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.

Pope Francis: A Man of His Word

The documentary, Pope Francis: A Man of His Word (2018) chiefly lays out the pope’s critique of economic Man. The film begins with references to climate change too loosely linked to the global population figure of 8 million humans, 1 billion of whom are unnecessarily living in poverty. The viewer is left to fill in the gaps, such as that because as biological organisms we must consume and use energy, the hyperextended overpopulation of the species is the root cause of climate- and ecosystem-changing CO2 in the atmosphere and oceans. Arguably, the salvific Son of God or the means into the Kingdom of God enjoy pride of place in the gospels, but compassion for the poor as well as outcasts and the sick is indeed a message that Jesus stresses in the faith narratives. Rather than being a sign of sin, poverty, especially if voluntary,  can permit the sort of humility that is much superior to the pride of the Pharisees. In the documentary, Jorge Bergoglio, who took the name Francis in becoming pope of the Roman Catholic Church in 2013, is a practical man who points to the sickness or temptation of greed that keeps humanity from riding itself of poverty, unnecessarily. Moreover, the hegemony of the market, with its culture of consumerism and commoditization, comes at the cost of the common good, which to Francis has a spiritual basis. Abstractly speaking, harmony, which inherently respects its own limitations, should have priority over greed and markets. Both of these can go to excess without enough built-in constraints as occurred before and during the financial crisis of 2008, with poverty plaguing humanity even more rather than less as a result. 

   

Such poverty as exists in the world (in 2017) is a scandal, the pope says, because we could solve the problem. “We have such riches, so many resources for giving food to everybody,” yet so many children are hungry. If we become a little bit poorer—having not so many things—we can help the poor. The pope even wants “a poor church for the poor.” Unfortunately, men can be found even in the Church who have yielded to—rather than resisted—the temptation to have more things. More things owned by fewer people means that more people get less.

Organizational theorists speak of dysfunctional organizations; the pope refers to the Curia, the government of the Church, as dysfunctional. Sins are malfunctioning diseases that weaken our service to God. In men of God, the result is tremendous hypocrisy. According to the pope, a sick organization can suffer from people who think they are immortal in the sense that they deem themselves immune from temptation. Other spiritual diseases include rivalry and vaingloriousness (boastfulness), closed circles (cliques), and lugubrious (sad looking) faces. Existential schizophrenia[1] and spiritual Alzheimer’s disease[2] are two others. Last but certainly not the least, given Francis’ preoccupation, is hoarding. A person seeks to fill an existential void in one’s heart by accumulating material goods not out of need, but, rather, to feel secure. Twice the pope states, “As long as there’s a church that places its hope on wealth, Jesus is not there.” This alone doesn’t exclude a church from having wealth, though Francis clearly wants a poor church for the poor. To be sure, a church that is itself poor has limited funds to lift the poor out of poverty, let alone help them momentarily, but in the spending of vast wealth a large church can made a dent in the problem and the remaining lower cash-flow can make use of fund-raising.

We need only look at Wall Street bankers to see that wealth can be accumulated much beyond even the most risk-averse need for security, financial and otherwise. Pope Francis does not discuss Wall Street in the documentary. No doubt he would have expressed disgust at the many traders for whom maximizing a yearly bonus is a game even during a financial downturn such as that of 2008-2009 even though many sub-prime mortgage producers and mortgage-based bond traders were culpable both ethically and in terms of competence. Making unnecessary hoarding into a game when ending poverty lies within our species’ grasp and poor people are suffering surely involves an immature, selfish dysfunction. What is for one person a game is for another hunger and even homelessness. No brotherly love exists in such a deprived culture of consumption.

In such a culture, money can apply value anything that can be commoditized. Goods, services, jobs, and even people are valued monetarily. A Hollywood movie star (i.e., a popular actor), for example can make millions of dollars on just one film, while dollars can be scarce for organizations that attempt to reduce poverty. This is a reflection of how much movies and reducing poverty are valued in a society. As Pope Francis makes clear in the documentary, enough wealth exists that poverty could be eliminated, but people with a surplus of money want to go to the movies more than they want to pitch in together to end poverty.

