Mar 15, 2012
Crisis: Corporate psychopaths - part B
in the former of which I provided a link to an interesting - to some, maybe inspiring video with Richard Fuld, Jr., then CEO of the now bankrupt Lehman Brothers, while I also considered several aspects of psycho-pathology, with quite a few useful and instructive links, and in the latter of which I raised and answered the question whether all or most of our leaders are psychopaths.
Yesterday the New York Times published an article by one Greg Smith - "a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa", the NYT says helpfully - the opening of which is quoted above, next to a picture of a vulture leaving a tribe of vultures.
The picture seems to sum up many of the reactions to Mr Smith's article on the internet, even though Mr Smith's second paragraph gives a deeply moral reason for his decision. Here it is:
It seems wise to be skeptical about Mr. Smith's public stance, but he does have a point, which may be summed up by "Greed is not good", even though the present leadership of Goldman Sachs seems to see it differently. According to Mr Smith, they see it the wrong way:
As it happens I have briefly worked for a bank - a long time ago - and I am willing to believe this may once have been the internal corporate ethos: It's not really credible; it's clearly meant for public consumption and team-building; but it's overall possibly more correct than not, and then not because in these now lost days bankers were more moral, but because their clients and their shareholders had some power over their actions, and failing one's clients (on a fairly large scale) then was a rather certain way towards a bankruptcy - that the state also would not bail the bank out of.
But the above spirit has left Goldman Sachs (and not just there, I would guess, quite confidently), mr. Smith opines:
But I don't think so. It is very likely that I would have a very low opinion of Mr Blankfein's and Mr Cohn's morality if I knew them better, but as it is I tend to believe they are just like Mr Fuld and other leaders of banking conglomerates who found that with deregulation and a booming economy they could get away with almost anything, including sluicing aways tens of millions to their own personal bank accounts, as long as there was a substantial end of year profit on the books, and maybe also if not, what with all those state bailouts by friends of the failing managers.
That is, I don't believe people or bank managers have grown worse: I believe that if you exempt people from painful sanctions for transgressing certain boundaries, then most people will transgress such boundaries as soon as that seems profitable for them. ("OK, we just deregulated and liberated theft, fraud, and swindle, all in the interest of God's Own Market Principles. Now you'll all be good boys and girls, won't you?")
Then again, Mr. Smith seems to see accurately enough how that worked out in Goldman Sachs:
I suppose so, but I think this happened in a wider social and indeed educational context, namely (1) that the banks and their managers got deregulated during Clinton's presidency, while (2) almost everyone they employed had learned during their university years that truth does not exist and that all morality is merely relative, while then finding themselves in a position in a bank where "Anything goes!" as long as it's profitable for the firm.
The result is this, according to Mr. Smith, whom I believe:
Then again, I would assume this has always been the case, for the most part, at least: To believe that banks exist to help their clients, is as naive as to believe that slave ships exist to help slaves: Profit is the motive in both cases, and clients resp. slaves the means - but what is allowable when making profits does not depend much on the manager or the captain, except in the very rare cases these are independent individuals with their own set of maintained personal values, but on what laws exist, that are being maintained by the courts, in the society that the managers or captains belong to. If these societies practice and preach that "Greed is good"; that all morals are wholly relative; and that anything goes ("the end sanctions the means"), as long as it makes a profit, then these are the rule by which most will play, indeed also while believing or at least pretending to believe that they are behaving quite morally: Don't their firms show a profit? Don't their firms exist to make profits? Doesn't almost anyone in the business try to rip off their clients? Well then, wouldn't one be mad to act differently? as Yossarian asked.
Mr. Smith has seen the evidence and the signs of the times at Goldman Sachs, and he does not like what he saw:
I believe him, and it shows just what I suggested: If "Greed is good"; if morals are relative; and if anything goes, as long as it does make a profit [Ovid: exitus acta probat], then these are the rule by which most will play, also or perhaps especially if it goes with acting as if one is a real tough guy or gal oneself, a winner, not a looser.
Also, Mr. Smith seems a bit naive, presuming he is honest:
I really don't think so: Clients of banks are also interested in profits, and as long as they believe - with or without justification - that their banks are making profits for them, somehow, and more than other banks would, they will remain clients. (As Madoff and Ponzi well knew.)
If there is a problem - and I agree with Mr. Smith there is one, as I agree that it is mostly a moral problem - it is that all restraints and almost all regulations have been thrown away or have been thoroughly eroded, and the only norm or end that remained, both for banks and for their managers, is profit, and the more profit the better, it doesn't matter how, for apart from monetary profits all ends, all values, all norms and all ideas are illusions, built on sand. (*)
Mr Smith is upset by what he saw and heard at Goldman Sachs:
Yes, but as I explained: That's what they all learned, at Goldman Sachs and at their universities, and indeed they are being moral after their own fashion, and they do follow their leaders and their leaders' norms, quite morally so, while engaging proudly in groupthink, like nearly all ordinary men.
Here is most of Mr. Smith's last paragraph:
I fear he will be seen by his former peers and superiors as a softy, a wimp, and as a man who just doesn't understand the realities of life. Then again, I don't think he is and am willing to believe he resigned for the reasons he gave, and also that his reasons are commendable.
Then again, I don't think they are realistic: The climate at banks will only change if the managers of banks are - again - made personally responsible for their personal failings, and are also not allowed to enrich themselves in the ways this has grown normal in the last 10 years or so, where persons like Mr Fuld could take home tens of millions of dollars each year, basically for practising "Greed is good" and "Après nous le déluge?" (**)
Finally, given my title: Do I think Mr Smith is a psychopath? Probably not: He does seem to have a respectable moral reason - and further see my Crisis: On the supermen who are our leaders.