Thursday, December 16, 2010


Beware of the private profit motive

Everybody loves an entrepreneur! While the news from Afghanistan is uniformly bad, a number of recent news reports see a glimmer of hope in the rise of Afghanistan entrepreneurs.

It is surprising that Americans still have not learned to be suspicious of the entrepreneur. People who look for a tidy profit are clearly the enemies of ordinary citizens. After three years of depression and unemployment, poverty, hunger and homelessness that should not need repeating. But after two centuries of capitalist propaganda the faith in the private profit motive dies slowly.

So let’s assemble a few reminders about the damage done by the pursuit of private profit.

The current crisis was caused by banks and investment houses taking excessive risks in the hope of super profits. This was not only true of American banks; it was equally true of banks in Ireland and elsewhere. Blinded by the promise of super profits, bankers, formerly, the epitome of conservatism and caution, made series of bad loans and needed trillions of dollars of government money to bail them out.

In pursuit of greater profit, US companies outsourced American jobs to Asia. They became “lean and mean,” replacing human workers by machines and cutting wages. Walmart, for instance, is trying to cut the extra dollar an hour they have so far been paying workers who staff their stores on Sundays.

The current crisis has produced a rash of illegalities. The US government reports initiating close to 200 prosecutions for financial fraud since August of this year. Desperate for profits, investors set out to defraud the public.

Everywhere, food banks report major increases in the number of people needing their help to feed their families.

States are in serious financial troubles. Even after cutting school budgets or programs to help needy children, states face major deficits and the only remedy is to cut back further on services to the public.

In the meantime, the banks and investment companies who started this disastrous depression are making money again. The head of Goldman, Sachs can expect more than $ 20million as a year-end bonus. (Don't hold your breath to hear that he is giving those $20 million away to the unemployed.) Contrary to what we are being told, that wealth is not trickling down. Unemployment is as bad as ever.

The next time somebody tells you about the blessings of the private profit motive, remember what is happening in the real world. However, you dress it up, selfishness is not a virtue.