Cheating is ubiquitous. Three sports — rugby, football and Formula One — are on the rack as coaches, players and drivers are discovered flagrantly flouting the rules. The world’s top banks have hidden trillions of dollars of near-valueless securities in offshore tax havens, deceiving taxpayers, regulators and investors. The consensus is that next year’s rise in the top tax rate in the UK to 50 percent will raise hardly any extra revenue, for high earners will successfully cheat on their obligations.
MG Rover directors cheated on their employees and the firm. Top UK sports retailers such as JJB Sport have been fined for price fixing. BBC’s Panorama program claimed an executive from Lloyds bank advised a tax evasion scheme to a wealthy client. A hundred building firms, including the top names in the industry, have been fined £130 million (US$206 million) for price rigging. The attorney general for England and Wales, Baroness Scotland, calmly paid a £5,000 fine rather than resign for not complying with her own legislation on employing illegal migrant workers. When Liberal Democrat Vincent Cable announced his well-judged “mansion tax”, the howl went up at the very idea of a new tax which could not be avoided (part of its virtue). And that is all in the last three weeks.
Behavioral psychologists tell us that human beings come down disproportionately hard on those who cheat on the agreed rules for their own advantage. Marc Hauser, Harvard professor and director of the Cognitive Evolution Laboratory, is one of the world’s leading experts on fairness. After setting standard tests for quarter of a million people from 120 countries he believes that human beings everywhere are born with an innate disposition not to intend harm. It is a result common to Amazonian Indians or pensioners in South Korea.
This instinct broadens into wanting not to cheat, and instead to cooperate. It is a capacity the species once needed for its survival. If a stranger could not be trusted to keep to the group’s rules when humans lived in caves as hunter-gatherers, it was a matter of life and death. Yet increasingly people shrug off this most basic of instincts, central to any conception of human association and fairness. So what’s going on?
What is dangerous is that when cheating reaches a certain mass, it becomes impossible to contain. Rules become there to be broken. Those who dive on the football field will hardly think an annulled suspension for a couple of matches for Arsenal soccer club’s Eduardo sufficient deterrent not to try it themselves — and the football authorities have to be careful in their sanctions, because diving is so rife. Equally, governments find it hard to challenge the accounting industry, along with much of the financial services’ so-called structured (cheating) investment operations, built around advising the rich how to avoid (and even evade) tax.
Too many people have been allowed for too long to build a career on advising others how to cheat. The lack of vengeance is an explicit signal to everybody else. Meeting one’s obligations under the rules is for somebody else — the little people. Almost nobody gets found out and when they do the penalties are trivial. Join the crowd and cheat. Dive in the box. Don’t pay tax. Have your racing driver crash. Try to rig the market or bend the rules to win the game.
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