The Psychopathic Rich?
In a free market, would psychopath-led corporations fail?
By Rod Van Mechelen
11/14/2011 Olympia, Wash. - In The 1% are the very best destroyers of wealth the world has ever seen, George Monbiot writes that the world of business is now dominated by industrial psychopaths:
In a study published by the journal Psychology, Crime and Law, Belinda Board and Katarina Fritzon tested 39 senior managers and chief executives from leading British businesses. ... On certain indicators of psychopathy, the bosses's scores either matched or exceeded those of the patients.
He makes an interesting case that their success "owes less to talent and intelligence than to a combination of the ruthless exploitation of others and accidents of birth." He cites studies indicating that the judgment of highly paid executives is often no better than "a chimpanzee flipping a coin." For which they are grossly overpaid:
Chief executives now behave like dukes, extracting from their financial estates sums out of all proportion to the work they do or the value they generate, sums that sometimes exhaust the businesses they parasitise. They are no more deserving of the share of wealth they've captured than oil sheikhs.
He also cites figures indicating that from 1979 to 2009, in the U.S., "productivity rose by 80%, while the income of the bottom fifth fell by 4%. In roughly the same period, the income of the top 1% rose by 270%."
Real inflation, real disparity
The point is interesting. More about that in a moment.
But first, about the income and productivity figures. If the real rate of inflation has averaged around 7% during the past 20-odd years, then we need to adjust for that. Inflation gives the illusion that productivity and the incomes for most of us have risen. But most of it is an illusion.
When you factor in the real rate of inflation, the income of the top 1% has risen by less than 270%, productivity has not risen at all, and the income of the rest of us, including the bottom fifth, has fallen by a great deal.
But, you say, more Americans than ever before own their homes. More Americans drive new cars, have iPods, iPhones (I'm holding out for 5), tablets, laptops and 3D TV.
Sure. And more Americans than ever are, in a manner of speaking, living underwater, too.
Psychopathic Masterminds of Wealth Destruction
Now about those psychopaths, there's another word for them: salespeople.
Decades ago I learned the hard way, as so many young people do, that success in sales very often requires the very traits Monbiot describes:
The psychopathic traits on which the bosses scored so highly, Board and Fritzon point out, closely resemble the characteristics that companies look for. Those who have these traits often possess great skill in flattering and manipulating powerful people. Egocentricity, a strong sense of entitlement, a readiness to exploit others and a lack of empathy and conscience are also unlikely to damage their prospects in many corporations.
That description fits many of the most successful salespeople. And they are very well paid. The man from whom I bought my first suit, at the long-defunct Fredrick & Nelson's in Seattle, made more than $600,000 a year. When I worked at US West (now Qwest...no, wait, now Clink), one of my coworkers earned in excess of $300,000 per year.
Successful salespeople make a lot of money. And, ultimately, most corporate executives are salespeople. They may not come up through sales, but they are salespeople, nonetheless. They sell the company.
Sales and marketing go hand-in-hand. Although I majored in Accounting before switching, in my senior year, to Operations Management (after first majoring in Engineering and then Pre-Med), I had to take a course in Marketing.
In my Accounting, Economics and Finance classes we were taught that people act in their rational self-interest. In Marketing, we were taught that people are irrational and make decisions based on their emotions. You can see this in most commercials, window and store displays.
Which view is the right one? They both are. Sometimes we are rational, sometimes we are creatures of emotion.
Many decisions are entirely emotional. There is nothing rational about eating ice cream, for example. Especially not when most brands now are sweetened with high fructose corn syrup, which is a slow-acting but deadly poison. (High fructose corn syrup, which is now often listed on labels as "corn starch" or "corn sugar," is the leading cause of non-alcoholic cirrhosis of the liver.)
Marketing and sales almost always rely on emotions. Those who are best at it, prey on our emotions. So it stands to reason that, in a world gone mad, a world in which entire nations have been on a decades-long spending spree, many psychopaths would rise to the top.
Depression: Revolution or Consolidation?
We are in a depression. Government officials tell us we are in a weak recovery. Pundits fear we are facing a double dip recession. Both are wrong. We are in a depression. At Shadow Government Statistics, John Williams reports that the real rate of inflation is about 12% and the real unemployment rate is 22.9%.
That's what Doug Casey calls the greater depression. Bill Bonner calls it the great correction. No matter what you call it, it's not a "weak recovery" or the threat of a "double dip recession." We are in a depression. It has already begun.
Will this depression lead to a revolution of the people? Or will it lead to a consolidation of elite power?
My guess is that it will be neither. Most of us don't want a revolution. Not of the violent kind. The wealthy elite prefer to send our youth--those most prone to violent revolution--to desolate battlefields. Iran and Pakistan are on the radar. More war could be imminent.
The question we have to decide is, will we continue to confer the greatest rewards on the psychopaths? In a world where our governments bail out failing corporations, the answer will be yes. But if we reign in the government and let the market decide, most psycopath-led corporations will fail and the disparities in income will get sorted out.
Rod Van Mechelen