Competition vs Greed – America Is Going to Have to Decide
Blog No 152
August 16, 2022
By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (3 Vols) (2018-2019); and The Relevance of Reason (2 Vols) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
See my legal articles and other blogs at https://www.mackwborgen.com/ . Then, just click the “Blogs” tab.
– Competition vs Greed –
America Is Going to Have to Decide
Introduction
There are thousands of good and honorable businesses in America. Most of them are small- or mid-sized businesses in the $1.0MM-$30.MM range. Even in highly competitive markets, they survive as a result of their hard work and their fine products, services, and marketing. But increasingly, different descriptions may apply to many of America’s large corporations. Increasingly, competition, the very core of American capitalism, is being evermore replaced by a new ethos — greed.
There certainly are exceptions, but the adjectives of “good” and “honorable” are rarely used to describe the actions of large corporations or the hustle-bustle of Wall Street. Indeed, there has been a shift over especially the last four decades. Once again, there are some exceptions. Some corporations are taking responsive steps to (finally) address climate change. There is a better gender balance on many corporate boards. Other corporations are responding, even if begrudgingly, to the reality that some investors now consider environmental, social and governance factors (“ESGs”) in their investment-making process. A few corporations are even adopting a social mission as a component of their corporate purpose and organize themselves as public benefit corporations (“PBCs”) or since their introduction in 2007 have become certified as a B Corporation through a third-party organization. However, that is not enough, and B Corporations remain relatively rare.
Nothing diminishes the hard reality that too much of our American economy is being driven by greed. Not “good” greed (if there is such a thing) or “bad” greed – just raw greed. This represents as radical shift in the nature of American capitalism.
There are many reasons for this shift in our capitalistic model, and some of those reasons will be discussed below. However, the focus of this article is that the core ethos of our Modern American economy has changed.
Now, protected by teams of lawyers, thick corporate shields, personal name anonymity, and an amazing array of company and product re-branding tools, greed is more and more the basis of our economy; the driving force of our economy.
No exact date can be ascertained as to when America’s corporate ethos officially “changed.” But maybe it was around 35 years ago — around the time of the 1986 release of Oliver Stone’s movie, Wall Street.
Oliver Stone’s movie Wall Street, released just one year after his award-winning film, Platoon, was filmed in an entirely different kind of jungle. Wall Street featured young Charlie Sheen (long before he departed from all forms of sobriety) and Hal Holbrook, but for many people, the star of the film was Michael Douglas in his portrayal of the character Gordon Gekko.
In the movie, Gekko delivered one of the most famous movie lines of all time as he assured a group of assembled shareholders that “greed is good.” (Note 1) Interestingly, this line was not just a movie script. It was taken from Ivan Boesky’s real-life speech to the 1986 graduating class of UC Berkeley’s School of Business Administration. Almost appropriately after Boesky’s pathetic encouragement of greed to Berkeley’s graduating class, he pled guilty to insider trading. He was fined a pitiful $100,000. He became an FBI informant. He served three-years in prison. Then, – right on schedule – he was divorced by his wife. (Note 2)
According to the movie’s writers, Gordon Gekko was actually a composite of several people. These people include Boesky himself, Dennis Young (a young Goldman, Sachs & Co. executive who was convicted of selling information), and Michael Milken, a former executive at Drexel Burnham Lambert and the king of “junk bonds.” In 1989, Milken also pled guilty to a federal securities charge and served two years of his ten-year sentence. (Note 3).
But, regardless of when the “greed is good” concept really started overtaking our economy, the question is whether greed is good – for oneself, for one’s family, for our communities, for capitalism, and for America. America needs to decide this soon. This author suggests that it is not good.
No Need to Be Burdened
By Windy Talk about the Historical Origins of Greed or the Philosophies of Our Forefathers
Greed (Note 4) in all of its sizes and shapes and with all of its consequences has been around a long time. It is not expressly mentioned in the Bible, but it is one of the Seven Deadly Sins (Note 5). Since the proverbial beginning of time, it has been viewed with disdain rather than as some form of necessary evil — let alone an acceptable evil.