St. Francis rejected the distended hoarding disease that springs from the sin of greed. He likened money to animal dung and lauded poverty, especially of the voluntary sort.[3] So he viewed money itself, rather than just the culture that forms from it, as problematic. In the context of ordinary Christians first being able to accumulate coin from trade during the Commercial Revolution in the High Middle Age, St. Francis eschewed his inheritance to undergo voluntary poverty in solidarity with the poor, the sick, and the outcasts like Jesus.

The saint felt a calling to restore God’s house on Earth, for which a complete transformation of attitude would be needed. Such a transformation, while not impossible with human nature, would surely go against its grain and thus could not be based in it. Like Kant’s notion of perpetual peace protected by a world federation, the transformation is possible but not probable.[4] Being very difficult to accomplish in human nature, we can conclude that the transformation is sourced either in the higher faculties of human nature or a source that is wholly other to our artifacts and nature. Both St. Francis and the pope who took that name would say that the transformation is so foreign to our nature (and thus ways) that the source must be divine, transcending Creation, hence wholly other.

To St. Francis, the transformation of attitude, which I submit applies not only to greed, but also pride,  can result in “a new brotherhood of man dedicated to the common good.” The documentary uses that rather secular language—the common good. In political theory, the common or public good stands for what is in the public welfare—the good of the whole (e.g., a city). The aggregation of private uses can fall short of that which is in a community’s interest. Hence, in Wealth of Nations, Adam Smith advocates a role for government in regulating markets. Relatedly, public goods like air and water are for common use because either they cannot be privatized (e.g., contained in packages) or the cost of exclusion is too high. Air and water, respectively, apply. This is why Polanyi argues in his book, The Great Transformation, that social norms should hold sway over markets, rather than vice versa, and thus governments should not be controlled by the financial sector. Even though markets can efficiently allocate goods and services, even a financial system, if left to itself especially in times of great volatility, can go beyond equilibrium and collapse without the overarching public good being enforced by a government, such as in the United States in 2008.

In St. Francis’ usage, the term common good is not just secular, for the transformation needed has a divine rather than an earthly source. The transformation runs against the human nature to economize even for a person’s own self-preservation. Godric of Finchale, a trader during the Commercial Revolution more than a century before St. Francis, gave his accumulated wealth to the poor in order to live as a hermit close to Nature. Godric put even his own life at risk because he, like St. Francis, believed that having any wealth would castrate his salvation. That is, salvation does not allow for making an income and accumulating wealth. The underlying assumption is that wealth is tightly coupled with the stain of underlying greed. Elsewhere, I call this stance the anti-wealth paradigm.[5]

That paradigm was dominant in Christian thought for centuries; the pro-wealth paradigm, in which greed is not necessarily behind profit-seeking and wealth, only began to take hold during the Commercial Revolution in the High Middle Age. Interestingly, just as capitalism arrived on the world stage two centuries before Adam Smith wrote his Wealth of Nations during the eighteenth century, so too did the pro-wealth paradigm come to dominate among theologians two centuries before Max Weber wrote his Protestant Work Ethic. Ricardo’s world capitalism began during the sixteenth century, and the pro-wealth paradigm had begun in the Italian Renaissance during the fifteenth century. Renaissance theologians emphasized the Christian virtues of liberality and munificence as “good uses” of wealth, and thus as justifying the fortunes of even the usurer Cosimo De Medici.[6] He made a deal with Pope Eugene IV: In return for financing the renovations of a Florentine monastery (at which Cosimo got a cell for prayer), the international banker could keep his fortune of usurious interest and secure his salvation. St. Francis must have been spinning in his grave.

