What's Wrong with American Business Today? Part 1: Compartmentalization of Markets and Vaues

I’ve been very critical of American business and its role in the meltdown in many on-line forums, particularly the Wharton forum (and, as a result, have been anointed “Wharton’s Resident Socialist” – which is cute, but I’m definitely not). I am, though, what I would call a “compassionate capitalist” (to paraphrase one of my least favorite politicians). So I thought I would jot down some thoughts on what I think is wrong with American business. I’ll try to send one out every day or so. Okay, here’s the first:

1. The Compartmentalization of Markets and Human Values

Way too often business leaders “compartmentalize” between their business sides and human sides and never in the twain shall they meet. It’s like Bill Clinton, Elliot Spitzer and Tiger Woods compartmentalizing their trysts completely out of their public personas. I think, in many ways they actually think there are two of them ! The same goes with many business leaders. In the workplace, they march to the beat of Adam Smith and the “Invisible Hand.” Out of the workplace, most try to be respectable members of the community and some even Bible-toting churchgoers. But here’s the problem – the decisions they make in the boardroom, when they are driven by the pure profit motive affect the community and society as a whole – many times in a negative way. But in the office they hide under the cover of “profit maximization”, using it as a shield. I’m sure those Enron folks who robbed their employees of their 401Ks - -- or the Citigroup execs who brought the company down but still think they’re entitled to big bonuses -- were good church-going citizens, but it certainly didn’t factor into their business decisions. They’re decisions many times leave people homeless, without health insurance and/or pensions, while the corporate execs live the “high life,” even after they’ve failed miserably. Capitalism without a social conscious is an empty vessel.

Some topics I’ll cover in subsequent posts:

2. Immediate Gratification

3. Financial Sector as Lord and Master

4. Consumer Schizophrenia

5. Creative Destruction Destroys Creatively.

6. The Rise of “Professional CEOs”

7. The “small business fallacy”

8. The 401K Con Job

9. Bigger is Better and Disruptive Market Power

10. Merger Mania, Leveraged Buyouts and Other Destructive Habits.

11. The Asymmetrical Rewards and Punishments of the Business Cycle

12. The marketing Afterthought

13. International Sanctuaries for Tax Evaders