For centuries, greed has been frowned upon by parents. Most parents routinely try to teach their children that greed is a dishonorable personal trait.
But that may have changed. In cruel twists of modern logic, greed is now often and conveniently justified. Sometimes, it is defended as a component of a corporation’s obligations to its shareholders. Sometimes, it is embraced by corporate managements with an “everybody-does-it” shrug of the shoulders. Regardless, more and more, it is too often and too routinely accepted as a core basis of capitalism itself.
Fortunately, to understand the role of greed in the context of economic capitalism, we do not need to go back centuries. We do not need to reread the thick words of David Hume or Adam Smith’s Wealth of Nations. We do not need to go back to the origin of modern capitalism or sit around and debate the 1970 and 1980 writings of Milton Friedman and his “free market” gang from the University of Chicago.
Instead, we can easily and independently conclude that the management of American businesses should not be allowed to wrap themselves in willful blindness or take wrongful actions in response to their supposed obligations to shareholders.
It is neither my place nor my desire to be preachy, but we do not even get to use the everybody-does-it card mentioned above. And it is not enough to blame globalism or complain about the supposed “over-reach” and “intervention” of governmental oversight and regulation.
But clearly, our relatively new, Internet-connected world has played a role. Americans have fewer direct, interpersonal, and face-to-face connections in and to world. Electronic “anonymity” is allowed by our wired society and results from our constant use of social media. Internet-based communications inevitably dehumanizes the recipients of our communications. Just too often, there are no visual observations of the faces of those injured by our words and actions.
Furthermore, few businesses have highly identifiable leaders such as Elon Musk, Jeff Bezos, Mark Cuban, and Jamie Dimon. But most do not. All we get are blank corporate names and Customer Service Numbers. So, there it is — what we already really knew. Few corporations have humanized faces, and few corporations “see” their customers. Online customers are still customers, but their sheer distance and anonymity have played a role in the tolerance of greed. Once again, businesses no longer have to look over a counter at their disappointed customers or across a conference room table at their outplayed competitors. In a million ways, the consequences of greed can be kept less visual. Distance and hiding can almost be part of the plan. Electronic data can keep human emotions at bay. The numbers start to mean more than actions. Right and wrong are long lost amidst the decisions of the day.
Lastly, wholly apart from the impact of our modern internet world, some suggest that greed is merely logical; merely the only logical response to defend itself against governmental intrusion and regulatory over-reach. And yes, there may be honest and long-overdue debates about the limits which should be imposed on our government’s regulation of our economy.
But regardless of all of these issues and excuses, the same stubborn question still remains before us. All of these what-about-that debates still miss the broader point – was Michael Douglas right that “greed is good?” I suggest not.
Greed Will Eventually Bring Us Down
Wholly apart from the downwind stink of greed, in the long run it is bad for our economy. In the long run, it is bad for our society. In the long run, it is dangerous to our social unity. The phrase “in the long run” is italicized because this author readily admits that greed in the short run can be useful. It certainly can be convenient. Greed can generate higher profits; can bury unwanted competition; can allow companies to more easily raise prices; can allow companies to under-pay its workers and overpay its management. I
In the long run, we will be all be dead — but hopefully America will be alive. THAT is why “in the long run” matters.
Furthermore, the very manner in which greed will bring us down is also dangerous.
The very word is buried by lawyers as they misdirect the focus of litigation. Greed’s consequences can become routinized simply by the use of protracted trials, by the almost standardization of baseless, time-consuming, and costly appeals, and by the imposition of mere monetary fines. The penalty for greed becomes a mere budget line-item; another “cost of doing business.”
Worse yet, even serious wrongdoing can be diminished by the overuse of some enforcement and legal punishment tools. One such tool are deferred prosecution agreements. Under these agreements, a corporation and its management, without uttering a word of remorse or admitting an ounce of wrongdoing (and thus escaping third-party liability), can merely agree not to do something again for a set number of years. Let us not use fancy phrasing here. Let us merely recite the word “Really?” out loud – without admitting anything, the “punishment” is that the corporate defendant agrees not to do it again.