As shown in the documentary, Pope Francis is also an adherent of the anti-wealth paradigm. “Jesus in the Gospels says no one can serve two masters. We either serve God or we serve money,” the pope says. He is assuming that serving money means that greed and money are present. In other words, greed and wealth are linked. Unlike Godric and St. Francis, however, Pope Francis was at the time the head of a very wealthy organization, the Roman Catholic Church. Although he says in the documentary that he wants a poor church serving the poor, he, like the pro-wealth paradigm adherents, had to confront, by which I mean legitimate, the extant wealth of his Church. He emphasizes good uses, namely to the poor, in the documentary. In contrast, St. Francis “attacked the subtle temptation of pious Christians to pile up wealth under the pretext of using it to beautify churches or serve God.”[7] Had he been alive in Cosimo De Medici’s day, St. Francis might have preached that Pope Eugene should pick up one of De Medici’s usurious coins by the teeth and deposit the coin on top of a pile of animal dung. Moreover, by contrasting St. Francis and Pope Eugene IV, we can see that the zenith of the anti-wealth paradigm had been replaced by that of the pro-wealth paradigm by fifteenth century—two centuries before Weber’s Protestant Work Ethic.[8]

As if channeling St. Thomas Aquinas, Pope Francis says in the film that the big temptation for mankind is greed. Even though Francis mentions St. Francis’ notion of an attitudinal transformation, the pope could have said more concerning how the dysfunctional attitude of pride fits in. This would be a nod to Augustine, who had written of pride as the chief sin. In the twenty-first century, the term sin can seem vague and even antiquated; hence the pope uses the terms, temptation and disease. Perhaps these, while workable in reaching a secular world, do not go far enough.

Beyond the temptation of greed issuing out in diseases, St. Francis’ transformation of attitude could be contemplated beyond the immaturity, selfishness, and lack of compassion for others. When Wall Street traders turned maximizing their bonuses into some kind of a game, something more than greed was at work, even during the mortgage-bond fiasco that led to the financial crisis of 2008. Not only did it not matter that subprime mortgage borrowers were going homeless; traders actually blamed the scheme on those borrowers (for being stupid) instead of themselves. During a flood, arrogance has no place above water, let alone on stilts.

A dysfunctional socio-economy can be viewed as an encrusted artifact of the attitude borne of the temptation of greed and its diseases. In the film, the pope bemoans an economy of exclusion and inequality, where money rules, as having resulted in a plundered planet; we have abused rather than cultivated it, and climate change may be our reckoning. Work is sacred, the pope says, because creating something is a version of doing the Creator’s work. “The way to escape consumerism, this corruption, this competitiveness, this being enslaved to money, is the concreteness of day-to-day work”—a “tangible reality.” Similarly, Heidegger wrote that in concrete work, such as nailing with a hammer, a person comes to realize oneself as an entity that exists (dasein). God sent our species to cultivate, through work, not only the land, but also science, art, technology, and culture. “But when someone feels that he owns this culture and feels all-powerful,” the pope says, “the temptation arises to go further, and destroy the culture.” This feeling of “all-powerful,” as if self-appointed as a god, is otherwise known as pride. Here we see the pope link it to the temptation of greed. Perhaps the common denominator is a refusal to recognize limits upon oneself. As Gordon Gekko says in the film, Wall Street, the wealth that he desires as a trader is unlimited. How much is enough?  "It’s not a question of enough.”

Exploiting the planet’s resources, including coal for energy, plays into more for its own sake. Increasing the CO2 concentration in the oceans and atmosphere does so as well. Even being fruitful and multiplying without limit—as if the divine command holds even after sufficient multiplying has enabled our species to cultivate the Earth—plays into more. Indeed, as the overpopulation is behind the CO2 increases because biological organisms, including of our species, must use up energy, our species may go extinct because of the refusal to rationally curb the more even to the extent that it is instinctual and woven into the fabric of our economic, social, and political systems. In the film, neither the narrator nor the pope go this far in connecting the major themes. Essentially, the pope argues that if people live as Jesus in the gospels, then exclusion, poverty, and the cult of more, including its destruction of the planet at least in terms of human habitation, and thus the overall good of humanity, could be expunged. Instead, a harmony could exist in line with the principles of ecosystems. It is a “law of nature,” the pope says for lack of a better expression that “all things should be in harmony.” Plato’s notion of justice, by the way, is when a musical-mathematical harmony exists within a reason-directed psyche (mind) and polis (city and even country).

