The cost of unstable norms

The backlash was ferocious and unexpected. Adam Neumann, Kevin Burns, Boris Johnson and Donald Trump were historically rewarded for breaking the rules. Now, suddenly, the rules seem as though they might matter.

• Neumann, the founder and CEO of WeWork, broke more rules even than Travis Kalanick, the former CEO of Uber. They both became billionaires by losing billions of dollars, and they both awarded themselves voting control of their boards despite holding only a minority economic position. But Neumann added in an unprecedented level of self-dealing, bizarre M&A activity, and absurd rhetoric.
• Burns, the former CEO of Juul Labs, allowed his company to market its products to childrenand to claim without FDA permission that they were significantly safer than cigarettes. His company also led the broader adoption of vaping, which has been linked to at least 12 deaths. Burns’ disregard of safety concerns helped Juul grow so fast that he managed to sell a 35% stake to Altria for $12.8 billion in cash.
• Johnson, the U.K. prime minister, made his name and reputation by making up liesabout the European Union and getting them printed in a respectable newspaper. Once he became PM, he tried to avoid parliamentary oversight of his government by shutting Parliament down for most of the run-up to Brexit.
• Trump— well, if you don’t know how Trump built his career by violating political rules and norms, Axios Edge is not the place for you to find out.

Driving the news: Neumann and Burns were both fired this week. Johnson’s activity was found to be illegal in a unanimous ruling by the U.K. Supreme Court. Impeachment proceedings are beginning against Trump, who is also losing Republican support in the Senate.

Where it stands: Capitalist societies are built on a foundation of trust — trust among participants, and trust in the deep architecture that underpins financial and entrepreneurial activities. When that trust breaks down, as it did in 2008, the result is a crisis.

The bottom line: Trust cannot be enforced with threats of legal sanction; it depends instead on societal behavioral norms. Our society rewarded Neumann, Burns, Johnson and Trump for violating those norms.

• Their punishment does not restore trust to the system.Instead, it reveals the degree to which trust is now absent. A world where rule-breaking and “disruption” continue to be celebrated in both the economic and political spheres is a world where a lot of energy ends up being wasted on trying to discern the status of formerly clear boundaries.
• Capitalism works best when everybody is playing by the same rules. Right now we seem to be moving away from that ideal.

Πηγή: axios.com