There is a certain karmic continuum between America's dire fiscal condition and Toyota's implosion as the world's most trusted non-Scandinavian car maker. The Toyota chairman Akio Toyoda early this month dutifully performed his corporate atonement, apologising for the sticking accelerators and faulty brakes that had rendered his company a Fortune 200 widowmaker, at least in the eyes of the motoring public.
It was a nostalgic moment; in the 1990s, after the bursting of Japan's famous asset bubble, corporate heads would resign in weepy contrition after enriching themselves from some major scandal, only to emerge months later as a senior official in the ministry of trade and industry, where the real money was just aching to be made. This is not to imply anything untoward on the part of Mr Toyoda or his team. They simply stumbled under the weight of an imperious expansion plan.
Toyota, like Daimler before it, had developed too many models for too many markets and its standards for quality and customer care predictably lapsed. In the past, Toyota would seek out and cultivate relations with the finest parts suppliers available. But for the sake of greater market share it cut corners, hence the lethal defects. Such is the pitfall of empire in all its forms. Whether building and maintaining military bases along far-flung colonial frontiers or rushing, pell mell, to locate factory lines in hot new emerging markets, the costs will eventually exact a corrosive, existential toll.
Take the Bank of America (BofA). Established more than a century ago in San Francisco by Italian immigrants, the bank was one of the most respected of California lenders for its folksy customer service and prudential management. Consumed by the imperial impulse in the 1990s, however, it broke out of its home market by purchasing or merging with various regional competitors. In 2001, BofA went national with an acquisitive binge that included the purchase of FleetBoston Financial, a deal that earned it the enmity of New England in the US north-east after it summarily sacked hundreds of FleetBoston employees.
Following the 2008 credit collapse, BofA bought the near-bankrupt mortgage lender Countrywide Financial. Later that year, apparently under pressure from federal regulators, it saved Merrill Lynch from bankruptcy by purchasing it at pennies on the dollar. BofA is now the largest bank holding company in the US, but at the cost of its once-abundant public esteem. Since early last year, the bank has received some US$170 billion (Dh624.39bn) in public bailout funds, some of which was funnelled through the bankrupt and thoroughly discredited insurance giant, AIG, according to press reports.
At the same time, it has been criticised by the US Congress for its reluctance to write new loans, particularly to small businesses, depriving the ailing US economy of a badly needed tonic. Bank of America Home Loans, as Countrywide Financial was renamed, has received thousands of complaints across the country for its poor service. From its humble beginnings as a small but trusted local lender, BofA is now a lightning rod for populist rage at Wall Street and a prime target of the US President Barack Obama's plan to break up financial institutions that are so large they would require another federal bailout the next time the system tanks.
There is nothing new about BofA's ambitions to devour rivals in a bid to dominate through size. A flurry of mergers and acquisitions defined the high-tech boom of the late 1990s, during which small lenders were gobbled up by larger rivals. The process has repeated itself, as well managed banks were preyed upon by the big nationals which, if not for Washington's largesse, would have collapsed under the weight of the very toxic debt and high gearing rates that the smaller banks resisted.
Nor does the imperial gene inhabit only car makers and financiers. The media industry has so wantonly consolidated itself that network news and entertainment offers all the diversity and daring of a strip mall. Retail box stores - the Wal-Marts, Home Depots and Best Buys that dictate prices to suppliers by the sheer size of their outlets - have done more to lay waste to small local business than bundled assets or a credit default swaps ever could. America's telecommunications networks, plagued as they are by abysmal cellular phone coverage and limited band width, are to American oligarchy today what the railways were in the late 19th century.
There is a reason that "think globally, act locally", a laboured conceit about how corporate interests converge with the communities in which they do business, has gone the way of the dodo. There was a time when citizens might actually believe that lightly regulated markets would result in low prices and a diversified, competitive industrial base. No longer. As the British rock band The Who famously declared, "we won't get fooled again".
But there is another dictum, attributed to another sage Brit, about how capitalism is the worst economic system, except when compared with all the others. Sadly, that one still holds. @Email:email@example.com