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II. The Business of America is Business

An important feature of congregationally-governed Baptist churches is the monthly business conference. A moderator calls the meeting to order and all the members of the church who so desire are present to vote on recommendations brought by the various committees and teams. The members have the opportunity to ask questions and to voice opposition or support of the recommendations before the voting takes place.

At one such meeting a month or two after I arrived for college, a certain man had been nominated for a church position of some kind, which I now forget. One of the members stood and said,

“I support the nomination of brother Smith. He is a good choice because he owns his own business and is therefore trustworthy.”

I had never heard that before, but I was to hear it again many times. It became quickly apparent that, not only did people consider business owners stabler and more trustworthy than other people, but that they generally also deferred to their opinions. Indeed, it was difficult to get anyone who was not a business person elected to anything. This was new to me. In Argentina business owners are looked upon with the same suspicion reserved for politicians: the bigger the business, the stronger the suspicion, all in spite of the fact that business of all kinds, including slick advertising, makes the Argentine economy tick, and that small business permeates the life of the country.

It was not long before I heard another expression which I was to hear over and over: “Mr. Jones is worth some two million dollars.” I understood what they meant, of course, but my attention was drawn to the fact that in Spanish no one ever says that. The language has the vocabulary and grammar to make it possible, but culturally it makes no sense. That is, it has not occurred to anyone to say it. What makes you worthy in Argentina is the kind of friend and family member you are. Or to make things clearer, both countries value family and making money, but the emphasis in the US is on making money, while the emphasis in Spanish-speaking countries in general is on family (and friends). I am talking of cultural tendencies here and preponderance of experience, not about individuals. I know lovely Americans who value friends and family far beyond money and Argentines who value money over all else. But the fact remains that in the US, when I meet someone new, the first or second question I am asked is “What do you do?” which means “What sort of job do you hold?” However, what the question is really asking is “Who are you and what are you worth?” Now, people in Argentina who work at a highly valued profession may well define themselves and others by what they do for a living. However, the usual first topic of conversation for people just introduced is one’s family and interests and that determines who you are. Both behaviors respond to cultural conditioning and to history.

Most Americans are fully cognizant of the fact that we value making money probably over all else. I would imagine that there are not many people willing to contest it. There are clear historical reasons to explain why it is so. In the last chapter I mentioned that our first two British colonies, in order of appearance Virginia and then Massachusetts, were publicly traded corporations, something I learned from my wife’s college American history textbook (Blum). The only difference from today’s corporations is that they required a royal charter. The Virginia Colony was governed by its periodic shareholders meeting in which each share was worth one vote. The more shares you had, the more you influenced the outcome. Note, in passing, that this state of affairs establishes deference to the wealthier people as opposed to deference to title of nobility, but it favors the wealthy over the poor. Freed ex-indentured servants could travel to the meeting and participate, as they had at least one share in the company. Freemen who lived too far from Williamsburg to attend the meeting could pool their shares, if they had an important stake in an upcoming decision, and each give a proxy to one of them who was able to make the trip and promised to vote all the shares as they instructed. According to the tours offered to visitors at Williamsburg, the practice was the first representative government held by Europeans in the New World. Thus, from the earliest times of our history, business and government have been inextricably linked, as have owning land and the right to vote, a situation which persisted until very recently, as history goes.

By the eighteenth century, Virginia had such a prosperous economy and vibrant culture that the British crown decided it wanted a bigger piece of the action. London sent a governor to Virginia to represent the decisions of the king to the shareholders’ meeting. The first order of business was new taxes, of course. The shareholder colonists took the position that the governor could not levy a tax without their approval, based on a by then long-standing principle that Englishmen could not be taxed without representation in Parliament. The first governors found the arrangement quite natural. It was definitely a cultural theme in Great Britain. The colonists used an unquestioned cultural practice to obtain leverage when asking for certain laws to be passed in turn for approving new taxation.

