Good Honest Dollar $$

Image by Zink Dawg via Wikipedia

Dear readers,

I would like to wish you all a merry Christmas and a Happy New Year.

It has been a pleasure to engage in discussion with you through this blog and also through some of your blogs in 2010. I look forward to further discussion in 2011.

Cheers,
Andrew

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Ever since last year’s announcement of the sequel to the all time great Wall Street movie, one key question has burned in the minds of those who drew inspiration from the legendary Gordon Gekko:

Is greed still good?

On September 23, when the new film, Wall Street 2 – Money Never Sleeps was released, the answer was revealed.

Greed, it appears, is no longer good. But now, Gekko observes, it seems to be legal.

 
Gekko’s new view on greed
It’s been more than two decades since Gordon Gekko (Michael Douglas) make the famous declaration in the original Wall Street movie that, ‘Greed, for lack of a better word, is good’.

Fast forward to 2008, in the midst of the financial crisis. Gekko, released six years earlier after serving eight years for securities fraud, appears to have re-evaluated his world view.  He now has a book, ‘Is Greed Good?’, and whilst he does not provide an explicit answer to that question, he does make clear his disdain for the herd mentality by which some of the practices leading up to the GFC had been followed.

‘Is everybody out there nuts?’, he exclaims during an address in a lecture theatre, an address which inspires Jacob ‘Jake’ Moore (Shia Lebouf) – an up and comer at troubled investment bank Keller Zabel Investments who is set to marry Gekko’s estranged daughter.

Gekko also wryly observes that, in contrast to the type of activity which landed him in prison, few of the practices that led up to the GFC were actually in breach of the law.

‘Someone reminded me, I once said ‘Greed is good’, he says. ‘Now it seems it’s legal.’

Gekko, declared the Weekend Australian Review on 11 September, is a ‘changed man’.

Or is he? Is he simply up to some of his old tricks again?

The new film, in my view, is nowhere near as good as the original. But it is still worth seeing – those involving Michael Douglas usually are.

 
Some issues surrounding the film
Here’s my take on a couple of issues surrounding the film.

 
• Corporate criminals are quickly forgotten.

The first scene shows Gekko walking out of the prison gates after being released from prison in 2002.

Who should be waiting for him?

No-one.

In his hey-day, financial market participants would watch his every move. Up and coming brokers like Bud Fox (Charlie Sheehan) virtually idolised him.

Now, no-one cared. Disgraced and estranged from his family, his release did not register with anybody. Whilst fellow former inmates were picked up – one in a limo that Gekko assumed for a second was his – nobody came for him. He was alone.

I am not saying that this is necessarily right. For anyone to experience this would be awful, no matter what they have done.

But there is a clear lesson. Those who engage in dishonest activity in the pursuit of wealth are soon forgotten.

 
• Gekko is no role model.

After the release of the original Wall Street film, Douglas apparently found himself being approached in restaurants and on the street by finance industry executives, who told him it was Gekko who inspired them to get into the industry (Weekend Australian Review – Sep 11-12).

Curious.

To be sure, there is nothing wrong with the finance industry. It is a good profession which offers excellent prospects for a rewarding career.

But drawing inspiration from someone who ends up disgraced and in jail is unusual, no matter how much of a legendary character they might have been.

Gekko is great for entertainment, but those who wish to succeed in the finance profession would be well served looking elsewhere for a role-model.

 
• Those who over-borrow are asking for trouble.

One aspect I liked about the film was the lack of sympathy given to Moore’s mother (played by Susan Sarandon), who borrows to finance property with little regard for her debt related responsibilities.

Individual borrowers did not cause the GFC – irresponsible banking practices did. Nevertheless, at an individual level, each and every one of us is responsible for what we ourselves choose to borrow. Those who over-commit themselves are not acting responsibly and have no-one but themselves to blame when they get into trouble.

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Not being familiar with American law, I cannot comment on whether or not the alleged behavior of Robert Halderman actually represents illegal conduct.

But contrary to the assertions of his legal council, his alleged conduct was certainly not an act of capitalism.

Frankly, I am tired of hearing terms like ‘capitalist’ and ‘entrepreneur’ used in efforts to downplay the seriousness of illegal and/or grossly immoral behavior. These types of words should be reserved for those who are truly worthy of being described as such.

 
The ‘Tiger Woods’ defence
Mr. Halderman is charged with first-degree grand larceny in connection with a failed attempt to secure payments of up to $2 million dollars from David Letterman in return for silence about the talk show host’s affairs with female employees (refer article). Allegedly, Halderman threatened to go public after the discovery that his ex girlfriend was one of the women involved.

