Friday, May 01, 2009
A Culture of Cheating
Cheating isn’t always a fully intentional act. Consider the executives at big insurance, finance, and banking firms – people at AIG, Citigroup, and JP Morgan Chase. At American corporations executives basically write their own paychecks; yet they believe that they earn the millions in salary, stock options, and bonuses they lavish on themselves. They’re like the men in the Olympic racewalking event I saw televised from Beijing last summer. Remember those guys?
Racewalking is just walking, but at a brisk pace, so that it looks almost like running. But the front leg is straight when the heel hits the ground, and the hips swivel, giving the motion a swishing, coquettish flair. The walker never loses contact with the ground. That’s the rule that distinguishes walking from running. But in Beijing – and probably everywhere these Olympians strut their stuff – the racewalkers were cheating. A low, distant camera provided a shoe-level view of the race. We could see that the racers, bunched together in a pack, were pushing off too forcefully and scooting, skipping a bit, not walking. You know that just a nanometer below consciousness each of them was thinking not, “I’m cheating,” but, “I’m bending the rule, but within reason, like everybody else.” The race pack incites a mob-like mentality that blots out intentionality. The guys in the middle, in the heart of the machine, those whose actions are hardest to observe, are the worst offenders, indulging in longer leaps, certain that no judge will call them on their subtle cheating. The official would have to disqualify them en masse, ruining the entire event and damaging the sport. The defense is clear: in a sport in which everyone cheats, you can’t really call it cheating.
But it’s a culture of cheating.
Executives who pay themselves lavish bonuses race along together in one big pack, and there isn’t much anybody can do about their habitual cheating. They surround themselves with managers whom they also overpay. Officials at the SEC and even stockholders turn a blind eye to the pillaging, because they are making money, too, or taking credit for the boom times. Only when there’s a crash do people begin to notice the violations. Then, for a moment, it becomes clear to everyone that the executives employ such loose calculations with the managers’ bonuses merely to conceal the even looser standards that excuse their own acts of predation. Suddenly it comes as no surprise that, accustomed as they are to the main work of filching money, they reveal themselves to be inept managers of the company’s wealth. When times are tough, they continue to do the primary thing they are trained to do: pay themselves as much as possible.
In high school, a friend of mine, a slow runner named Philip, made varsity track by training as a racewalker. His faster teammates were uninterested. Racewalking is slow. It’s all about discipline. It doesn’t look cool. Other schools rarely even fielded a walker. When opposing coaches saw Philip lining up for the race, they’d push a tall kid out there to compete for the points. Inevitably, these athletes zoomed past him and, just as inevitably, committed a violation. Philip then completed his tortoise-like laps – annoying everyone, but sweeping up all the points.
In this disastrous economic environment, we may learn who the tortoises are and who the hares. But unless we are in for a full-scale depression, expect the hares to return and to multiply – and to continue to plague us with frauds less flashy than Bernie Madoff’s but more insidious.