Wall Street

Oliver Stone’s film, Wall Street (1987) was filmed in the midst of U.S. President Reagan’s push for financial deregulation. As a MBA student at the time, I volunteered to help a professor with his paper on financial deregulation. The theory behind why the NASD (the National Association of Securities Dealers) could self-regulate its members seemed solid enough to this idealistic youngster (i.e., me); I had yet to witness human nature in the field, and over decades. Similar to Marx overlooking the human need for economic compensation as an incentive to work on a daily basis (though I overlook it too in posting free essays online), I was blind to human nature in that I did not see that the NASD itself would protect even its most sordid members so to safeguard the reputation of the profession and, even more realistically, stick up for other “members” of the “club.” The Newtonian-like automatic mechanism whereby industry self-regulation would work was too beautiful to let human nature interfere. Similarly, when I worked in public accounting, I saw the “check mark” indicating that, “as per comptroller, discrepancy resolved,” was just one of several technical points in conducting an audit. The illusion of technique as somehow objective in the business world can shield practitioners from the ethical content. In case you’re wondering how this relates to Oliver Stone’s Wall Street, the antagonist Gordon Gekko is the poster child for greed, and thus the reason why the public should not rely on industry self-regulation to police Wall Street. Bud Fox goes headlong into being Gekko’s insider-trading protégé, easily ignoring conscience personified by Lou Mannheim even though he and Bud work in the same brokerage office. In Freudian terms, the id easily defeats the superego. It’s not even a close fight.

This is precisely why externally-imposed (i.e., free of the influence of the political contributions made by Wall Street firms) government regulation is necessary in a Capitalist economic system. Even Adam Smith recognized such a need, and thus that his theory of moral sentiments would not be sufficient. Greed can destroy persons and even entire economies. Wall Street’s greed for the very profitable unregulated sub-prime mortgage-bonds (and the insurance policies on those financial derivative securities), for instance, led to the financial crisis of 2008. The Clinton administration had fought to keep those instruments unregulated. Even after the crisis, Wall Street refused to accept blame. Even after the fact, conscience was easily dismissable.

In the film, Bud Fox’s conscience, as represented by Lou, tells him that there are no short-cuts. Bud dismisses Lou’s wisdom culled from at least 20 years of experience. Bud’s position is that he can good later; got to get the wealth first though—as if doing good depends on being wealthy—but Lou is not referring to philanthropy after retirement from working on Wall Street. Later in the story, Lou senses that Bud has been cutting corners ethically and perhaps even legally and tells the young enterprising man that money makes a person “do things you don’t want to do.” Bud wants to profit off insider info about his dad’s company, however, in order to snag the big fish, Gordon Gekko.

Carl Fox, Bud’s working-class father, tells his son, “Stop going for the easy buck.” But Carl is going after Bud’s industry and thus misses an opportunity to counsel his son on his tactics. To Carl, financial brokerage itself is problematic in that it does not produce anything. He contrasts brokers with lawyers, but both mediate parties who make things. To Carl, GNP is constituted by goods—not services. This is interesting because as an airline mechanic, Carl must know that oil is important to keeping an engine going, and thus things to be produced.

In the 1980s in the U.S. at least, finance was king and business schools were booming. I must admit that I got sucked into that vortex, quite unaware of what was happening in higher education, for I did not even realize that I was reducing education to vocation in the process. In a MBA course, I read what Robert Reich wrote about the American economy increasingly comprised of paper entrepreneurism. Manufacturing had been a casualty in the recession of 1981. During that recession, my hometown lost practically all of its machine-tool industry to Europe and unemployment stood at 21 percent. Gekko’s view of wealth as a zero-sum game fit with the empirical reality of companies moving their factories abroad to capitalize on cheaper labor markets and less onerous regulations. Gekko could have written speeches for Ronald Reagan’s presidential campaign. “America’s a second-rate power,” Gekko says at one point. The federal government is a “malfunctioning corporation” rather than a functioning democracy. The trade and budget deficits were just two indications that the government was in a pathetic way. Pro-business Reagan would hardly have agreed with Gekko’s negative view of corporate America, however.

In too many corporations, Gekko explains at a stockholder meeting, it’s a case of survival of the unfittest. Stockholders have ceded control to non-owner managers, who are after all really just bureaucrats. As a result, too many companies have become bloated. Referring to the company’s management sitting on the stage, Gekko complains that the company has 33 vice presidents. Gekko’s claim to be a liberator of companies has some merit. In breaking up badly run, overextended companies, hostile takeovers cut the fat and move the evolution of American Capitalism in the direction of greater efficiency and effectiveness. What about Bud’s father, Carl, who would lose his longstanding job were Gekko buy another company, Bluestar Airlines, and sell it for parts? Performing radical deconstructive surgery on the U.S. economy involves people’s livelihoods.

