Elizabeth Holmes fraud case exposes fractures

A new symptom of the current stage of US capitalism can be seen in the case of businesswoman Elizabeth Holmes, one of the Silicon Valley pledges, but who is on trial in the US court on 12 counts of fraud.

Before stamping the criminal pages, Holmes was stamped on the most noble news. Inc magazine, for example, put Holmes on its cover with the words “the next Steve Jobs”, referring to the creativity of the late Apple founder.

Forbes also highlighted the businesswoman, who was the cover of the Forbes 400 edition, which lists some of the new tycoons on the world stage.

At 37, the businesswoman was once again in the news due to the judgment of her conduct at the head of her company Theranos, a startup that would revolutionize world medicine.

Valued at $9 billion (about $47 billion), the company was working on the Edison test, which would allow scientists to identify diseases like cancer or diabetes with just a few drops of blood.

Quick and painless, as it would dispense with the use of traditional needles, the technology proposed by Theranos attracted the attention of grown-ups. Rupert Murdoch, a media magnate, for example, invested more than 120 million dollars (630 million reais) in the fraudulent initiative.

The Walton family, owner of retail chain Walmart, and former education secretary Betsy DeVos also fell for the coup, along with a horde of investors and Silicon Valley fans.

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While speaking to converts in front of the cameras, behind the scenes Theranos technology was pure smokescreen. The plot had a twist in just a few months – in 2014 she was in heaven, and in 2015 she knew hell, when the first accusations of fraud began. In 2018, Theranos collapsed completely.

To the American justice, Holmes and his lawyers try to argue that failure and fraud are different things, and that the first does not constitute a crime.

While jurists don’t hammer out, society already has its verdict: the businesswoman is guilty of bleeding millions of dollars from “poor” investors.

“Of course, we were all on her side during her ascent,” says Knox College Professor Emeritus of Psychology Tim Kasser to Brazil in fact.

He adds: “The idea was to support her so that more people would follow her example, but she went too far and now we need to punish her. We can tolerate Jeff Bezos making billions while Amazon employees can barely go to the bathroom and They are paid minimum wages. We can tolerate CEOs earning 200 times more than the average worker in their companies. We can even tolerate leaders who are less than ecological. .

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For Kasser, this system trap is neither new nor unique to the United States. All countries that operate under the logic of capital make the search for profit their premise of existence.

This does not mean, however, that it is something healthy or even desirable. “I have been studying materialistic values ​​for 30 years, and it is known that societies that are based on material values ​​are less happy, have a lower quality of life, and are less kind. The most striking characteristics become competition and manipulation.”

And he continues, “more materialistic nations have fewer children, and the children there have lower levels of well-being, according to UNICEF. So both from an individual and a collective point of view, capitalism is always harmful.”

colonial roots

In conversation with the report from Brazil in fact, economist Richard Wolff explains that American capitalism is a product of a sequence of events, whose roots are rooted in colonization itself.

“The United States went through a process of definitive colonization, in which the natives were annihilated or expelled, and replaced by workers who could not succeed in their original lands. In parallel, the colonization took place under a non-Catholic Protestant regime, then there were no papal restraints. Capitalism without limits was imposed,” he says.

The lack of brakes became more noticeable years later, when the country came out of slavery in 1860. “At that time we experienced unprecedented growth, and the game between the United States and England turned around, with the Americans becoming more powerful and embracing the idea that this land was chosen by God to lead humanity,” he says.

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The economist, who is also a professor emeritus at the University of Massachusetts, reveals that the heyday of American capitalism happened in the 1950s, 60s, 70s and 80s, with the idea – and the promise – that everything would be better than before.

“So we married with the promise that, alongside our partners, we would have a better life than our parents. We raised our children thinking that their lives will be better than ours, and that they just need to go to college to get a bigger house, better vacations or whatever. The problem is that logic is gone.”

In hindsight, Wolff argues that the great mistake of the working class was to have fought for its rights and not to have put an end to capitalism. “After the Great Depression, back in the 1930s, there was a boom in unions and the conquests of rights such as unemployment insurance, retirement and others”, but he ponders that “the working class woke up, was amazed by its achievements, and forgot to control the capitalism, which would later come to take away all the rights previously conquered”.

The promises of capitalism in the US, according to Wolff, began to wane as early as 1980 and 1990, but they kept alive with the help of “gadgets”. “Americans started to incur debts to finance the house, the car, education and even health. Right now, Americans are without work and without a future. The United States is a great failure”, he points out.

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In fact, the country’s consumer debt surpassed 14 trillion dollars (73 trillion reais) in the last quarter of 2020, according to the Central Bank of New York. The institution has mapped a rise in four main debt areas: housing, automobiles, student loans and credit cards.

While some economists believe that this debt is not a big problem for the macroeconomy, they ignore the domino effect of this issue. “We are so desperate that we want to believe anyone who appears on television with promises of salvation. That’s why Donald Trump was elected. Not because Americans approve of his policy, but because they are desperate and want to believe in a candidate who says he can make the United States great again”.

Despite the US GDP having advanced 6.6% in the second quarter of 2021, local inequality shows, once again, the fractures of the system. According to the Pew Research Center, the US has the highest income inequality of any G7 country, and the chasm separating rich and poor has more than doubled in size between 1989 and 2016.

Edition: Arturo Hartmann

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