Eventually King George took the position that, as Virginia and Massachusetts operated by permission of royal charter, they were his personal property. Accordingly, he set about to bring them into unquestioning obedience. The colonists responded that they were English citizens and thus entitled to certain rights. The king would have none of it. His actions are clearly detailed in our Declaration of Independence and so do not need to be repeated here, but it should be kept in mind that George was violating agreements established back in medieval times. The 18th century was the age of creating strong nation-states ruled by monarchs, who were seeing how far they could extend their power. The intransigence of the king in insisting on taxing the colonies directly, in violation of a culturally accepted practice of long standing, eventually led to the revolution and independence. A major triggering event was the taxation of tea, that is, a tax on commerce, establishing an American theme holding that taxation on business is something negative. We tend to believe this, allowing our politicians to play on shared values and experience, and on other themes, in order to get us to support what they want for deregulated commerce.

It is worth noting here that there was ferment going on simultaneously in France. The colonial envoys, who eventually became the American ambassadors and consuls, spent considerable time in France. They eagerly absorbed the political philosophies circulating in France and England and these philosophies in turn are reflected in our founding documents.

US independence came, as we all know, in 1776. Ferment continued in the American states. The Vineyard of Liberty recounts how in Massachusetts, the unicameral legislature, dominated by common people, voted to void all existing debts. This and other developments in the states as well as in France, and the weakness of the Continental Congress and its currency, alarmed many. The more patrician element of American society pushed for a constitutional convention to create a strong central government with the division of powers which persists until now. This constitution was signed in 1789 (the same year that launched the French Revolution with the taking of the Bastille) and then circulated to the states for ratification.

During the unsettled time of the rule by the Continental Congress, a useless person was called “not being worth a Continental,” in reference to the disdained paper currency of the day. I suppose the habit stuck. By contrast, people who had great landholdings and other measures of wealth were called worthy. Another saying, both in the US and in England, was that the poor were undeserving (Shaw): if they were poor, it was their own fault.

How, then, was one to become deserving and worthy? In the US, the only way was to be rich or at least become prosperous by dint of hard work. The stories by Horatio Alger, appearing in the last quarter of the 19th century and coinciding with the Gilded Age, nearly always featured poor young boys who attain at least middle-class status and security if not more, by working hard and displaying a sense of responsibility, heroism, or some other sterling quality that brings him to the attention of a wealthy person who then eases the boy’s way into a lucrative occupation. Alger helped create the enduring myth of a country which almost guarantees a comfortable life if only one puts out enough effort to make it happen. The convenient corollary, obtained through a popular but flawed bit of logic, held that those who remained poor did so for lack of stamina, purpose, work ethic, or some other negative quality.

During the 1930s, in response to the Great Depression, the US government instituted a series of policies designed to give as many people as possible (excluding minorities) a roughly equal playing field. The measures relied largely on emphasizing free quality education and redistribution of income through taxation. The country’s entry into World War II stimulated the economy with the demand for armaments, tanks, military transportation airplanes, bombers, jeeps, and so on. Countless newspaper stories, books, and documentaries attest to it. When the war was over, the factories were converted to producing major consumer articles, such as refrigerators and washing machines.

The result was unprecedented material affluence in the US at a time when Europe was still recovering from devastation, the United Kingdom was divesting itself from its imperial holdings, and much of the rest of the world had suffered great damage. The US, itself untouched by war, naturally emerged as the richest and most powerful country in the world. People took this newfound power and prosperity as confirmation of its myth of worth by monetary and heroic achievements. Had we not been rewarded for our work ethic and selfless commitment by a huge victory?

This is the world I grew up in and, in my immature and under-informed mind, I assumed that people had learned how to establish wealth and stability and that, once learned, they could keep it that way. Unfortunately, there were tensions I only vaguely was aware of that would prove my assumptions wrong in due time. After all, until I went to college, America’s position meant a strong dollar which allowed us to live comfortably in Argentina.

