In the Grip of Greed

The 20th century became busier and more prosperous, but also revealed the dark heart of America’s wealth machine.

The last hundred years have turned this planet on its ear. One begins to realize it by comparing 1900 to 2000.

Automobiles were nothing more than curiosities; railways had just made it cross-country. Even telephones and bathtubs weren’t commonplace. No TVs, no computers. The pace was slower and the work week longer and more laborious. Earth was home to merely 1.6 billion people.

But the growing colossus of business and industry was beginning to lead a wave of change. In many ways it led a charge that has revolutionized the life of each person from then to now.

To examine the impact of business and industry in the 20th century, a study of the United States provides all the material we need to see its extremes of success and failure.

The World’s First Superpower

In 1900, though America was still considered something of an upstart in the world, it was working its way to prominence through the grime and sweat of heavy industry.

America was a wealth-creating machine. Its free markets were making rich men of thousands of entrepreneurs, who fueled the engine of an economy that wouldn’t quit.

Through the first half of the century, the U.S. grew to dominate the world in nearly every major industrial category: It produced half the world’s petroleum and coal; 60 percent of its pig iron and steel; 73 percent of its automobiles. The American industrial juggernaut generated half of the world’s electricity and, with Britain, possessed more of the world’s merchant fleet tonnage and railroad mileage than the rest of the world combined.

By nettling over worker efficiency and making great strides in production technology, businessmen could make goods cheaper and quicker, and that combination made them much more widespread. Even during the lean years of the Great Depression, rising consumerism continued on its steady course; between 1929 and 1935 the use of natural gas and electricity jumped, and radios and refrigerators could be found in many homes.

Two world wars rocketed America to even greater prominence. The U.S. threw in its lot late each time, but then hurled itself into the war effort by drawing on its industrial might. Auto plants became tank factories, bomber plants were quickly erected. America helped the Allies to two victories, in the bloodiest, costliest conflicts ever. It led the field technologically as well: By ending World War II in a numbingly awesome display of force, the U.S. catapulted the world into the frightening nuclear age and became the world’s first “superpower.” Never had history seen a nation launched to such heights so quickly.

After the war, when the capital and energy tied up in warmaking was freed up for other things, Americans began to bask in unheard-of prosperity. People had more money to spend and more things to buy. Conditions for workers were generally fair and pleasant, thanks to labor unions. Invention and technology gave many people reprieve from having to work so hard.

The true benefits of wealth could never be seen so clearly as in post-war America. Nor could its perils.

The Love of Money

Is the love of money, as it says in I Timothy, really a “root of all evil”? After all, the money-driven behemoths of business and industry seem to be delivering on all the promise they presented after World War II. In addition, 50 industrious, wealthy years down the track, America is still dominant in many industries, as well as militarily supreme. On the surface it seems to have managed its success fairly well. As we enter a new millennium, business and industry even appear to some to be the long-sought solution to war.

When the Information Age took over in the second half of the century, the world became smaller and more connected in every way, including economically. Now even politicians talk about how the new global economic interdependence will save us from world war—actually surpassing governmental efforts to make peace. Countries today simply need each other too much for fighting to be a viable option. War is bad for business. If we bring down our partner, we bring down ourselves.

But let’s look deeper. If we scrutinize the pulsating world of business and industry, we will realize that it is far from being any kind of savior. We will see that the marvelous achievements of humankind cannot stand, because they have increasingly abandoned a firm moral foundation based on the law of God. Behind the advancements, behind the promises, the greater part of man’s business and industry is built on something far too unstable to put our trust in, and that is greed. Increasingly unchecked greed.

The Drug of Debt

If modern business and industry have delivered the high lifestyle and made things easier and more luxurious, that lifestyle has also become our drug of choice.

Consider these facts. Today, there is a gaping disparity between the rich and the poor worldwide. In 1996, the world’s 358 billionaires together had money that roughly equaled the possessions of the world’s poorest 2.5 billion people. The rich tend to consume the most. A UN human development report showed in 1998 that the wealthiest 20 percent of the world’s population consumes 86 percent of its resources.

