The Volkswagen Scandal Exposes The True Cost Of The "Free Market".

I have worked as a therapist and as a leadership adviser to big business and I’ve encountered far more psychopaths in the boardrooms of Britain than I ever did in Broadmoor.

In his book, The Corporation: The Pathological Pursuit of Profit and Power, Joel Bakan compares corporations to psychopaths, for whom people are purely a means to making profit. They employ sophisticated control mechanisms, such as excessive pay, to indoctrinate employees into compliance. History is littered with examples of how corporations put profits before people, with calamitous consequences. 

The Volkswagen emissions scandal is the most recent. Whether its emission rigging by the car industry, Libor rigging by the banks, suppressing unfavorable trial results by the pharmaceutical industry (see Seroxat story this week) or the usurping of public services and workers’ rights via the Transatlantic Trade and Investment Partnership (TTIP), far from being free, worshiping at the altar of “the market” has cost people and the planet dearly.

VW could face a fine of up to $18bn (£11.6bn), as well as criminal charges and legal action from customers and shareholders amid claims in the US that it used a device to falsify emissions data. Suspicions that the “defeat device” was also installed in European models, if substantiated, would add to the already crippling pecuniary and reputational costs. It has been described as the biggest corporate cover-up since Enron.

It seems inconceivable that no-one at managerial level knew of this software. The more likely scenario is that a cost-benefit analysis was done and life threatening respiratory problems and irreversible damage to the planet came out cheaper than investing in producing legally compliant cars. The alleged rigging of emissions tests may have added around 1 million tonnes of air pollution annually.

This isn’t the first time the car industry has been in the dock. Ten years ago, I used the Ford Pinto case study to demonstrate that, apart from the morality of conducting a cost-benefit analysis where customers’ lives are known to be at risk, it’s also bad for business in the long term. 

When a fatal fault was discovered in the Pinto production in 1968, Ford’s executives conducted a cost-benefit analysis and concluded it was cheaper to continue selling the faulty car and treat predicted deaths as the cost of doing business. Ford’s now infamous “Pinto memo” caused public uproar and resulted in record compensation payouts. Ford’s reputation never fully recovered.

Last year, General Motors agreed to pay $900m in a bid to prevent the company's executives from facing criminal charges over a serious ignition defect and cover-up which has been reportedly linked to 124 deaths. The company was also accused of hiding the defect (for 13 years) from regulators and defrauding consumers. Apparently, wait for it, a cost-benefit-analysis was conducted which concluded that paying off deceased relatives was cheaper than installing a $10 part per car.

In Bakan’s book he explains the logic behind such amoral decisions, time and time again. Directors are legally obliged to put profit before everything else. Maximising shareholder profit is their first priority. Setting aside for a moment the ethical issues of killing customers, scandals involving cover up, cheating and corruption, kill corporations too. About €25bn (one third), has now been wiped off the value of Volkswagen’s shares in the few days of trading since the scandal erupted. How are tumbling share prices and astronomical penalties good for shareholders?

In 2005, BP was hit with a (then) record $50.6m (£32.5m) fine for failing to fix hazards at its Texas City oil refinery resulting in an explosion that killed 15 people. Numerous red flags had reportedly been ignored.

Four years later, the company hit the headlines again for unleashing yet more human and environmental carnage at Deepwater Horizon. An explosion killed 11 workers and led to 3.2 million barrels of oil spilling into the Gulf of Mexico

The cause? Same as the last time, “Management failure which put costs before people’s safety”. So why weren’t lessons learned? Because corporate psychopathy (the delinquent offspring of unregulated capitalism), and political incompetence, has no conscience, feels no remorse and refuses to abide by the same rules as mere mortals.

A record settlement of $18.7bn (£12bn) was reached with US regulators and share prices fell by around 46% in the wake of the disaster. History has shown us that ethics belong at the heart of leadership decisions, not as an optional extra thrown in at the end of an MBA.

CEO of Turing Pharmaceuticals, Martin Shkreli, also made headlines this week when he raised the price of a drug called Daraprim from $13.50 per pill to $750. Shkreli has a monopoly on the drug and is effectively holding a gun to the heads of sick and vulnerable people. Further proof, if we need it, that the “free market”, which assumes multiple competing sources, is obsolete. Shkreli has since said he’d reduce the price but hasn’t disclosed by how much. It was later reported that Mr Shkreli is being investigated by the US government for being involved in illegal activities and that he was ousted from his previous post amid multiple allegations of misconduct.

In his book “Snakes in Suits: When Psychopaths Go to Work”, Dr. Robert Hare highlights the disproportionately higher percentage of people with psychopathic tendencies in positions of power. I’m not suggesting everyone in power (and definitely NOT those mentioned here) is a psychopath, but I am perturbed by the proclivity with which we reward dysfunctional, amoral behaviours.

Probably half of society’s psychopaths are incarcerated (the poor) while the other 1% (the rich) are more likely than people without psychopathic traits, to occupy powerful positions. Both groups are a danger to others (as opposed to themselves), the difference being that one is heavily medicated, the other is the lunatic in charge of the asylum.

Jeremy Corbyn's Win Will Breathe New Life Into The Labour Party

I couldn't be happier at Jeremy Corbyn's win. He has already brought swathes of Labour voters back to the fold with his politics of principle & integrity. An edited version of the entry below was published in Thursday's Independent, ahead of the leadership results:

http://www.independent.co.uk/voices/comment/suffragettes-died-for-my-right-to-vote-so-dont-tell-me-that-i-shouldnt-vote-for-jeremy-corbyn-10495014.html

Cognitive dissonance is what the brain does to rationalise and justify dysfunctional behaviour.  As a therapist I’ve seen people dismiss even the most compelling evidence in order to pursue a path of self destruction. I believe this is the root cause of new labour’s demise.  In the same way that smokers continue to smoke even though they know it could kill them, “new Labour” resists any movement away from the right, despite the catastrophic consequences.

