Recently in the UK we had the Libor scandal. This was a shocking revelation that banks had colluded to set inter bank lending rate. This rate essentially deternines the cost of borrowing by consumers. So it had the effect of "stealing" from everyone who needed to loan money or had an existing loan. What's upsetting and ironic is that the rich bankers sought to enrich themselves further at the expense of the very people who through their taxes had bailed out the banks a few months earlier. This scale of this scandal was described by Andrew Lo, MIT Professor of Finance: "This dwarfs by orders of magnitude any financial scam in the history of markets."
Nobody went to jail or has suffered from their part in this. The banks were fined and the CEO resigned with a big payout. The bank staff continued to get massive bonuses and kept their jobs.The losers were the bank's shareholders who essentially bore the cost of the fines and share price drop and the bank's customers who paid excessive interest.
Today UK news is of another scandal, but this time in energy markets. The essence of this scandal is the colluding by energy providers to set the gas price artificially. This effect would be to keep the retail price of gas high even though the wholesale price had dropped substantially.
In common these examples show an essential flaw in our world. We have lost our understanding of right and wrong. When you break into a man home and steal his possessions it's wrong and you go to jail. If you lift a mans wallet in the street it's a crime and you go to jail. However, if you run a big company and preside over a system that colludes to defraud systems designed to ensure fair consumer prices; you get a big bonus and a massive pension .Where are the great entrepreneurs that stood apart as daring contributors to society, enriching society and using their wealth for positive outcomes?
Contrast this to the captains of industry in the 19th century, for example Brunel.
In the early to mid 1800's we had massive industrial development. One man stands out Isambard Kingdom Brunel he was ambitious and brave, not afraid to think big, confident in the face of critical press and his impact was felt by all. An English mechanical and civil engineer, he built bridges and dockyards, the Great Western Railway, a series of steamships including the first propeller-driven transatlantic steamship and numerous important bridges and tunnels. His designs revolutionised public transport and modern engineering. His work provided employment for many and new mobility to millions. They advanced the public good.
Isambard Kingdom Brunel by the launching chains of the SS Great Eastern |
Today we have spotty faced billionaires and stuffed shirt CEOs running massive corporations. In common the aim in these worlds is to accumulate wealth. A few philanthropists like Bill Gates are amongst them but they seem insignificant. What legacy of these wealthy captains of industry will remain? Will they impoverish the world in their pursuit of more wealth?
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