America alone, which makes up 5 percent of the world’s populace, burns up about a third of its resources. By far, Americans top the all-time list of super-consumers. Since 1950, they have used more resources than everyone who ever lived before them combined.

After the Second World War, Americans steadily achieved increasing luxury. Today the median family income in the U.S. is over $44,000—more than any nation this size has ever had. We are living in bigger homes, with more things. Many of today’s three-car garages are 900 square feet; that’s approximately the size of the average home in 1950. There are an average of 2.3 televisions per household. Malls and superstores—the churches of consumerism—everywhere testify of our lust for cars, gadgets, clothes, entertainment.

Is all of this materialism motivated by greed? Perhaps the answer lies in the fact that we don’t know when to stop buying. Greed blinds people to the dangerously high cost of such luxury.

In America, living beyond one’s means is a way of life, and government is leading the way. The national debt in the U.S. is soaring at $5.6 trillion, 60 percent of which the government owes to foreign and other private parties. Since the ’50s, the debt has climbed steadily, virtually unimpeded—even in the face of recent so-called “budget surpluses” in Washington.

On top of that, Americans carry over $1.5 trillion in personal debt, not including real estate and home mortgages; on average, every man, woman and child personally owes about $4,000. There are a billion credit cards in circulation, and only a third of the card-holders pay off their balance in full each month. The rest make piecemeal payments at crippling interest rates, burying themselves under ever-increasing debt to try to sustain their unsustainably high standard of living. For many, the burden becomes too much: In 1997 a record 1.3 million Americans declared personal bankruptcy (up from 182,000 in 1978), and record bankruptcies continue today.

In the past, Americans put more in the piggy bank—saved more for the rainy day. Even in 1987, during the “Black Monday” crash in which the stock market lost 22.6 percent in a single day, Americans were saving about 5 percent of their incomes. Today, that savings rate is actually negative. The nation is spending more than it is earning. The situation brings to mind the saying, “If your outgo exceeds your income, your upkeep will be your downfall.”

An Orgy of Speculation

In addition to buying stuff—new cars, new TVs—the money that used to go into savings is flooding into today’s hottest new investment: the stock market. The bull market of the ’90s has blown away anything ever seen, and has made a happy lot of new rich people.

Compare it to the economic growth spurts of the ’20s and the ’80s. At the height of the “roaring ’20s,” what was called by the Chancellor of the British Exchequer “an orgy of speculation,” in 1929 the Dow Jones industrial average peaked at a record-breaking 381.17. (That was before a three-year slide precipitated the Great Depression.) The market grew fairly steadily over the next 50 years, and by the early ’80s that figure hovered around the 800 mark. In 1982, a wild, seven-year bull market took off that bounced the Dow up to an unheard-of 2,722.42 (before dropping almost a thousand points over a couple of months which culminated in “Black Monday”). Today, hardly a decade later, the Dow is riding giddily well above an unbelievable 10,000 points. And investors are behaving as if it will forever stay that way.

Is the hyper-inflated stock market a product of greed? Let’s use the price-to-earnings ratio as an indicator. Historically, stocks have been valued around 10 to 20 times their earnings (you pay $10-20 for each dollar of dividend yields, which are based on company earnings). In 1929, the P/E ratio of some stocks ballooned to around 50; Radio Corporation of America, which had zero earnings, rose to 420. Why? Speculation. If people believe a stock is worth something it’s not, it can be sold well above its value. In the ’20s, “investment trusts” enabled even small investors to join the boom, inflating the market even more.