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1. Efforts to stabilize one’s existence, in this case by having more wealth.

2. Remembering God no longer. In this void, a person can engage in self-idolatry, which can include worshipping one’s own wealth as an extension of oneself.

3. Skip Worden, God’s Gold.

4. Immanuel Kant, Perpetual Peace.

5. Skip Worden, God’s Gold.

6. Ibid.

7. Dan Runyon, “St. Francis of Assisi on the Joy of Poverty and the Value of Dung,” Church History 14 (1987).

8. Skip Worden, God’s Gold.

Monsignor

Monsignor, a film made in 1982—in the midst of a very pro-business administration in Washington, D.C.—depicts a Vatican steeped in matters of finance centering around a priest whose degree in finance makes him a prime candidate to be groomed for the Curia. That cleric, Father John Flaherty, helps the Vatican operating budget during World War II by involving the Holy See in the black market through a mafia. In the meantime, he sleeps with a woman who is preparing to be a nun and subsequently keeps from her the matter of his religious vocation. The twist is not that Flaherty is a deeply flawed priest, or that the Vatican he serves is vulnerable to corruption inside, but that those clerics who mercilessly go after him are devoid of the sort of compassion that their savior preaches.

The pope, exquisitely played by Leonardo Cimino, demonstrates how upper-echelon leadership can transcend the managerial foci that so preoccupy partisans. Put another way, the social distance that tends to come with organizational figure-heads can give “the big picture” characteristic of “having perspective” some role in seeing to it that narrow organizational politics do not have the last say even in terms of what the criteria are to be. I suspect that too many CEOs go with the advice from their subordinates, and thus unwittingly buy into the managerial criteria charged with garden-variety one-upmanship. In such cases, organizational politics triumphs over what is really important from the standpoint of organizational mission statements.

In the film, the pope presides over the traditionalist cleric’s castigation of Flaherty . The pope later reads of Flaherty’s sordid deeds, and then speaks with the man presumably condemned. Rather than defend himself, Flaherty says, in effect, “guilty as charged!” Rather than take Flaherty’s misconduct as the most telling facet of the case, the pope observes that the traditionalist’s tone was that of jealousy, without any hint of sympathy for his brother in faith. The traditionalist’s utter lack of brotherly love stands out in retrospect to the pope as further from Christ, hence more serious, than Flaherty’s corruption. This prioritizing of values is made known to the viewer with the sight of Flaherty’s mentor, rather than the head traditionalist, as the next pope. In fact, the mentor reinstalls Flaherty in the Vatican after the contrite yet corrupt priest has spent some years in exile at a monastery. The film ends with the two men embracing, with facial expressions revealing true brotherly love—a real contrast from the cold, stern expressions of the traditionalists who had been so confident that the “prosecution” of Flaherty would result in one of their own as pope.

The message presented by the film is therefore that in a religion in which God is love, hardness in place of brotherly love is without any legitimacy whatsoever; it is worse than unethical conduct. This is one way of saying that religion does not reduce to ethics because more important things are involved. This is not to excuse corruption in the Vatican; the hypocrisy alone is repugnant to anyone who takes the clerics in the Curia at their word that they are following Christ in their living out of the Gospel. Even so, going after such hypocrisy without even sympathy for the human nature, which we all share, evokes the Pharisees whom Jesus goes after in the Gospels. A Church run by Pharisees does more than unethical conduct to undercut the faith espoused by Jesus because matters of the heart are more deeply rooted than conduct as far as Jesus’s preaching is concerned. 

Margin Call

An unnamed investment bank holding enough of its own subprime-mortgage-based securities on its books to more than erase the firm’s entire market value should those derivatives lose only 25% of their value. What to do? In Margin Call (2011), the CEO, played by Jeremy Irons, makes the call—the firm’s traders are to unload the entire asset class the next morning. Kevin Spacey’s character has two major objections—one normative and the other operational. The marginal place of ethics on Wall Street is well illustrated by how these objections pan out in the film.

