September 16, 2014  
 
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Stopping Business Corruption

 

How to Fight Corruption in Business and Government

Is business corruption endemic to the human race? It would seem so. We look at why this is the case and suggests a couple of ways to fight corruption.

Lately, the news is full of stories of ethical lapses and outright fraud.
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In Illinois, our governor, Rod Blagojevich, has abandoned his charter to serve the public interests and instead has used the public to further his own self-interest.

In New York, Bernard Madoff has just been caught perpetrating a $50 billion Ponzi scheme.

Since the beginning of time, there have been swindlers, corruption, liars and cheaters.

Prostitution is the oldest profession? I don't think so. I'm guessing that theft was the first means of making a living on this planet.

Given that ethical lapses likely date back to Cro-Magnon times, it seems that theft and corruption are endemic to our species.

Here are some reasons that business corruption is not going away any time soon.

Our Competitive Nature for Material Goods Makes Us Unethical

Greed is clearly a driving factor for business corruption. We covet things. We love material goods. A decent house is not enough for some of us…we would rather have a mansion. One mansion only? Some of us need to own several mansions.

Can we buy these things by staying on the straight and narrow path and behaving ethically? It's possible, but it's a long shot. Stealing money -- either through accepting a bribe, embezzling money, running a Ponzi scheme or any of hundreds of other ways to steal money – is more of a sure thing, with the only risk being that you may get caught.

Our Desire to Seek the Easiest Way to Do Something Leads to Business Corruption

Efficiency is the mantra of the human race. We are always looking for a better way to do something…and that means we are always looking for the easy way out. For humans, lazy is not the exception. It is the rule. Hard work? No thanks, most of us would answer.

The easy way out, of course, is not to build something up on your own. Rather, the easy way out is to take something from somebody else. Wait for them to create something of value and then take it. That malodorous yet highly effective action can range from plagiarizing a speech verbatim to robbing a bank. Again, the risk is simply that you might get caught, which can result in anything from personal humiliation to jail time in a federal penitentiary.

The Odds Are Against Your Getting Caught

Are you likely to get caught? Unfortunately, no. Most crimes are committed and never detected. Crimes that are detected are rarely solved.

When a criminal is caught, it is typically because they have pushed the odds. A driver who constantly speeds on the expressway might speed 300 times before they are finally pulled over and given a speeding ticket. The odds that they are pulled over the very first time they break the law are slim to nil.

The Pros of Being a Con Outweigh the Cons of Being a Con

Moreover, punishment does not always suit the crime.

Take junk bond king Michael Milken as an example. In 1989, he was accused of insider trading and was indicted on 98 counts of racketeering and securities fraud. Statistically, it seems 99.9% likely that the crimes he was tried for were not his first. A life of business corruption allowed him to live a glorious life of fame and fortune. He was sentenced to ten years in prison, but was released after less than two years.

Hmmm...let's ask this generic question. Imagine that you are given the option to have $50 million in cash in the bank and live high on the hog for 30 years. You will own mansions all over the world, you will eat at the best restaurants, you will drive the fanciest and most expensive cars on the planet. You will not only live well, but you will be admired by the masses. The only hitch is that after those 30 years, you will lose your reputation and will become infamous, rather than famous. You will also have to spend 2 years in a jail cell. Not a nasty jail cell...something more akin to a cheap motel room. You can still read, write, learn and you will no longer be burdened with making ends meet.

We need only look at the news and study the annals of white collar crime to realize that many would say "Sign me up!" in a heartbeat to the proposition outlined above.

What Must Be Done?

If we've learned anything in this world, it's that you cannot teach old dogs new tricks. For humans, an "old dog" is a ten-year old. If a boy or girl is ten years old and still has leanings toward unethical behavior, those tendencies will be with them for the rest of their lives. They may fight against their penchant to take the easy way out, and they may succeed. But enough will remain unethical and immoral to cause societal problems.

Even the smallest crimes add up. Cheating just a bit on taxes might seem harmless, but, in aggregate, the unethical behavior of the many can be more damaging than the massive crimes of the few (e.g. a Blagojevich or a Madoff).

Proper parenting is failing us. Religion is failing us. Clearly these time-tested proponents and evangelists of ethical behavior are not getting the job done.

The unethical are slipping through the cracks in growing numbers, entering adulthood and placing themselves in the spots where it is easiest to steal. If you want to steal a lot of money, you need to work in the government or on Wall Street or in a business. When asked why he robbed banks, Willie Sutton the bank robber said "because that's where the money is." It's for this same reason that crooks have gravitated into the money-flush worlds of Wall Street and big government.

The agencies that work to fight crime do a great job. But they are understaffed. They do not have the resources they need to be successful.

There is of course no easy solution to this massive problem. I can recommend two things:

  • Formally Teach Ethical Behavior to Young Children. We know that the Pledge of Allegiance is effective in making impressionable young children patriotic. We need to have a national Pledge to Do the Right Thing. Somebody needs to write an inspiring pledge and get every child to recite that pledge. Moreover, we must go beyond the Three R's ("reading, riting, and rithmetic") and add a Fouth R – Rightness. The curriculum for children starting in pre-school should evolve to include a comprehensive education on Rightness…giving examples of bad and unacceptable behavior and discussing the implications of not doing the right thing. Teach morality in the schools? Anathema to many…but it needs to be done, and it must be done thoughtfully and systematically. In addition, outside of the schools, there needs to be more PR aimed at kids that deters them from being bad. 'Nuf said.
  • Create More Good Guys and Give Them the Tools They Need. Many important professions are undercompensated and underglorified. Teaching is one good example. Crime-fighting is another. We have trouble attracting our best and brightest to these professions, and it is therefore more difficult for those professions to escape the ogres of mediocrity. We need to glorify those professions that protect us against the unethical and encourage our best to become crime fighters. We need to pay them enough so that they will not be tempted to go over to the dark side. We also need to give them the resources they need. That means that crime fighting agencies need budgets to hire and they need the best tools that are available, because the bad guys are not pinching pennies.

The Bottomline on Stopping Bottom-Feeders

Let's face it. By nature, we are bad people. For the reasons outlined above, crime and corruption are not going away. Business corruption and government corruption are here to stay.

But a good PR push to young children in and out of the schools might slow crime and corruption down in the long-run. In addition, giving crime fighters more resources may obstruct and intimidate the Blagojevichs and the Madoffs of the world in the short-term. We might even catch more of those jerks and actually give them what they deserve.

At the same time, there are related battles to fight on other fronts. Income disparity is a leading crime driver. In this down economy, as unemployment rises, crime is rising. Desperate times require desperate actions.

As entrepreneurs, we must focus our efforts on job creation, working to help people make a decent living so they won't need to cheat or steal. Unlike those malignant freaks who steal and cheat because they need six mansions and must have the most expensive car in town, most of us will not cheat or steal if we are content with our work and it earns us a decent living that allows us to meet our basic material needs.

To be sure, it's the small business economy that creates those jobs, and, as business owners, it our job in society to keep the peace simply by going about our normal business activities.

If you are an entrepreneur, you are a hero. Maybe you didn't know that, but it's true.


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