Examining Profits über Alles as a Part of the Problem

The dialog around OWS is spreading and maturing, and the nation owes the die-hard protesters who have stuck it out through ridicule and nasty weather a debt of gratitude. That's not to say magical solutions have been found or enacted, but at least people are talking seriously about the system's flaws now and not childishly focusing on what the protesters are eating or where someone has to relieve themselves if they're camping outside.

Essentially, the triumph of OWS has been to raise awareness that people are dissatisfied with the current course we're on and to get everyone talking. But even still, though more people are seriously engaged in more meaningful conversations, easy answer are not readily available. The landscape is very complex.

For example, is it really the bankers we should be angry at? Nicole Lapin explains why that's perhaps oversimplified:

1. To get into the “top 1%” of Americans you don’t need to be a billionaire or millionaire or half-millionaire. The minimum wage earners in that group make about $343k/year.

2. Financial services professionals (a.k.a. “Wall Street”) average $311k/year — so they technically don’t make it into the top 1% if you look at the mean.

Or is it the CEOs? Nona Willis Aronowitz suggests they have more power to make real changes in everyone's lives than the bankers do:

[T]ax codes matter, but CEOs and boards are the ones making the salaries and doling out bonuses. They're the ones making obscene amounts of money for no particular reason—John H. Hammergren, the CEO of McKesson pharmaceuticals, made $131.2 million last year, 11 percent of the net income for a company that employes more than 36,000 people. They have the most direct power to redistribute the wealth and give their employees decent pay and benefits. [via Sully]

But, then, the bankers don't get off that easily in Tom Friedman's latest column:

Citigroup had to pay a $285 million fine to settle a case in which, with one hand, Citibank sold a package of toxic mortgage-backed securities to unsuspecting customers — securities that it knew were likely to go bust — and, with the other hand, shorted the same securities — that is, bet millions of dollars that they would go bust.

It doesn’t get any more immoral than this.

Indeed. It doesn't.

Unless your moral compass equates profits with true north.

For generations now we've had it drilled in our heads that profits are the ultimate good. They are the entire raison d'etre of any business. And if profits are good, then a lot of profit must be really good.

And, so we're told, this isn't selfish or greedy on the part of the business executives either. After all, we're reminded, repeatedly, how profits benefit shareholders...you know the proverbial little old lady with 8 cats on a fixed income who would perish were the CEO of MegaCorpaton Inc. not squeeze every last penny out of his employee's healthcare benefits that he could. The fact that the little old lady owns 50 shares of MegaCorpaton and sees $35 dividends a year (a drop in the bucket compared to what she annually sends her unemployed relatives struggling to put food on the table) is not really highlighted, but....

But, unemployment is actually good for profits too, it turns out. As Walter Benn Michaels notes in a brilliant essay (one of the Held Essays on Visual Arts, edited by our pal Jonathan T.D. Neil) published in The Brooklyn Rail, as a system Capitalism rather likes a certain level of unemployment because it increases profits:

Unemployment is both a problem and a solution. It’s a problem for the unemployed, who want work, a solution for employers who not only want workers but also want the cheapest ones they can get. If, say, you’re looking to hire a salesperson (the largest occupation in the U.S.), the reason you can get one for an average salary of only $12 an hour is because there are a lot of unemployed potential salespeople out there. Which means, in turn, that unemployment is not just a problem for people who don’t have jobs, it’s a problem also for people who do. If you’ve got that sales job, the unemployed are your competition; they may be worse off than you but you’re worse off because of them—they’re the reason you’re only making $12 an hour.

Of course, a lot of unemployment means far fewer consumers, so Capitalism likes to keep profits at what Milton Friedman called the “natural rate of unemployment.” But it gets even more complex, when you consider which people are willing to perform which jobs, as Georgia and Alabama farmers have found in the wake of their states' harsh anti-immigration laws.

Over the weekend, we saw the financial thriller (yes, I know...how improbable...but these are the times we live in) that's generating a lot of word-of-mouth buzz and deserves to receive widespread distribution. "Margin Call" is summarized this way on the movie's website:

Set in the high-stakes world of the financial industry, Margin Call is an entangling thriller involving the key players at an investment firm during one perilous 24-hour period in the early stages of the 2008 financial crisis. When an entry-level analyst unlocks information that could prove to be the downfall of the firm, a roller-coaster ride ensues as decisions both financial and moral catapult the lives of all involved to the brink of disaster.

I can report it's indeed thrilling. I felt like I had be punched in the gut by the end of the flick. [Spoiler alert] What really got to me, because I saw the stark truth in it, was a dialog between Demi Moore's character and Stanely Tucci's, both of whom were being let go from the firm. Staring in to the abyss and contemplating not only the repercussions of what was happening for themselves but the general public, Moore's character reflects on how they got there, at the point at which they chose to move forward with the decision that brought them down, and argues that at the time there didn't seem to be a choice. Tucci's confirms that it always looks that way.

In this scenario it looked that way because they were focused not on what was best for their clients or even what was best for the firm, but rather on what profits demanded of them. Indeed, it was the obsession with making money that destroyed the firm and ended up impacting millions, if not billions, of other people in the process. Even as the 24 hours unfolded and the executive decisions were being made, even as it was clear that the path they were choosing would end all their careers, their reputations, harm so many other people, and most likely bring down the firm, they kept focused on the clarion call of the industry's prime directive: profits über alles. Get what you can for yourself while the getting is good.

If you're looking for the baby, it's out there with the bathwater.