Today I happened to read a pretty disturbing article in the Rolling Stone that had nothing to do with business and everything to do with banking [1]. I would rather let the article explain the details (which include a rather frightening quotation from bankers who agreed to collude and engage in corrupt conspiratorial practices involving bank loans in exchange for day-old sushi, which is about the definition of corrupt). There are many ways in which competition can be a good thing; I enjoy watching (and occasionally playing) in competitive sports, and like it when competing business drives down prices and drives up service for me, because I like getting more for less whenever that is possible. Unfortunately, though, those who are engaged in competition often find it more profitable and enjoyable to reduce competition for their own well-being, as companies and institutions that are too big to fail change their behavior from competitive people in search of honest business to people who want to protect their fiefdoms and achive even greater profits and power through corruption and crony capitalism.

Competition benefits us when other people compete for us. When there are multiple people or companies or parties with an interest in our time and loyalty and affection and whatever else people want from us, their competition makes terms better for us. When we have to compete for opportunities ourselves, then the terms get better for others. Supply and demand can be a cruel way to operate sometimes, and it can be a glorious way to operate sometimes, depending on whether we have what others want or whether we want others have. There comes a point, though, when we may extol the virtues of competition but feel ourselves above the need to compete and desire to game the system in our favor. The road to corruption begins when we see ourselves as having done enough where we no longer need to act in such a way as to prove our loyalty and decency and when we expect to preserve whatever power and position we have to make it so that we never have the risk of loss for ourselves. Once we do that, whatever lip serve we pay to competition in reality has become anti-competitive and corrupt practices. We see this in sporting leagues that try to protect their monopolies to drive up prices for fans, and we see this in banks that rig interest rates and game the financial services sectors of the world, causing pain and suffering through austerity to many the world over, while ensuring their own ill-gotten gains are protected and any wrongdoing that is found receives nothing more than a slap on the wrist, at best, while the corruption continues.

If we are honorable people, then we accept that sometimes a given situation may work out in our favor and sometimes it may not, but we respect integrity and the freedom of others enough that we accept the risk in order to be decent and upstanding in our own conduct, whatever our flaws. It is honorable to accept risk knowing that if one receives the favor and grace of others it was done without manipulation and openly and above board. That is a success one can take comfort in. Likewise, if one does not succeed in a particular endeavor, one can find comfort in the honor of the process and one’s own conduct even if one cannot cheer the outcome. For the honorable perosn, a noble failure is better than a base success. Not all people, however, are that honorable, and for some people, there is no nobility in any process that allows the possibility of failure. It is this determination that no failure is an acceptable option that leads to attempts to rig and game systems. In such a paranoid and conspiratorial world, though, no success has any joy or any benefit, since one can never know that one has succeeded by one’s own efforts or whether it was through one’s control of the process. And yet fear of failure often drives people to behave in ways that make it impossible to know if they are really liked and respected or whether people are just acting that way out of their own fear and their own desire for the offices and success that in a corrupt system can only be gotten through corruption.

How does one deal with this problem? When institutions, be they companies or governments, get so big that they view themselves as too big to fail, they are too big to be allowed to continue in existence. But how does one get rid of the problem? In what ways can competition be restored and anticompetitive monopolies be broken up so that the possibility of collusion (which requires a very limited number of players who can engage in collaborative efforts to game a system, and which is drastically hindered once numbers reach a critical level where cooperative effort becomes impossible to maintain for all parties)? It is not simply enough to have the illusion of competition that comes from looking at the cereal aisle, but the reality of competition that one finds when looking for fast food or casual dining, where there are so many options that new restaurants rise up and fall with alarming frequency based on such matters as price, service, location, and reputation. When companies collude, you lose. When companies compete, you win. The only way to make capitalism work for the consumer is to ensure that there is enough real competition that companies are motivated to offer high quality goods and services at reasonable prices. When shrinking numbers of players in a market allow collusion to take place, and when companies and their leaders decide that base success is better than the risk of failure, then we get the sort of world that we have now. we deserve better.

[1] http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425