The by then unquestioning faith in business was fertile ground for neoliberal ideologues to plant three ideas which have grown out of control. The first held that all institutions should be run on business administration principles, while the second proposed that wealthy corporation CEOs were the principal job creators, and should accordingly have their taxes reduced drastically so that they can create more jobs and thus create wealth. The third was the above-mentioned axiom that taxing business is bad. As for the second and third tenets, since the 1980s taxes on the wealthiest have been drastically reduced, with the result that the wealthiest 1% of Americans now have the majority of the wealth of the country in their hands. The promised creation of jobs and wealth for ordinary Americans never materialized. On the contrary, the buying power of most families has fallen rapidly behind the rate of inflation and so, as a country, we are considerably poorer than we were in the 1950s and 60s. The proliferation of consumer goods masked what was happening for most people, who were buying by using credit cards. The credit card companies allowed everyone to make minimum payments indefinitely, but the minimum the companies set did not cover the interest accumulated in the month in question. This meant the less financially able cardholders fell further behind with each payment. Some people paid in full each month and others paid up what they owed over the course of a number of months. The majority of people, however, were using the cards to make up for their lack of purchasing power from their earnings. If they could not pay more than the minimum or chose not to, they fell into a painful financial trap. The card companies were aware of all this, of course. At the time of this writing the economy is having an unusually sluggish recovery from the great recession of 2008 largely in part because people are cutting up their credit cards or restricting their use significantly. Customers are spending much more within their means and that means a reduced economy. I hear on the radio well-informed commentators wonder aloud if this reduction is permanent.

The first idea mentioned above is rarely questioned. I teach at a premier private university, where I regularly hear my colleagues say, in effect, that we have to keep students happy because they are our clients. After all, they or their parents are paying their college expenses. This concept is a misapplication of the buyer-seller relationship to an institution of higher learning, which is most emphatically not a business. Businesses make money, or at least they do so regularly or cease to exist. A university, however, only spends money and that is as it should be.

My wife and I were missionaries with a large protestant denomination in Brazil for four years. For over a century, the various boards of the denomination, including the foreign mission board, had been headed up by executive secretaries, who administered with a view to making certain the contributions given by church members were used wisely and that the policies of the various boards were adhered to. The title “executive secretary” reflected the acknowledgment that we were not a business and that missions were not a money-making endeavor. The foreign mission board was highly decentralized, with the missions (consisting of all the board’s missionaries in each given country) being entrusted with the proper use of the money. The administrators back at headquarters in the US understood that the missionaries living and working on the field knew the needs far better than they did. Business people were in awe about what the denomination was accomplishing with its money and how well everything was accounted for.

Around the time we went to Brazil, the newly installed executive secretary contracted business consultants, by whose recommendation and approval by the foreign missions board of trustees, had his title changed to president and reorganized the administration, centralizing decision making, as in a corporation. One could not have expected any other recommendation from business consultants, who had no missionary experience and could not be expected to understand the reasons for how the board had functioned up to that time. This would have never happened if our culture did not blindly assume that the way to organize any entity is to make it work like a business.

The outcome was a major turnaround of responsibilities. Mandates came down from headquarters as to what missionaries had to prioritize and eventually ended administration by the missions in each country. At the time of this writing, the board is having to downsize the number of missionaries, in part because many missionaries are not happy with how things have evolved and in part because the apparently permanent economic downturn in the US has significantly reduced the funds available for salaries and operations. In other words, the acceptance of business criteria in an endeavor that is in no way a business, combined with the deleterious economic effect of slashing taxes on the wealthiest, has greatly weakened what was once an enviably efficient and effective mission effort.

Our uncritical support of business also affects our politics, and therefore our democracy.

The US Supreme Court would never have ruled that the Constitution requires that corporations be treated as people absent this cultural assumption. The protections of the Bill of Rights are clearly meant for individual American citizens. Only a distortion of meaning could make these rights apply to corporations, and that distortion comes from the cultural theme that tells us that business is the supreme good.

As I write, one of the candidates being nominated for president in one of the parties is, by his own account, a wealthy businessman. He has been known to fail at much of what he has taken on, requiring him to file for bankruptcy more than once. However, millions of people support him uncritically. One woman was quoted in the New York Times as follows: “We’ve had an administration the last eight years of someone that never ever hired anybody and was responsible for a payroll, who filled ninety percent of his cabinet with academia, teachers, and professors. I want a guy that’s run a business. I don’t care if it’s a bulldozer and he’s cleared lots for 20 years.”