Carl has Gekko’s number. This is very clear. “He’s using you,” Carl says to his son. Carl knows that Gekko is lying about intending to keep the airline running. Bud dismisses his dad’s intuition. It does not help that Gekko has become a surrogate father and that Carl is at least in part jealous of Gekko, even apart from Gekko’s wealth. It is important to know that Bud has not gained a second father, for Gekko is not loyal to other people, and certainly not to a young salesman. Gekko lies to Bud about intending to keep the airline together and let Bud run it. That he actually thinks he could run a business merely because he has some experience executing trades shows just how delusional greed can be. Carl provides a reality-test here when he points out to his son that brokerage does not give a person experience tantamount to being able to manage a large business. Blinded by Gekko’s statement, “I’m going to make you rich,” Bud thinks he can do anything. Both Bud and Gekko are in fact greedy and consequently neither man pays any heed to insider-trading law or financial ethics. The S.E.C. is presumably on holiday.

Such is the delusion that can come from greed, the desire for more. This desire is treated as an end in itself. That is to say, that desire is assigned absolute value. God is knocked out of its perch, and relationships go by the wayside. The root is self-love, wherein the self is situated as the center and end of all; truth is a function of subjectivity.

“Greed is good,” Gekko states at the stockholder meeting. Greed works; it clarifies, which I assume means that it puts priorities in order. This goes for “love, life, and money.” Not surprisingly, Gekko admits to Bud’s fake girlfriend, Darien, with whom Gekko has been secretly sleeping with, that he has tried to avoid love. Presumably it gets in the way of his first priority, money. Lest it be concluded, however, that Gekko is the Devil incarnate, we get a glimpse of Gekko appreciating the beauty of the ocean while walking on the beach on Long Island. Even a greedy person is a human being. Even so,  greed eviscerates relationships, especially in a commercial context for there is no loyalty on which business relationships can be built, for the quick buck is all that matters.

Once when I was going to extend my hotel stay at a Merriott hotel, I asked that my rate be continued. The hotel manager refused, saying that hotels are like airlines so the rate is whatever is currently available online, given whatever supply and demand happen to be at the moment. This is in line with the hotel maximizing revenue on a nightly basis. The narrow fixation and the absolute priority on revenue cut off a business relationship from developing. Because hotels differ from airlines in that flights end whereas hotel stays can be extended, I knew that the company’s technocrats had adopted a flawed, ill-fitting model. I did not extend my stay at that hotel; rather, I went to another hotel, and, once checked-in there, I put the Merriott “loyalty" program card, which a front desk employee at the previous hotel had given me, in a trash can. One-sided loyalty is an oxymoron. To be sure, the Merriott company got some revenue from me, but the company stumbled over itself in that it lost much more (without knowing about the future lost business). Any marketing ploy that refers to hotel customers as “guests” is disingenuous because the “hospitality” industry, at least in the U.S., practices such radical conditionality in customer relations. From my observations and reactions to managers at that Merriott hotel, I could sense just how inimical greed is to human relationships in a commercial context.

In general, greed cannot tolerate the ongoing bonds that sustain human relationships, whether business or personal, if those bonds constrict a gain that could otherwise be snagged. Greed’s interests are immediate because the desire for more cannot refuse even a momentary gain even if it means diminishing or losing a long-term arrangement. Even a person’s or company’s reputation is no constraint if there is an easy gain to be had. This does not mean that greed eschews long-term investments and even business relationships that are advantageous (e.g., a discount for frequent business). It’s just that greed cannot be relied upon by counterparties to stay on course should conditions change. Like a cheating spouse, greed won’t let a vow get in the way of instant gratification.

In the film, it is not surprising that Gekko has been cheating on his wife by having sex with Darien. Even business relationships are difficult if greed is all that matters. Larry Wildman, who is trying to buy a steel manufacturer so to improve it rather than break it up (whereas Gekko would break it up), calls Gekko a “two-bit pirate and a blackmailer” who would sell out his own mother. Presumably no one on the street is going to go into a deal with Gekko because he can’t be trusted beyond what is in his immediate financial interest.

Therefore, greed is shortsighted not only in wrecking the finer things in life, such as love, but also in terms of business relationships and even in terms of maximizing wealth in a time horizon beyond immediacy.  Rarely does a person enthralled with greed look into the abyss and find his character. This, Lou tells Bud just before he is arrested at the brokerage office, is what keeps a person out of the abyss. A narrow, “pinhead” mentality is the natural funnel that forms when a person allows the desire for more (i.e., greed) to encompass one’s experience and even existence. Sartre claims that a person’s existence precedes one’s essence. The danger in subjectivity being the basis of one’s essence is that absolute truth is abdicated. Subjectivity itself can narrow without thereby recognizing this and thus being self-correctable. More than looking into an abyss is necessary to grasp a normative anchor. In the film, neither Gekko nor Bud even look into the abyss.