The same is happening today. The October 28 Foreign Report stated, “By every conceivable historic valuation measure, [markets] are hugely overvalued…. If Wall Street were to go back to its long-run average price/earning ratio, the market would need to fall by 54 percent.” People are selling stocks for whatever they can get, literally making pieces of paper into commodities. Today, many Internet and tech stocks are the “bubble on a bubble,” with P/E ratios soaring to 200 or more—some as high as 400—for companies that generate absolutely nothing in revenue for shareholders. People make money off “capital gains” rather than dividend yields, meaning there is practically no price ceiling. The bubble keeps expanding, and some people are getting very rich, very fast. As success stories pile up, the promise of instant wealth lures new waves of small investors. “Mutual funds” have taken the place of 1929’s investment trusts, and now everyone can get in on the action. In 1987, only about 20 percent of Americans held stock. Today, almost half of them do.

It is virtually greed alone that has propelled the stock market to such heights. Greed has created an unsustainably vast bubble of paper wealth. If the bubble bursts, the wealth evaporates. (And America’s little investors don’t have the financial depth to sustain major losses. With half of America holding stock, a market collapse would have enormous consequences.)

Profit Before People

The sign over the storefront in a cartoon reads honest john’s motors. In the window is a sign stating, “Profit before people.”

Of course, if businesses ignore people too much they lose employees and customers. But the market is changing rapidly; competition is fierce. To stay afloat, companies are merging, consolidating, trimming management, streamlining, “rightsizing” (which still costs jobs, even if it isn’t downsizing); bigger companies are cannibalizing smaller companies. Profits really are highest priority. The fiercer the competition, the easier it becomes to see the tentacles of greed in modern business and industry.

Consider quality. In virtually every industry, the drive for profit is matched by a loss in quality. Costs are cut to the scientifically determined minimum at which customers will keep buying. Cars and electronics are constructed with built-in obsolescence to guarantee an ongoing market (and to keep service and repair industries active). Food is manufactured in mass quantities through methods irrespective of the harm done to the food’s nutritive value. (In its extreme, this reality of the business world creates products which blatantly harm customers. Think junk food. Think tobacco.)

So that companies can continue to attract customers, prices must be kept artificially low. The standard of living must be maintained. That also means that say if Japan can make a cheaper TV than America can, and floods the U.S. with cheap TVs, Americans will buy Japanese TVs; the more that such money goes to Japanese manufacturers the harder it becomes for U.S. manufacturers to stay afloat. This situation has far-reaching implications. In addition to shriveling America’s manufacturing base, it creates a gaping trade deficit. Such competition has also led many American businesses to cut costs by opening shop in foreign countries where factory workers can be “legally” undercompensated (sometimes working long shifts for pennies a day).

What about advertising? Is it motivated by greed? The average American will spend a full year of his life watching TV commercials. Ads assault us on the radio, in magazines, shops and billboards—and now, even on school textbooks and lunchrooms (many schools receive enormous payoffs if their students buy so much soda-pop or other goods). Most ads, as they sweat and strain to attract consumer dollars, appeal to the worst side of people: their vanity, greed, covetousness, lust. Ads broadcast messages that are destructive in a multitude of ways, creating and feeding wrong desires, convincing people of needs they do not have, pushing unhealthy ideas that make sense only for the seller. Kids are especially susceptible to attitude-heavy, “be young—have fun—drink Pepsi” images that can seem normal after so much repetition. Ads often use dishonesty, deception, exaggeration and misrepresentation; yet, widespread as they are, they dictate many of the norms and beliefs of the culture.

The entertainment industry, which lives symbiotically with the commercial world, also plays to people’s lowest desires. The movie, television, video game, magazine businesses pump out, in overwhelming quantity, material fixated on darkness, sex, violence, moodiness, abuses of power, fame and wealth. Sin is “in”! Don’t forget the $11 billion a year American porn industry. There is practically nothing to guide these people in imposing limits on what they produce—certainly not that it might be breaking God’s spiritual law—except what will sell. In other words, their own greed.

The Unsustainability of Greed

Okay, business and industry are founded on greed. So what? Is that so bad? After all, where would the world be without it? You could legitimately say that greed has led to some of the greatest improvements of the 20th century. Remember Gordon Gekko from the ’80s movie Wall Street: “Greed…is good.”