There is so much wrong with the above “reasoning” that it’s difficult to know where to start. First, the assertions concerning the administration she refers to have no basis in fact. Second, the claim that you need to have experience of hiring and running a payroll as a necessary qualification for president has nothing in the constitution or in US history to back it up. As a matter of fact, our form of government is not a business nor is its purpose to make money for anyone. Most people, when told that the country needs to cut back spending and stay within its means just as in a business, being culturally conditioned to accept business as the model for everything, accept it readily. This is a perfect illustration of how our faith in “the business of America is business” molds our thought processes and decisions.

There are other effects of this cultural theme that few people recognize. If you drive through west Texas, my native state, you will approach towns preceded by a long string of farm equipment and car dealerships, places that sell seed and fertilizer, mechanic shops, all housed in zinc-sided buildings, all showing their wares in the open, and none displaying any beauty at all. The towns themselves are dominated by grain elevators, gas stations, and places to eat that apparently have not changed since the 1940s. Some have a chain restaurant that looks like every other restaurant in the chain anywhere else in the country. There is no sense of the esthetic anywhere and nothing visual to show character or identity. No wonder the young people never return to these places after going to college. All of this is what Texas calls being business friendly: low taxes (or none) and minimal (or no) regulation. All the powers have to do in Texas to shoot any proposal down is to say it isn’t business friendly. The connection of business and government going back as far as the Virginia and Massachusetts Bay Colonies readily explains this lack of logical thinking.

Our house is built on a slab laid directly onto the clayey soil. It has no foundation. In summer the soil expands and in winter it contracts, resulting in cracks in the walls and driveway. The same is true for all the other houses built in the 1970s and later. The only people to gain from that sort of flimsy construction are the developers who built the houses on the cheap and the companies who are glad to put a foundation under your house, for an extortionate fee, of course. In all this, the interests of the business people were attended to, but nothing else was taken into account: not what the shifting clay would mean to homeowners, not the historical experience of house building, not the lack of safety afforded the residents during tornadoes.

The Riachuelo is a partially channelized small river which forms the southern boundary of Buenos Aires. The city’s most concentrated industrial activity is conducted along its banks, on the city proper side and on the suburb side to the south. There are numerous tanneries among the factories, so it is easy to account for the foul stench, the ugly greenish bubbling surface of the water, and the bloated dead fish drifting aimlessly on it to the River Plate and then on to the sea. Over the last sixty or more years people have complained about it. In the 1990s a Ministry of Ecology was created, María Julia Alsogaray was named minister, and a huge budget was allocated. The first and most important charge of this ministry was to clean up the Riachuelo. Fast forward to the time of this writing in 2016, and the river is as polluted as ever. The minister, however, acquired an opulent lifestyle and numerous luxury properties. She was indicted, but wound up never being convicted. She gave some, but not all of what she took, back to the government. Any Argentine will tell you that the entire episode is typical of what goes on down there. I include this historical tidbit to make clear that I am quite aware that the US is not the only country with severe ecological problems that are not being addressed because of faith in the business model for everything and greed. As a matter of fact, I realize that none of the problems arising from the themes of US culture I discuss is unique to the US. Please bear this in mind in the following sections.

One of the great privileges of being from a missionary family has been the opportunity to travel. Three times I traveled from the US to Buenos Aires by ship. I was too small to remember the first voyage now, aside from two or three hazy scenes. It left from New York City. The other times we embarked in New Orleans. The last time I was about to turn fifteen years old. I retain a vivid memory of spending the first afternoon and part of the evening after dark sitting to starboard and watching the endless marshlands go by as we floated gently down the Mississippi toward the Gulf of Mexico. Out of the blackness, from time to time, a light emerged: people lived there.