In an attempt to have the charges dropped, Halderman’s lawyer, Gerald Shragel, compared his client to women linked to Tiger Woods (who were reportedly paid to keep quiet), claiming that “their behavior was capitalist, not criminal,” and that “(The) reality is that evidence of celebrity misdeeds has a significant market value.” (refer article,)

 
Blackmail not what capitalism is about
The question of whether Halderman’s alleged behavior indeed represents criminal conduct will be decided by the American judicial system in due course.

But was it capitalist behavior? No way.

Dictionary.com defines capitalism as:

“an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.”

Neither blackmail nor larceny are mentioned in any part of this definition. Nor, I doubt, would they be associated with the word in any other dictionary. They are not what capitalism is about and they have no place in any form of economic system, and though efforts on the part of defence council to downplay the nature of their clients’ alleged behavior are certainly understandable, I grow tired of the way in which concepts like capitalism get abused in the process.

The same applies to the concept of entrepreneurialism, a term all-too-often abused in describing the organisation of blatantly criminal or immoral operations for financial gain.

(Blackmail is defined as “any payment extorted by intimidation, as by threats or injurious revelations or accusations” and “the extortion of such a payment“)

 
Capitalism Vs Blackmail
Let’s have a look at a few differences between capitalism and blackmail:

Capitalism is an economic system. Blackmail and larceny are acts of criminal conduct.

Capitalist behavior serves genuine needs for end-consumers. Blackmail and larceny do not.

Capitalism appeals to those who seek reward for courage, initiative, diligence, hard work and sensible risk taking.

Blackmail and larceny appeal to the lazy and dishonest – those who seek to get rich quick via opportunistic behavior.

Capitalist behavior is legal in free-market economies. Blackmail and larceny are not.

Capitalist behavior (usually) contributes in a positive manner toward society. Blackmail and larceny do not.

The American judicial system will decide whether or not Halderman has breached the law. But regardless of the outcome, his alleged behavior is not what capitalism is all about.

Let’s leave words like ‘capitalist’ and ‘entrepreneur’ to those who are worthy of being described as such – those who seek reward through courage, initiative, risk-taking, diligence and hard work.

(Image provided by Keith Allison via Wikipedia)

Tiger Woods’ recent fall from grace is a shame, not only for those directly involved, but for the entire sport of golf.

It also highlights a wide range of broader issues and questions relating to personal, professional and business ethics.

Amongst other things, these could include:

 
• How the private conduct of high profile professionals can affect their ‘brand value’ in terms of advertising and corporate sponsorship.

The understatement made by consulting firm Accenture upon termination of its sponsorship – about Woods being “no longer being the right representative,” – said it all.

So too does the more frank commentary (same article) of public relations consultant Ian Monk, about Woods being “… damaged goods with no commercial value to sponsors whatsover.”

 
• How the expectations placed upon role models in any profession extend beyond their professional lives.

Role models, it seems, are expected to demonstrate exemplary behavior in all aspects of their life – private or professional.

 
• The issue of media outlets paying for stories.

I don’t know whether or not Jaimee Grubs or any of the other women involved have indeed received any form of payment from media outlets for going public on this story. But I certainly hope they didn’t.

Woods’ transgressions are unacceptable, but so too are those of any of the women involved. Each of them appears to have been willing participants in their affair with the superstar – none deserve any financial reward for their behavior

 
Even the best are mortal
But there is one important lesson which should not be forgotten in any of this – the fallibility of even the most revered superstars.

Prior to the revelations, there were strong reasons for holding Woods in high regard, particularly given the way his work ethic, general demeanor and extensive involvement with charities and youth projects served to complement his talent and achievements. He was, it seemed, an ideal role model.

Nor was it in any way wrong to give him so much respect. Positive role models are needed in every profession, and those who achieve excellence whilst appearing to conduct themselves in an exemplary manner deserve our admiration.

But these sentiments must be tempered with two sobering realities:

• we don’t always know the whole story; and
• even the best role models are human.

The second point is especially pertinent. No matter how exemplary their behavior may be, all role models are human. None of them are infallible, nor should we expect them to be. Disappointment is inevitable if we forget this.

Respect for high achievers who display exemplary behavior is healthy, but idolization is not. No one should be put on a pedestal.

 
Great shame, important lesson
Tiger’s fall from grace was a great pity. I certainly hope that he is able to get his life back together and, if possible, salvage his marriage.

In the meantime, his story serves as an important reminder about the fallibility of even the most revered superstars.

Those who set positive examples deserve our full respect – but they should never become our idols.

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Image by Steve Burke via Wikipedia

Dear readers,

I would like to wish a merry Christmas and a happy new year to you and all of your families.

There have been a number of interesting comments from a variety of people during 2009. My sincere gratitude extends to all who have contributed to the discussions. I have certainly enjoyed writing on this blog as well as engaging in discussions on each of your blogs.

See you all in 2010.

Special thanks to:

Ana
Brad
Cath
Fred
Jake
Karen
Lillie
Meryl
Natural
Tom