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Scraping the Barrel

More times than I care to count, I’ve heard business and financial leaders argue that things are not as bad as they seem, that the problem lies in “just a few bad apples.” But while only a tiny minority of those leaders have been implicated in criminal behavior, I’m afraid that the barrel itself—the very structure of our system—is bad. While that may seem a harsh indictment, I believe it is a fair one. Indeed, Martin Howell lists no fewer than 175 (!) “red flags,” each describing a particular shortcoming in our recent business, financial, and investment practices.

I have witnessed many of them right before my own eyes.

It is now clear that our capitalist system—as all systems sometimes do—has experienced a profound failure, a failure with a whole variety of causes, each interacting and reinforcing the other: the stock market mania driven by the idea that we were in a new era; the notion that our corporations were trees that could grow to the sky and beyond; the rise of the imperial chief executive officer; the failure of our gatekeepers, the auditors, regulators, legislators, and the boards of directors who forgot to whom they owed their duties; the change in our financial institutions from being stock owners to being stock traders; the promotional hyperbole of Wall Street; the frenzied excitement of the media; and of course the eager members of the investing public, reveling in the easy wealth that seemed like a cornucopia, at least while it lasted. It was this happy conspiracy that drove business standards down even as it drove stock prices up.

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