Well, let’s look at it. Is it possible for greed to prevail? Can we expect current conditions to last? Is what 20th century business and industry have built worth putting our faith in? What are its fruits?

Let’s examine the U.S. trade deficit (the amount that imports exceed exports). This year, Americans have greedily snapped up an estimated $280-300 billion more in foreign goods than they have manufactured and exported. Ships arrive in American ports filled with goods and leave half-filled. That means there is a gigantic flow of cash bleeding out of the country. Right now, economists aren’t so concerned. Why? Because foreign economies are presently turbulent, and foreigners are eager to invest that money back into the U.S. What are they investing it in? U.S. Treasury bills. In other words, the money coming into the country will have to be repaid—with interest. (Economists are behaving as if this is an even exchange: It’s okay that they get all our money, because they’re loaning it back to us!) This is all pure insanity.

Consider the effect that foreigners grabbing U.S. markets and flooding them with cheap goods has on American manufacturing. It affects everything from clothing to electronics—but let’s just look again at heavy industry. Remember the numbers indicating America’s industrial dominance in 1950? Compare them with these numbers. Today the U.S. produces only 11.1 percent of world oil, less than a quarter of its coal, 12.4 percent of its steel, 9.1 percent of its pig iron. It makes 12 percent of the world’s electricity and a mere quarter of its cars. Its railroads ship 14.2 percent of world totals; its merchant fleet has dropped to 1.8 percent of the world’s fleet—meaning that about 97 percent of the freight moving in and out of the U.S. is carried on foreign ships. The huge American industrial base is a shadow of what it was merely 50 years ago.

Logically, as America’s manufacturing—its “cunning artificer” (Isa. 3:1-3)—disappears, so does its global influence. Other countries simply don’t need the U.S. as they once did.

Surely we can see as well that the Treasuries and other forms of government debt supposed to fill the capital void are, at best, a short-term solution. Let’s just look at the mounting interest payments. In 1998, the interest on the national debt cost the U.S. $41 million per hour (that’s 24 hours a day, 365 days; a bill of $364 billion for the year!). That is 70 percent more than the U.S. was paying ten years ago. Still, over the past 11 years, U.S. interest payments alone—to say nothing of the principal on the debt—have equalled $3.3 trillion. Over the century, America has gone from being the world’s biggest creditor nation to being its biggest debtor. Another sign of declining global clout.

Debt is dangerous. Being so reliant on other nations gives them a great deal of power. As Solomon said, “The borrower is servant to the lender” (Prov. 22:7). Consider: If for any reason foreign investors lost confidence in the U.S. and their money stopped coming, the entire economy would short-circuit. The American dollar is not attached to gold or any other standard; what makes it valuable is one thing—trust. Just one of a number of potential triggers could burst the economic bubble in the U.S., bringing the dollar down very quickly. That in turn would wipe out American consumers. If they stop buying, everything shuts down.

While on the surface things look fine, America is losing its power and its wealth—all because of the unsustainability of greed.

Bad Fruits

We see increasing today in the business world several other very ugly fruits of greed. Here we can briefly address only a few of them.

Twentieth century business and industry have caused an irreparable amount of environmental degradation. It does not have to be that way; in more and more cases it is not. But working cleanly means working more expensively, and in many cases, again, the unscrupulous pursuit of profit above all else exacts a high cost—this time on the very planet we inhabit.

Even more shameful is the effect of business and industry on the very character of morally weak people. Where you see great sums of money, you often see high levels of corruption. A 1998 report by Ernst and Young showed that over half of U.S. organizations, including government and private, were victims of fraud the previous year. It showed that at least half of “serious fraud” is committed by the organization’s own management. Such fraud costs U.S. businesses an estimated $400 billion a year.

Such items pepper the news regularly. Fraud. Bribery. Backstabbing. Conspiracy. Embezzling. Secret bank accounts. Ties with criminal rings. The high-power world of riches and influence inevitably corrupts people who do not have a firm moral anchor. Perhaps the extremes of such activity are rare; perhaps not. But even many smaller companies face serious problems associated with trying to survive in a greed-based society. High stress. Depression. Overlong work hours. Neglected families.

