Sun Jan 25th, 2009 at 03:01:32 PM EST
I got three pieces of mail yesterday each of which contained a deceptive offer. At the risk of boring the reader with the details:
- An offer by a local law firm calling itself "The Tax Adjustment Agency" to file an appeal on my behalf over the amount of my property assessment. In return for filling out a bit of paper which contains little more than my name, address and lot number (which I can do myself for free) they will take 50% of any reduction in taxes I might get in the first year.
- An offer by the local phone company for a combined rate for phone and internet use, but only for six months and with no indication of what the rate becomes afterwards.
- A note from my credit card company stating that as they have been taken over by a new bank in the future any standard payment arrangements I may half to pay off an outstanding balance will be replaced by one in which they just deduct the minimum. Furthermore the order of which loans will be paid will be to their benefit, namely lowest interest loans first.
Being clever all of these offers are strictly legal, but still deceptive. They don't inform me of how little they are doing for the money, or my other options, don't state the full details of a contract I'm entering into and depend up the average consumer not to notice the payment changes.
Just one more example. A TV show had a segment about "payday" loans which used to be only offered by loan sharks, but are now a big business. They will lend you $300 for two weeks and they you pay back $345. If you can't pay then they will extend the loan for another $45 etc. It turns out that about 85% of the people who use such loans are repeaters and are "trapped". The attractive young woman from the industries trade association (called "The Community Financial Services Association of America") explained with a perfectly straight face that this service was only intended for those who had a rare, sudden need for some extra cash, in spite of the evidence to the contrary.
I wonder how she lives with herself? Did she plan on becoming a spokesperson for loan sharks when she was growing up?
I'm going to propose a Gresham's Law of work: Bad jobs drive out good ones.
Firms which want to behave ethically are put at a disadvantage compared to those who don't. Of course we understand that outright fraud has an advantage, one only has to look at the success of Enron or Bernie Madoff's Ponzi Scheme, but no one can compete with crime. A man sticking a gun in your face has a very high return on his investment.
A bank which didn't boost its fees by deceptive means, or charge the maximum interest it could get away with wouldn't earn as much as its rivals. Investors would complain about its lack of financial "innovation" and demand a management team that was more like the others. And they would get it too.
Alan Greenspan finally stated that he was mistaken when he thought that firms would remain ethical and prudent enough not to damage their own enterprises, but as a promoter of unbridled competition and lax enforcement what did he expect would happen.
As has been explained many times, one needs a balance of forces. On one side is the force of acquisitiveness which leads people to start up and run enterprises. Then there is the desire for fairness demanded by the public and provided by government acting on their behalf. Finally there is the demands of the workers to fair compensation and working conditions as expressed by collective associations that they establish.
Take away or shorten one leg of the stool and it tips over.
Is there any way to restore a sense of ethics to the business world and to make people fee shame when they cheat for a living? You tell me.
The fact that politicians go before us everyday and lie to our faces about the reasons for the positions they take helps set the tone for what is acceptable in a society, but that's a topic for another day.