Here’s Nobel prize winning economist Joseph Stiglitz on differing reactions to the subprime meltdown among business and economic elites at the Davos conference last week:
“It was interesting to see the different cultural attitudes to the crisis on display. In Japan, the CEO of a major bank would have apologised…, and would have refused his pension and bonus so that those who suffered as a result of corporate failures could share the money. He would have resigned.
In America, the only questions are whether a board will force a CEO to leave and, if so, how big his severance package will be. …”
How did it become the acceptable standard of behavior in this country for CEO’s to treat their companies as a private piggy bank? It seems impossible to shame them into decent behavior. Many people are probably just cynical about public life in general and corporate behavior in particular; no doubt others have been convinced by the free market evangelists that self-interest will always transform apparently greedy acts into a common good by Adam Smith’s invisible hand. But, as Stiglitz points out…free markets don’t always work:
“This is the third US crisis in the past 20 years, after the Savings & Loan crisis of 1989 and the Enron/WorldCom crisis in 2002.
Deregulation has not worked. Unfettered markets may produce big bonuses for CEOs, but they do not lead, as if by an invisible hand, to societal well-being. Until we achieve a better balance between markets and government, the world will continue to pay a high price”