Those marshlands are currently receding at an alarming rate. Since the 70s I have read in National Geographic stories, heard on radio, and seen on television news about the disappearance of the delta. Those spits of land are built up by silt deposited by the mighty river as it slows upon meeting the Gulf. They are home to an astounding variety of plant and animal life and essential to the survival of numerous species, especially avian. It is one of the country’s most important ecosystems. There are two reasons for the progressive and rapid loss of these essential land masses. First, the Corps of Army Engineers put in some canals and levies to change the course of the river at a number of points, ostensibly to protect New Orleans from flooding and to facilitate ocean liner traffic. The river runs much faster in the canals and does not deposit its life-giving load of silt to replenish what is washed away by the action of the waves of the Gulf. In addition, the state has allowed extensive drilling for petroleum all up and down those lands and the building of pipelines to carry the oil. The crisscrossing pipelines also disturb the silt deposition. The result is an ecological disaster of major proportions. Not only is there disruption of the biological balance, but the real protection of New Orleans from hurricanes has been removed. When Katrina hit, if there had been no canals or pipelines, the marshes, which would have reached far beyond where they are now, would have absorbed most of the wave surge and the city would have been relatively spared.

New Orleans was devastated by a combination of short-sighted engineering and greed which cared not for what happened to anyone as a result of all the oil-drilling activity. Of course a government of the people, by the people, and for the people could well set limits to petroleum extraction and achieve a balance between commerce and nature. However, since we believe that business is essentially good, not enough Americans question what is being done. Those who question are accused of being naive and anti-business. For more on the effects of oil exploitation in southern Louisiana, see Grisham (256-7). The story, of course, is fictional, but Grisham’s description of the Mississippi delta and what has happened to it is not.

In Argentina, the inability to deal with the excess power dealt by the wealthy, who then skim money for themselves from the top, has to do with its very different colonial past. When Spain reconquered the last Moorish stronghold in the late fifteenth century, they finally were able to set up a feudal society and economy at the very time the feudal system was collapsing in the rest of western Europe because the world as it was no longer matched the medieval world view. Spain was having nothing of it. As it moved to conquer the New World, it set up viceroyalties to represent the crown over large areas (New Spain, Peru, the River Plate, and so on). The viceroys had governors under them, who in turn were above the landholders. The landholders had slaves in some areas, native peoples in encomiendas in others, and semi-serfs yet in others. The positions of viceroy and governor were awarded to the highest bidder and were granted to them and their families in perpetuity. As the “Catholic King and Queen” of Spain squeezed whatever money they could by selling important offices, it was understood all around that the purpose of holding office was to garner as much money as possible, legally through taxes and illegally through other means to the benefit of office holders and their families for as long as possible. This is a cultural theme of Latin America. The people hope their leaders will be ethical and wise, but the leaders and the people expect them in reality to siphon as much money off the system as they can get away with (Michener). That explains why the Riachuelo did not get cleaned out but the Ministry of Ecology did.

In the US, it is the cultural theme of business being good and that taxing it and regulating it are bad which keeps us from dealing with the excesses practiced by certain corporations and wealthy individuals. The two countries have similar effects resulting from different cultural themes and assumptions.

I heard a recent president offer the following bit of non-logic on the radio: “America has the most modern factories and American workers are the most productive in the world; so all countries should have free markets.” No one questioned him, in spite of the fact that he adduced two highly questionable premises, provided no middle term, and slipped in a non-sequitur for a conclusion. It just sounds pro-business so it must be right. Now, Adam Smith had a lot to say about free markets, but his free market was a recurring event in which people gathered to bring their animals, farm produce, and manufactured (meaning hand-made, not industrial) goods to sell. The potential buyers haggled for a price, finally settling on a sum agreeable to them and the sellers. In such a situation, supply and demand establish a reasonable price. Americans, however, have lost the will to haggle over prices. In every commercial establishment, the prices are preset and you take them or leave them. That is not a free market. Having a lot of competing businesses selling a product helps, as the buyer can find where to get the best price. On the other hand, when you have only two major booksellers, for example, one on line and one in physical stores plus on line, the need for the companies to offer low prices on books is much reduced. The same is true for office products, art supplies, food, and so on.

Smith was rightly concerned with showing that the free markets of his time (the 18th century) were superior to mercantilism, which was the widely practiced control of commerce by the Crown, which determined who could produce what, where the products could be sold, and at what price. This system obligated, in the English colonies, that all products of the colonies go to England, and not be sold to any other country. In the Spanish colonies, all the goods, especially mineral, produced, say, by the Viceroyalty of the River Plate (now Argentina and Uruguay) were required to go by land to Peru, then by ship to Mexico, and finally from Mexico (after traveling over land) shipped to Spain. Buenos Aires was so far from Spain as to make the system impractical.

