The state must curb greed

Boguslaw Kowalski

The time of crisis is the hour of truth. This is the time of trial for the owners of small and medium businesses as well as for managers of big corporations. Acting under huge psychological pressure, resulting from the threat of bankruptcy, they must take stoic decisions. They must carefully observe what is going on in the market, what the contractors and competitions do. They must maintain dialogue with workers in order to manage employment wisely if needed, considering the number of orders and appropriate amount of production. This is the time to test characters and abilities. This is the time to verify what has been done so far. It is known that weak and badly organised entities will experience more difficulties in this turbulent period than those concise, dynamic and well-managed ones. And those who will panic or will not realise what is going on are to lose quicker than those who have nerves of steel, good information and appropriate skills. But does this competition actually only depend on this? Is it honest in the sense that the best always win?

The greed of financiers

After the fall of Lehman Brothers the American Senate called into being a special commission to examine the reasons for this bankruptcy, the troubles of other institutions and widely the increasing financial crisis. The commission called one of the presidents of a bank who received ca. 100 million dollar bonus just before its fall. When asked if he had not been ashamed of having led the company to bankruptcy and receiving the prize, which ordinary citizens could not dream of having, he answered, ‘Yes, I am ashamed of that but I will have to cope with it somehow (!!!)’ Cynicism combined with extreme impudence. No sincere criticism of his own activities, no understanding of the harm done which he was partly responsible for, not mentioning his good will to retribution by returning the unjustified bonus. The US government granted the financial institutions that had fallen into trouble a gigantic help in the amount of ca. 800 billion dollars. It is not actually known what the money was used for. One of the papers conducted a survey among the beneficiaries asking them how they had used the help. A decisive majority could not give a precise answer. Only some used the money to struggle with the crisis. But at the end of the year the firms from Wall Street spent over 18 billion dollars for bonuses and prizes for their directors. They also bought luxurious limousines, expensive furniture, etc. Similar phenomena have occurred in Europe. The elite of banking and finances showed their worst face – a mixture of greed, cynicism and arrogance, which was caused by their feeling of impunity. Since the politicians – top administration officials – turned out to be lenient judges acting on behalf of the whole nation and not holding accountable those who caused the catastrophe and simply scared office boys, who immediately used the money of taxpayers to save their rich friends and at the same time perhaps their patrons and protectors.

The state guards the interests of the whole nation

The desire for riches – common greed – is a frequent feature of ambitious businessmen. However, the role of the state as the one that regulates economic life is to establish law and to execute it in order to ensure the interests of the whole nation. Speaking straight, the state has to curb the destructive character of greed and use its power to a positive development of economy and thus for the good of all people. But this action must be accompanied by assuming responsibility for one’s conduct and full non-dependence of the political elite on the economic elite. In case of the aid programmes for the financial sector it is important to ask, ‘why was the money sent directly to the selected institutions and not for example to ordinary citizens who began having problem with paying their loans?’ We know that such help would also be sent to banks because their problems resulted from the fall in the market for mortgage loans. But through ordinary people. It would mean that the state helped a big number of ordinary citizens and not a narrow group of financial tycoons. The support would come a little more slowly but it would be more just.

Oligarchisation of politics and economy

Why did it not happen? The answer is the strict connection and mutual dependence between the authorities and businessmen, especially the business elite. Election campaigns are more and more expensive and require more funds. Those who have money give it quickly and in large sums. But they do not do it gratuitously. When a politician whom they support is elected he is given definite tasks to fulfil. Sociology calls this phenomenon ‘the oligarchisation of politics and economy.’ It means that a small group can influence the state authorities and through suitable political decisions they gain a key position in economy. So far this mechanism has been used to describe the situation in non-democratic countries. But the activities referring to the crisis in the USA give grounds to see elements of oligarchisation in such a country that has been regarded as a model of democracy and public spirit. Directing such large amounts of public money, generally without any control, to the financial centres of the Western countries has undoubtedly shaken the confidence of ordinary citizens for their countries. But the essence of democracy is a social contract, based on the fundamental principle of equality and justice. The system works well if most people identify themselves with it and think that it defends the interests of all and its activities are more or less just. This time faith in these values has been clearly shaken. People must have felt deceived and used. If the situation caused such phenomena as mass unemployment, poverty of the retired citizens and taking over houses by banks to a large extent, an outbreak of social dissatisfaction would be bound to happen and democracy would formally stop acting properly. One should also see the problem of financing political parties from the state budget in this context. If we do not want them to depend on the world of business the state should support them. But if we have a crisis and all people tighten their belts political parties must do the same, e.g. by resigning some of their rightful funds.

Struggle with crisis based on healthy principles

That’s why the new US President Barack Obama tries to calm people down by assuring them that the directors of the companies that have received public help cannot earn more that 500,000 dollars a year or by not allowing the lobbyists, i.e. representatives of the richest corporations, to hold the highest offices. We will see whether this will be sufficient. These rules concern Poland, too. Fortunately, our banks have not received billions but the government seems to be surprised by the crisis. It has lost initiative and with delay reacts to the events. This was the case of the shortages in the state budget. Only when the matter was publicised the government began economizing. But these efforts will not push economy and will not save the labour market. First of all, we need investments and cutting the costs of energy and fuel by legal regulations. One should use the EU means very quickly. One cannot wait until people are out protesting. The time of crisis is a trial not only for businessmen and workers. Most of all, it is a trial for the state authorities and its officials. The state must pass the test of confidence that all citizens, including the weakest groups, place on it. The state must show that it can defend them in difficult times, that it is their country. Otherwise, we can face chaos, riots and the fall of the government. The political power must ensure the victory of the biblical principles of justice and law over greed, egoism and contempt for the weaker because the authority can effectively struggle with crisis only if it has social confidence and support.

"Niedziela" 8/2009

Editor: Tygodnik Katolicki "Niedziela", ul. 3 Maja 12, 42-200 Czestochowa, Polska
Editor-in-chief: Fr Jaroslaw Grabowski • E-mail: