Recent U.S. presidential administrations are cultivating quite the reputation for scandal, with Donald Trump’s perceived conflicts of interest, Barack Obama’s seemingly unbounded surveillance program or George W. Bush’s controversial justification for invading Iraq. Corporate scandals, meanwhile — think a United Airlines passenger being assaulted, exploding Samsung telephones or Bernie Madoff — can arouse similar, or sometimes even greater, public outrage.
Yet between a typical political scandal and a garden-variety corporate one, the latter is generally the lesser of two evils.
Many frustrated U.S. citizens feel that they are unable to hold the politicians responsible for government scandals accountable. Voting them out of office is an incredibly coarse — and mild — punishment mechanism.
Not to be outdone, corporate America has excelled in inexcusable acts of immorality. British Petroleum’s oil spill in the Gulf of Mexico, Enron’s fraudulent accounting, and the credit rating agencies’ manipulation of credit assessments prior to 2008 all demonstrate human fallibility and the inadequacy of the systems meant to prevent such missteps.
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Assuming we don’t want to expend every ounce of our mental energy being angry at so many deserving targets, how do we prioritize? Two key differences suggest, given the choice, we should probably focus on the politicians:
First, in the private sector, when most organizations become embroiled in a scandal, we consumers can take our business to a competitor.
Second, on the rare occasion when the scandalous company is a monopoly — and no competitor can service our demand — we usually retain the option of simply opting out. If you are disgusted by how the NFL handles domestic-violence issues, you may be frustrated by the fact that there is no comparable replacement on the market.
In contrast, for many government services such as law enforcement, there is no real alternative. Even when there is a viable commercial competitor, such as in education, you cannot get your money back when you decline the government option.
In principle, eliminating competition and choice should result in poorer performance, including unsatisfactory responses to scandals when they erupt. Corporate America’s cold-hearted pursuit of profits in a competitive marketplace means that they genuinely want to avoid scandals in the first place.
Privacy concerns illustrate the difference between corporate and government responses to accusations of unethical conduct. Facebook and Google have been severely criticized for opaque data policies, including accusations of invasions of privacy. Both responded and now provide far superior levels of transparency.
And what about the government’s response to accusations of invading citizens’ privacy with excessive surveillance? What evidence of reform by the organizations accused of acting improperly have we seen?
Admittedly, it’s difficult to conceive of a decentralized, competition-based alternative to the current systems of national defense and security, unlike the social media services that Facebook, Google and others provide. Instead, the public must be vocal as a watchdog and demand internal reform when necessary.
This is the price of public schools and universities, transportation, clinics, and all of the services for which we voluntarily cede the benefits of competition in the marketplace.
As Americans grow increasingly disenchanted with the political process, the importance of public engagement in it is at an all-time high. And perhaps taking some of the power out of the hands of policymakers can be more effective than simply waiting until the next election.
Omar Al-Ubaydli is the program director for international and geo-political studies at the Bahrain Center for Strategic, International and Energy Studies.
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