One of the strategies invoked to deal with cognitive dissonance is to minimise the evidence in support of behavioural change by seeking alternative research. Smokers might do this by latching onto studies that dismiss the dangers of smoking, however tenuous. New Labour produces meaningless reports which endorse business as usual.

Yesterday a report was published indicating that Labour’s woes are attributable to not being Tory enough. It was carried out by a lord and an ex aide to Tony Blair (I kid you not). Labour’s response to the shocking May election result is to commission reports that sanction the onward trajectory to the right, despite it leading Labour to electoral annihilation.

The report was right about one thing though. The party was rejected by an electorate who no longer trust or respect the party.  I lost respect for the party when Tony Blair’s true Thatcherite ideology became apparent (Margaret Thatcher apparently cited Tony Blair as one of her greatest legacies). It doesn’t help that he starts his sentences with “look” and thrusts his thumb out for emphasis.

The epic groundswell of support for Jeremy Corbyn is a far more credible barometer of the public mood. It demonstrates a hunger for the party to be realigned with Labour’s founding principles.  Corbyn gets that Labour lost the election, not because it was “anti-business” (as Blairites claim), but because it wasn’t anti-austerity.

Three weeks before the election, a guy in his 20’s sat opposite me on the train. I was reading Tony Benn’s Diaries, he was reading Margaret Thatcher’s biography. A polite if lively discussion ensued.  Turns out he was an intern for a prominent Labour MP and known Blairite. I asked if it was wise to admit to being a Labour intern while brandishing Thatcher’s biography. He extolled her virtues. As someone who, despite being ideologically aligned with labour, was forced into a political abyss as a result of the party’s lunge to the right, this rankled.

I asked if he’d read Tony Benn’s diaries. With a condescending snigger he dismissed Benn’s legacy out of hand. “He was a bit too left”. I asked what constituted “too left”. He couldn’t say because he hadn’t read his book but had been reliably informed that at labour HQ being “too left” was not good. I knew that already. I met a Labour party insider when I visited the Occupy London camp who told me the party was monitoring developments. It concluded that the movement didn’t generate enough numbers to justify a realignment to the left. It’s that fickle, corporatisation of politics that is so demoralising.

My conversation with the Labour intern drew to an abrupt close when I told him Labour’s support for the failed austerity experiment ruled out my vote. “Voting on principle is wasting your vote”, he lectured, “that’ll just let the Tories in”! It was expressed as a statement of fact rather than with rousing conviction. So that was labour’s election strategy in a nutshell. It came down to tactics and a business strategy involving scaremongering people into voting strategically. Principle, or policies, didn’t come into it.

Suffragettes died so that I could vote, I wasn’t going to be lectured by a man on how to cast it. “If the Tories get back in, it’s down to you guys for pushing supporters like me away. If Labour can’t stand on its’ own principles and be prepared to defend them, why the hell should the people whose principles you abandoned vote for you”?

It’s ironic that traditional labour voters, like myself, were forced to vote elsewhere because new labour reinvented the party on Thatcher’s principles. Yet, when a true labour contender for the leadership contest woos us back with an anti-austerity narrative for which we yearned at the election, we’re rejected on the grounds that we don’t share Labour’s values. What are Labour values? The website boasts, “… the establishment of the National Health Service… and the creation and maintenance of an empowering welfare state”

So why was Jeremy Corbyn the only leadership candidate who voted against the recent Tory welfare bill (which sought to abolish child poverty targets and cuts to child tax credits, Employment and housing benefit for young people) in its entirety? Labour’s crowning glory was the establishment of the NHS. Yet it was new labour, with Tony Blair and Gordon Brown at the helm, that sowed the seeds of the NHS’ demise. The reckless implementation of private finance initiatives (PFI), not only paved the way for privatisation by stealth but saddled the NHS with crippling debt. Next year alone, trusts will make some £2bn in repayments. How is being responsible for polices that bankrupt the NHS espousing Labour values? How was the de-regulation that led to the financial crash, the brunt of which is borne by the most vulnerable, in step with Labour values?

Abandoning Labour’s founding principles has left new Labour with no meaning, no soul and therefore, no relevance. Jeremy Corbyn is the party’s only hope of survival.

What About the African Refugees?

Public pressure has resulted in David Cameron agreeing to accept more Syrian refugees, albeit still a pitiful amount. "Syrian" is now synonymous with "refugee" in almost all the headlines, but what of the swathes of African refugees who are fleeing genocide and persecution? Surely all human beings in need of shelter and humanitarian help are worthy of our munificence, irrespective of colour, creed or nationality? Why is David Cameron not offering homes to victims of the 12 year long genocide in Sudan? Why is their need less worthy than that of a Syrian? What criteria is used for deciding which nationality is prioritised over another? It shouldn't be a case of them or us. The refugee crisis has to be tackled more strategically and more fairly.

The link below is to an article published in today's Independent. It's an updated version of my last blog and includes the heart breaking story of a Sudanese refugee's agonising, dehumanising journey to Britain.

http://www.independent.co.uk/voices/comment/now-weve-changed-our-minds-about-syrian-refugees-we-need-to-stop-ignoring-those-in-calais-10490142.html