Spacey plays Sam Rogers, the supervisor of a trading floor who had been with the firm for over thirty years. Operationally speaking, he warns John Tuld, the firm’s CEO, at 3 or 4 am that the fire sale would have to be done by early afternoon or the unloading strategy would not work. After a few hours of heavy unloading without any buying of the asset class from the counterparties (i.e., swaps), word on the street would pummel the remaining securities’ market value; claims of readjusting a firm’s overall risk only go so far in the face of such mass selling, and it would be only a matter of time before the market learns that the derivative securities are largely worthless.

Hence, Sam warns both his boss and the CEO that knowingly selling crap to the long-established counterparties of the firm’s soon-to-be unemployed traders would effectively trash the credibility of the firm and its traders on the Street, and be highly unethical to both the traders and their counterparties.

Apart from the film, Goldman Sachs knowingly sold its derivative securities to its counterparties even though the firm’s traders were referring to the instruments as “crap.” Whereas the fictional firm in the film lied to counterparties to unload the firm’s entire holdings of the asset, Goldman Sachs traders lied about the actual worthlessness of the bank’s mortgage securities in the regular course of business—the profit margins being too good to pass up. Unlike the fictional firm, Goldman bought insurance that essentially transferred the risk of the derivatives on the books to AIG and shorted derivatives sold by other banks. In selling derivatives it would buy later, Goldman was betting that the value of derivatives would decrease even as the bank’s traders knowingly sold the bank’s own securitized mortgages to even the bank’s best counterparties. Goldman’s executives were both smarter and more unethical than the characters in the film’s fictional bank.

In the film, the CEO has more of a basis in pointing to the firm’s survival because continuing to hold onto its derivatives that were in its “pipeline” risked being left standing when the music stops. Looking out onto a dark Manhattan at 3am from the bank’s high conference room, John says he does not hear any music in the near future, and it would not be long until other people in the bewindowed towers see the writing on the wall too. So the firm must sell all the crap it has as soon as possible, or in all likelihood the  firm would face bankruptcy and everyone in the room would be unemployed. Survival is a given that does not permit alternatives; moreover, the CEO depicts it as a sort of a moral principle countering all the resulting harm to others, rather than admitting that it is actually naked self-interest that is fueling the deceitful fire sale that he was about to unleash on the firm’s counterparties.

As if the firm were an end in itself, its survival is vital. The same holds at the individual level; expensive mortgages and other commitments such as alimony (e.g., to Sam’s ex-wife, who lives in a mansion) make it seem that continuing those mammoth executive compensation inflows counts as nothing less than survival. Ethics is easily cast by the wayside as though scruples were an interesting though irrelevant observation on the way to what must be done. It is as though there were absolutely no choice in the matter, just as there had been little perceived choice for Demi Moore’s risk-management character, Sarah Robertson, a year or two earlier when she passed on the red-flag warnings of Stanley Tucci’s character, Eric Dale, without due urgency. The lack of urgency, Sarah finally admits to him just after both had been fired, had seemed at the time to be necessary.

The lure of the large profit margins on the firm’s manufactured mortgage-based bonds had undoubtedly been behind the “necessity” not to blow the whistle. For when an oilman has a gusher spewing out black gold, only a fool risks what can be extracted for certain today for what one expects will still be available tomorrow. A bird in the hand is worth two in the bush. Even with Eric’s dire warning in hand, Sarah could only have saved the firm from its own incompetence only if the executive committee had gone along.

“How could we have fucked it up so badly?” Sam asks the CEO at the end. “Don’t be a sour-puss,” replies the enabling top executive in denial; he had already procured Sarah’s head on a plate for the board, which is different than going after the incompetence that led to the self-inflicted disaster. Incredibly, the risk management executives still assumed a sort of entitlement to hold onto their jobs, as if having nearly brought the firm down was a sufficient reason to be fired, or resign. There is apparently no honor on Wall Street—no Japanese willing to fall on their swords (or even feel the natural sentiment of humiliation)—and no serious consideration given to the ethical dimension in its own right.

