yet they do this without thinking about logistics or manufacturing costs. 

    The problem is concern over ROI moreso than anything else.  The problem
    with this is- if you drive down the costs of salaries, who’s going to
    buy the Iphone, pay the credit card convenience fee, shop for new
    clothes, or pay the airline bag fees?  I can say in the last couple of years, I’ve done none of
    these.

    Corporate America needs to look at the folks making less than
    50k per year and really- understand what they are doing to folks by
    allowing them to work for 6-12 months then put them out of work for 6
    months at a time.  50k is really- 30k or less.  And in a metro area- 30k is not a house (we’re not talking a mansion here) payment or a new car (and we’re not talking a Lexus or Porsche) payment either.

    In the article- I’d like to point out that a lot of us are ‘forced’ to
    work at said corporations mentioned.  Yes I use the word forced- how else
    are we going to get money to buy goods and services?  There’s only so many government grants to go around for one to run their  own business- and who wants to work 12-16 hour days as it were? 

    In the end- I think the greed is all a result of dergulated business in america and a deregulated economy.   And I agree with the sentiment that Corporate America really buys political power of either party.  That alone is a shame and sham as well.

    I think they need to raise taxes on goods imports to the US for these companies.  Lets face it, the Iphone would be $99-149 or less MSRP if Apple really cared.  Paying workers 300 a month in china while they are living in a dehumanized barrack style without freedoms even the poor americans are lucky to have here- hasn’t driven down the prices of Apples products- but merely padded their pockets.  Only one example of many many many- how Corporate America and the NYSE investors of today- are simply- greedy.

    • http://rkweblog.com Rich Kirkpatrick

      Thanks for your comment. The point here is to not say corporations are without greed. It is to say that we all are greedy. Our behavior feeds the beast. We are the source of greed and must own up to it. Our fireman pensions drive greed to keep account investments going up. After all the office clerk’s 401k is invested where? Until we put a face to the people behind this legal shield we call corporations real change is silenced.
      It is another kind of greed to redistribute wealth. So, I think it is a myth and shallow to simply say companies are greedy. Is there not more to the story? Are we not part of the problem? No one truly forces anything on us. We have choices here in the US–yes, they are fewer and more costly than in memory. If not so, immigration would not. E an issue.
      RK

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