In America, over two thirds of office visits to physicians are over stress-related illnesses. It is estimated to cost American business $150 billion per year in increased health insurance, absenteeism, reduced productivity, mistakes on the job, employee turnover and other related problems. Yet, people must keep working, and working harder, if they are to sustain the life of luxury.

By 1998 figures, 68 percent of two-parent American homes with kids under age 18 feel they cannot get by on one income. (The same is true of 62 percent of those with children under 6.) So both parents work. Thus we have more daycare, more latchkey kids, more teens having nice houses to themselves for several hours a day, more husbands and wives who care less about their family than they do their individual careers. We have fast food and frozen dinners to feed us because no one has time to cook; we have all forms of escapism increasing in popularity because people can afford them —and because they do not like to talk with each other.

Such ugly trends continue to get uglier—all because of greed. A 1999 report in Britain called “The Paradox of Prosperity” projected that by 2010, overall living standards will increase by 35 percent. At the same time, people will be “under increasing pressure, working longer hours and suffering higher levels of stress. As this trend continues, alcohol and drug abuse could become worryingly prevalent. At the same time, people will feel the need to ensure private financial provision for their old age and will be less able to withdraw from the rat race.” The report predicted, among other things, a 33 percent increase in single-parent households and a 6 percent increase in childless women. In other words, the family will be increasingly sacrificed on the altar of prosperity.

The Verdict

Where will it end? We are twice as wealthy as we were in 1950—the wealthiest people at any time, ever—and still are not content. “Hell and destruction are never full; so the eyes of man are never satisfied” (Prov. 27:20).

These conditions cannot go on. Economics, business, industry cannot be the final answer to mankind’s problems. As with every other human endeavor, the “solutions” they present bring with them too many more problems—problems worse than those they purported to solve.

Business and industry in the terrible 20th century—for those with eyes to see, they illustrate how humankind’s mightiest efforts amount to little more than further proof of the ultimate failure of godless civilization. Why? Because what the Apostle Paul wrote in I Timothy is true: The love of money is a root of appalling evil. Man without God is inherently materialistic. Where money is involved, he has proven himself unable to avoid the spiritual trap of greed. And greed is a frightful thing to try to build a civilization upon.

We see the fruits before us: In spite of the stunning advances brought about by business and industry this century, there has been a corresponding spiritual retrogression. To believe, as many do, that economics is the messiah of the new millennium leaves an honest man looking forward to a very black future.

Sidebar: “Meaningless” Prosperity

From the Henley Center’s 1999 study, “The Paradox of Prosperity”

Contrary to previous representations of well-to-do people as idle landed gentry, the modern axiom seems to be that those earning the most money often have the least time to enjoy the fruits of their labor. In other words, high “standards of living” are not necessarily accompanied by high “quality of life”:

• 59 percent of UK citizens are now burdened by excessive time pressure, believing they “never seem to have enough time to get things done.”…

Working late hours and skipping holiday entitlement exerts huge demand on family life and relationships, as we see below, but “downshifting” to a lower paid job with less stress and more free time remains an option that people are reluctant to take. Although they may aspire to a more relaxed lifestyle, they have also become accustomed to the material trappings of the high-powered career and would find it difficult to live without a house full of expensive consumer durables or to remove their children from expensive schools and extra-curricular activities. In addition, the need to contribute to pension plans, insurance policies and other areas of private provision may take people beyond the point of no return. For women especially, there is more pressure these days to “do it all”—to manage an executive career rather than “simply” being a housewife or mother (although they frequently end up having to juggle these conflicting roles). Essentially, people have become trapped on a merry-go-round of demands, pressures and expectations, resulting in a constant plateau of stress.

• 22 percent of full-time workers would be willing to take a lower paid job if it meant less stress and more free time, but…

• 48 percent of workers say they need more money to keep up their quality of life.