Big business, big crimes

Another scandal, and more faith eroded in the capitalist system. The recent behaviour of Volkswagen (VW) reminds me of the poisonous legacy left by bankers after 2008. The carmaker is accused of being unable to meet emissions standards and resorting to cheating instead. Even VW’s high reputation for R&D has been undermined by the scandal.

Everywhere we see businesses behaving like robber barons. People talk about the “money sickness” in China — but the West is often the same. Companies will do anything for a quick buck. Look at the anger unleashed by the hedge fund manager Martin Shkreli, who bought a drug that helps people such as AIDS patients, and jacked up the price by 5,000%. In Japan, intelligent pharmaceutical executives at foreign companies have told me that they know such incidents are a catastrophe for their plans to push the Japanese healthcare system from a cost to a growth sector. Such a goal, if it can be combined with better and cheaper patient care, is laudable; and Prime Minister Shinzo Abe is heading the charge. But men like Shkreli cannot seem to see that their short-term, profit-driven antics will make it far more difficult to gain the trust required to push through such changes — thus harming the pharma companies themselves.

Like many of the former princes of high finance, Shkreli does not just seem to be ruthless and unpleasant; he seems to lack empathy and revel in attention.

In a roundabout way, this brings me to Donald Trump, who is regarded by some as a wonderful candidate for president of the US because he is a billionaire businessman. But it is baffling to me that, just because someone has had a successful business career, they should be seen as suitable for the presidency. I also have a quibble with Carly Fiorina, another Republican contender with a career in the corporate world. It’s not that she has a spotty business record, but it’s the idea that anyone running a business could possibly be a sound government leader.

Successful business leaders today too often demonstrate unlimited greed, unbending resolve and refusal to compromise — an unwillingness to acknowledge reality (in VW’s case, that they need to figure out how to meet emission targets) and a contempt for the democratic process exemplified by ruthless lobbying. The Economist had an excellent article in late September about emission tests in Europe. These oversights are little more than a crude pantomime of what testing should be, and demonstrate just how the lines between the private and public sectors have blurred.

A successfully managed national economy does not need a CEO in charge. In fact, it needs a completely opposite set of virtues. Japan and the UK both used to have highly regarded, educated bureaucrats who were viewed with fear and loathing by the business sector. And that was right and fitting. Bureaucrats should have a very different code of honour: not profit above all else but, rather, an eagle-like vigilance over the crimes and misdemeanours of the private sector — also, the aggression to take them on fearlessly.

Bureaucrats should not have a love of money and conspicuous consumption, but a bias towards personal and government austerity, a long-term view, and the ability to keep away from lobbyists. Bureaucrats should avoid putting GDP growth first, in favour of their role as custodians and arbiters. Given it is obviously futile to expect firms to regulate themselves — or even to manage risk — we need a proud, independent public sector more than ever. At the end of the day, VW behaved very stupidly, possibly because nobody had the courage to blow the whistle, or because everybody was too locked into group-think to understand the real risk.

Critics of corporate interests are often viewed as anti-growth and reactionary. But until governments start controlling big business more effectively, such anti-trade and anti-capitalist movements will continue to grow.

© Japan Today