In fact, in the British colonies of North America, it was taxation of tea without representation in Parliament and the requirement that all North American colonial products and commodities be sold to England and nowhere else, added to the intransigence and petulance of the king, that pushed the colonists to rebellion. This means that neither current financial markets nor the self-styled “Tea Party Movement” of 21st century US politics has anything to do with the issues Adam Smith wrote about or with the grievances of British subjects in the colonies. If we do not know our history, we are prey to manipulation by Wall Street, by politicians, and by advertising. That is why I am writing this book.

Financial markets are something else altogether. Such markets offer no products, only potential profits for speculative investors. They have a legitimate place when operating properly, but turn to speculation if not regulated. Doing the will of the corporations which got them elected, our politicians sing the praises of free financial markets. They will self-regulate, they said, if not interfered with. The result of course was the great crash of 2008, which came close to sending us into another Great Depression. What is forgotten in all the propaganda is that the Constitution gives the Federal Government the responsibility to regulate interstate commerce, which most commerce at present is.

The power of, and deference to, the commercial class is neither new nor exclusively American. In the movie Amadeus, the young Salieri’s father is depicted in church praying “fervently for the protection of commerce.” Actually, commerce as we know it goes back into the Middle Ages. Most of us have heard about the Hanseatic League but have been given only a fuzzy notion of what it was. Centered around the German city of Lübeck, from the 12th century on, it consisted of numerous cities on the Baltic Sea voluntarily cooperating to bring about commerce, much of it the purchase of raw materials from the eastern Baltic for use in Germany. Note that the German airline Lufthansa contains the word hansa, with clearly deals with large commerce. You see, back in the Middle Ages, the Hanseatic League was engaged in major commerce with trade agreements among various city states. They invented modern banking as we know it. A merchant who needed to travel a great distance on business would be reluctant to carry the large sums of money he might need as his convoy could meet with well armed and organized robbers or lose the cargo in rough seas. A procedure was developed in which the merchant would deposit the needed cash in a business that had a branch in the city where he was going. The business issued the merchant a letter saying “Please pay the bearer the sum of X” (X being the amount of money he had deposited), addressed to the head of that business’ branch at destination. That is, they had invented checks and fund transfers.

The Hanseatic League was a major development, among others (such as the creation of universities, the invention of eyeglasses, the compass, and the sextant, the use of wind mills, and in the 1450s, the development of a printing press with movable type) which so radically changed the reality on the ground that the medieval world view, hierarchical, static, and land based, vanished and gave way to the modern world view, which is individualist, dynamic, and money based. The very stability achieved by the Feudal system was its undoing, because it allowed money and goods to circulate again, allowing serfs to save up enough money to buy their freedom and join the ranks of city-dwelling artisans or merchants. The nobles, on the other hand, found it increasingly necessary to accept money in return for freeing serfs from their land because wealth had come to be measured in money and no longer in land or cattle.

The modern period, which lasted (according to the Encyclopedia Britannica) from the 1450s (printing press) to around 1900 (World War 1, 1914-1918), was dominated in its first two centuries by a burgeoning global system of commerce and the idea that money is the highest good. This means that globalization of commerce began nearly 600 years ago. The establishment of nation-states powerful enough to control commerce through mercantilist policies (a purely modern phenomenon) saw an attempt to slow globalization or at least control it to the advantage of the rulers and the merchant class. The latter was favored in the nation-states as it alone was capable of lending money to the crown. In the light of this history, the constant struggle between protectionism and “free trade” becomes understandable. What is not clear to most of us in the US is that commerce and government are not strictly related: a capitalist system can flourish in a variety of government types: monarchies, democracies, and autocracies, even in “communist” China. What was new starting in the mid-20th century was consumerism, that is, the availability of a bewildering variety of products to most people at an affordable price. This abundance, which is moving increasingly out of the reach of more and more people, has lulled us all into thinking that capitalism and business are an unmitigated good.

I believe that we are all quite capable of discerning what is good and what is negative about our love for business and to do something about it. But will we? It will require our transcending our usual way of thinking and examining our values.