The CEO does not even try to hide his dismissiveness of Sam’s ethical point that selling stuff that only the seller knows will soon be worthless in the hands of the counterparties. So Sam tries to appeal to the firm’s own financial interest. “We won’t be able to sell anything again to our counterparties,” he warns. Tuld is unswayed, and probably with good merit. Apart from the film, Wall Street did not punish Goldman Sachs too much for having knowingly sold “crap” in what Lloyd Blankfein would tell a U.S. Senate committee was merely “market making.” In general, the lure of profits proves to be a good thickener of once-aggrieved slights from the past.

In the film, the CEO is utterly unconcerned about the tarnished reputations of the bank’s traders (many of whom will soon be without a job). However, it can be argued that approving the $1 million bonuses in the event of a successful unloading of the sordid excrement is not only oriented to providing sufficient incentive (i.e., in the firm’s financial interest), but also makes up for the traders’s loss of established trading relationships.

Even so, the CEO’s maxim treats self-interest itself as a esteemed, even ethical, principle. It is about one’s own survival and that of the firm; the strongest surviving both at the firm and individual level. Being the first out of a burning building is no vice, the CEO contends. In fact, being the first to spot the fire and get out is laudatory rather than blame-worthy. However, what of the utter incompetence that had gotten the firm into such an over-leveraged, risky position in which the established “VAR” numbers no longer held—the risk being now too great? Does the firm, not to mention its occupants, deserve to survive in the exclusive club known as Wall Street? Being the first out of a burning building could be nothing more than the basic animal instinct of flight, rather than intelligence.

Moreover, the bloated claim of survival necessity could simply be selfishness and greed with a complete disregard for the harm one is inflicting on others (e.g., colleagues in the firm as well as the counterparties). Yet in the face of the inexorable path of money, such normative concerns are mere diversions like store windows during the Christmas season. To a selfish kid bent on what he or she is going to get on Christmas morning, barely a glimpse goes to the ascetics, not to mention the ethical. Perhaps the overarching impression that the film presents is that of selfish children in such lofty positions not only on the Street, but societally as well.  

The Wolf of Wall Street: Greed as Excess

Greed is indeed a major player on Wall Street. Perhaps this is why films on the financial world embellish the behavior; film-goers might otherwise fall asleep. It is much more difficult to see greed fueling the embellishment highs in the process of film-making. Perhaps both Wall Street and Hollywood are glitz on the outside, but supercharging the inside hardly does justice to either venture. In this essay, I discuss Jordan Belfort, an actual financier on Wall Street and the main character in the (fictionalized?) Wolf of Wall Street (2013) so as to flesh out the different ways in which sordid greed manifests in modern society.

In 1991, Robert Shearin could only repress his frustration as brokers at Stratton Oakmont unloaded their own shares in penny stocks while ignoring the sell orders of Shearin and other investments. "By the end it was constant screaming matches with these people," Shearin recalls. "They would just ignore my sell orders."[1]

The “suck and dump” scheme ran from 1988 to 1996. Twenty years later, the investment firm’s founder and CEO, Jordan Belfort, was still wheeling and dealing. After 22 months in prison followed by a period probation until 2009 during which half of his income had to go toward the $110 million in restitution, he was brazenly holding the remaining restitution ($98.4 million) owed to his shafted clients as hostage in negotiations with Loretta Lynch, the U.S. attorney for the Eastern District of New York. Since the end of the probation, Belfort had paid restitution of only $243,000 on income of millions from his two memoirs, the sale of the film rights, and motivational speaking fees.[2]  Although legal, the post-probation skimping effectively nullifies his claim of being a changed man. "I was not such a good guy back in the day. But I'm a good guy now. I am. I live my life with such integrity," he told the New York Daily News in October of 2013.[3] Yet at his speaking engagements, he would repeatedly quip, “Hey, at least no one got killed.”[4] Hearing about this crafty way of evading questions, Diane Nyggard, the attorney who represented Shearin and twenty-four other investors whom Belfort fleeced, replied, "I guess you could say no one was murdered. But a lot of lives were ruined, and many of the more elderly investors never recovered."[5] Poverty, especially that which comes out of treachery, is a sort of death that gradually saps the body and abruptly snuffs out the the spirit, leaving in its wake walking corpses who cannot afford even to haunt the bewindowed towers.

