How They Do: The Rich Stay Rich

A good friend told me a story I've never been able to shake. It was like looking through a window into a whore house. 

He had been given a seat on the board of directors of a company which made products with which he was very familiar and he was the chairman of an academic department of one of the nations most prestigious universities. He had no illusions about why this publicly trade company wanted his name on their masthead: They were basking in his reflected respectability, in his glory.

At his first meeting the CFO outlined the bleak performance of the company, the costs of research and development, the competition the company faced, the difficulties finding and recruiting talented employees, the faltering economy.  Good friend listened with growing disquietude, thinking, I thought they wanted me for my insight; then I thought they just wanted the name of my university, but now I wonder if they really want an expert in resuscitation.

After the CFO finished speaking the next item on the agenda was voting bonuses for the CEO, the CFO and all the members of the board.

"I don't understand," Good Friend finally stammered, after the pause during which everyone in the room considered whether or not their bonuses were sufficient. "From what I've just heard, this company is in peril for its very life. How can you vote for bonuses when the company has lost over a million dollars over the past two years?"

"Oh," the CEO smiled indulgently, and he spoke very slowly, as if instructing a very dim child. "That doesn't matter."

Good Friend resigned from that board. It had been his first venture outside the academy and into the world of boards of directors, business, finance and all that. 

What really stunned him was the brazen amorality of that group. We have the power to take the money. We will take the money. Whether that is justifiable does not matter. It is legal and that is all that matters. There is money on the table, ready for the taking. This is why we are on the board.

This is one, if not the central, element of corruption in corporate, capitalistic America. 

The rich get richer not because they are deserving, but because they have worked their way into positions to exploit a very flawed system.

Members of corporate boards have found a way to turn knowing people, acquiring titles of authority, using academic positions, using connections to past government positions,  to cash in. The damage done to employees, consumers, investors is irrelevant, not even on the agenda for discussion. All that matters is greed.