Two things stand out about U.S. business today. One is how successful U.S. firms are: they account for 57 of the world's 100 most valuable listed firms.
The other is the bad smell hanging over a number of powerful companies.
Boeing faces claims that it sold 737 Max planes with dangerous software. It says it is "taking actions to fully ensure the safety of the 737 Max."
Criminal charges have been filed against Goldman Sachs in Malaysia for its role in arranging $6.5 billion of debt for a state-run fund that engaged in fraud. Goldman says it is cooperating with investigators.
A jury in California found that Monsanto failed to warn a customer that its weedkiller could, allegedly, cause cancer. Bayer, a German firm which bought Monsanto in June, says it will appeal the verdict.
Wells Fargo, one of the United States' biggest banks, admitted creating 3.5 million unauthorized bank accounts. It says it is working to "rebuild trust with our stakeholders."
Facebook's data practices have come under scrutiny in several countries. The firm says "we need a more active role for governments and regulators."
Then there is the opioid epidemic, which involves not only Purdue Pharma, the maker of OxyContin, but also, according to a lawsuit by New York's attorney general, other firms including McKesson and Johnson & Johnson. Purdue says it is "deeply concerned" about opioid addiction. Last year McKesson also said it is "deeply concerned" by the epidemic and that its board has "enhanced oversight procedures." J&J says it is "committed to ensuring its medicines are used correctly."
200 million consumers
It is tempting to view these cases as unrelated events caused by factors ranging from bad luck and human error to negligence and criminality. That would be a mistake. U. S.firms seem to be more scandal-prone than their peers across the pond.
The total market value of U.S. firms involved in big incidents that have become public since 2016 is $1.54 trillion. At least 200 million consumers have been affected. The figures are only $600 billion and less than 30 million for European firms, including carmakers that faked emissions tests and Nordic banks involved in money-laundering.
The United States is no stranger to corporate scandals. But today's crises are diverse, yet with common elements.
The firms tend to be established, with dominant market positions. Outrage infuses social media and Congress. And yet the financial cost has been limited. Take a sample of ten big U.S.-listed firms involved in controversial episodes: their median share price has lagged behind the stock market by a bearable 11 percent since the event, after adjusting for dividends.
The crises have caused bosses to be fired in only two of the ten cases: Wells Fargo and Equifax. Some adjustments to bosses' pay have been made.
For critics of capitalism none of this will be a surprise. They argue that firms controlled by private shareholders are especially unethical. Yet it is easy to poke holes in this. Volkswagen cheated on emissions tests even though it is part-owned by the German state and has workers on its board. Despite Sweden's cuddly "stakeholder" capitalism, Swedbank faces a criminal investigation for money-laundering.
An alternative explanation is that U.S. capitalism has got ten out of kilter. Three forces have long constrained corporate conduct: regulation, litigation and competition. The aftermath of the financial crisis saw a storm of lawsuits and fines on banks. But since then each of the three forces may have weakened, increasing the incentive for firms to take risks.
Lost their bite
Take regulation first. The system is a strange blend: there are pockets of laissez-faire attitudes here, thickets of rules there and lobbying everywhere. It is prone to laxity, capture and incompetence.
Second, litigation may no longer be quite the deterrent it once was. Criminal cases leading to jail terms for top executives are as rare as socialists at Goldman Sachs. And civil law has lost its bite.
The final constraint is competition. It can drive firms to cut corners but in the long run should act to discipline careless or badly behaved firms, because customers shun them. Kraft and Heinz boomed in the 20th century, thanks in part to a reputation for safety. Japanese car firms forced Detroit to raise its game in the 1980s. And today Netflix trounces the traditional cable TV firms which love to bamboozle customers.
But across the economy incumbent firms have gotten more powerful over the past 20 years, making it harder for customers to switch.
There is one alternative to Boeing, Airbus, but it lacks spare capacity. Users find it hard to leave Facebook. Pesticides and herbicides, credit-checking, drug distribution and drug retailing have grown more concentrated, too.
Perhaps the rash of crises will prompt corporate soul-searching. If not, public confidence in capitalism may suffer another blow.