At the end of 2013, Belfort was still trying to weasel out of paying the remaining 90 percent of the restitution still owed to over a thousand former clients, including Shearin (who had received only 20 cents on the dollar as restitution). To be sure, Belfort had some leverage in the negotiations, for the 50 percent of income stricture had elapsed at the end of the probationary period so he could legally continue to pay scraps until his death, after which the restitution would abruptly stop. Among other acts, he had spent five years after being arrested in 1998 on securities fraud and money laundering charges wearing a wire, “ratting out friends and colleagues from Stratton Oakmont and testifying against them at trial.”[6] Besides stabbing friends in the back, the founder was essentially making the people whom he had trained and ordered to rip clients off take the hit in his place.

True to form, in the negotiations in 2013 on the remaining $98.6 million, the unchanged man offered to pay all the money from the film and books into the restitution fund if Lynch will substantially reduce the rest of his obligation. With almost all of the $11.4 million having come from sales of Belfort’s properties, the unrepentant swindler was clearly trying to keep the restitution judgment from touching the fortune he had saved from his swindling enterprise.

What lesson can we take from this case concerning the nature of greed? Most principally, it has not only unlimitedness as a salient quality, but also an in\mperviousness to the restraint that comes out of conscience. Put another way, greed does not recognize should. Instead, the desire for an even better deal, ad infinitum, views the external world as potential props that are themselves perceived only in so far as they can potentially be manipulated for gain. Because the last deal is never good enough, as it does not satisfy the desire, the wealth one possesses, including in property, goes practically unnoticed unless it can be manipulated for still more. That is to say, what was once vividly in focus as the aim of the best deal so far is naturally dismissed by greed as it moves on to getting still more for even less.

Going too far, in never being satisfied with enough, can apply to film-making too. In The Wolf of Wall Street, which is based on Belfont's memoires, the credo of film-making that even a story based on a “true story” must push the truth to dramatic exaggeration to hold an audience's attention reduces Belfont and his second in command to a contorted mass of drugged-down humanity on the floor of Belfont's kitchen and side room. Having already provided over-the-top eye candy in the scenes of the office celebrations, Martin Scorsese apparently felt obliged to "kick it up a notch" on the emotional intensity meter by having Leonardo DiCaprio flop around on the floor, tangled in a phone cord while shouting and foaming at the mouth.

DiCaprio plays Jordan Belfort. The character reduces from this realistic image to a floundering fit of over-drugged and over-dramatic human mess. (Image Source: AP)

It is as though film must push its own adrenalin highs, each one more intense than its predecessor, in order to maintain the attention of a hyperactive audience, itself on popcorn laced with speed. With what costs to the story and, ironically, the integrity of the characters does serial exaggeration in a screenplay come? According to Shearin, the audience skates past the grounded gravitas of the characters as real human beings, whether fictitious or based on real people. "Jordan Belfort is not a fictional character, but when DiCaprio plays him he becomes one for the audience," he said. "We like our scoundrels as entertainment, but it's easy to become disengaged from the real harm this guy did."[7] Watching the fun-loving, theatrical Belfort motivate his brokers onscreen does not begin to reveal the man behind the character, who stabbed his friends in the back in order to save himself from the consequences of what he himself had engineered and gotten others to do for him.

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[1] Paul Teetor, “How the “Wolf of Wall Street” Is Still Screwing His Real-Life Victims,” LA Weekly (Blogs), December 16, 2013.

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.