But the bedrock of America’s capitalism should remain competition; not greed.
We can sit around and watch Damian Lewis in all six seasons of Andrew Sorkin’s (Note 6) blockbuster, Billions, but we should not delude ourselves. The my-yacht-is-bigger-than-your-yacht conversations are literally counter-productive to society because greed does exist in isolation. As it becomes more tolerated in our economy, it becomes an enlarged component of our society.
In addition, there are the whole “entitlement” issues. Greed is not the only basis for the entitlement issues which are so pervasive in our society, but greed – or at least a tolerance of greed, is one component. Greed was an unwritten part of the recent college admissions scandal. Greed (and its buddy word, envy) are part of the motivations and subtext of the thousands of Kardashian wanna-bees and look-alikes which dominant our social media. Greed thickens the us-vs-them aspects of our country.
Greed becomes a justification for more and more things in our society; for more and more actions of our people and our companies – both big and small; rich and the poor — even though most of us remain, precariously, in the middle.
But both the reach and dangers of greed can be hard to define with precision. This is because there are many inter-acting forces simultaneously at work. There are many vagaries which blur our analysis. They confuse our discussion.
For example, some would suggest that in our economic life, just as in love and warfare, all is fair. Slightly less aggressively, it can be suggested that “if it’s legal,” it is ethical. However, the use of legality as a basis for ethics is absurd.
First, laws cannot begin to prescribe all of the “rights” and “wrongs” of our daily lives or of our corporate actions. Ask any parent, any teacher, and friend – or any foe.
Second, even in a perfect world – which is far distant from us – would we ever want to allow politicians and regulators to define our ethics; to define what we do, how we behave, who we are.
Third, another common suggestion is that even if one accepts greed as a driving in force at our work, it does not define one’s life. It somehow will not define our communities. It somehow will not define our society. But I suggest that this argument is misguided because greed is never left at the office.
Author’s Digression: This writing is not intended to have any high-and-mighty tone. Counting my flaws and listing my errors in life would take all day – no, all weekend. But it is humbly suggested that confronting the growing acceptance and influence of greed as a driving force in American capitalism has been ignored for too long – dangerously ignored and conveniently ignored.
Greed is not an 8-to-5 disease. Like mud, glue, grime, and slimy substances, greed sticks to us. It creeps into our thinking. It affects our decision-making. It becomes a factor in our choice of friends; a guiding force in our voting; an influence upon what we buy. The concept of “conspicuous consumption” has been around for a long time, but we all know that it has reached new dimensions. Greed even affects our philanthropy and (tax-deductible) charitable giving. Too often, they, too, have become how-much-did-they-give transactional events.
Thus, this writing suggests that the basis of American capitalism must be hard work and aggressive, but honorable, market competition. It cannot be greed for greed will – in the long run – adversely affects us all; diminishes us all.
Closing
So, greed is clawing its way into our society. Fortunately, America still has the power.
America has the power to choose what is wants to do; what it wants to be. In future articles, this author will suggest a series of (pretty simple) changes which can be made in our economy to diminish both the prevalence and power of greed. I have not finally decided on their titles — but I believe they will be referred to as “Greed-Killer Steps.”
In defining our American capitalism, we still can reset the expected balance between the disdainful role of greed and the honorable push of market competition. However, just like with climate change and next year’s taxes, the time to plan is now.
The time to choose is now. We cannot keep putting it off. We must decide whether “greed is good.” This has been hovering around our economy, our politics, and our society for too many decades.
It is obvious that this author believes that there should be little doubt about this. But I also know that it is not for me to decide. It is for America to choose as to whether or not “greed is good.”
In closing, this author humbly suggests that without a more honed societal moral compass, America will stay lost. Merely enforcing our laws is not enough. Narrowly (and defensively) defining our choice of friends is not enough. Building more gated communities is not enough. Hedging our bets and shorting our futures are not enough.
Instead, we must first recognize that we have drifted — from competition to greed. Then we must embrace that the core ethos of our economy matters. Then we must remember that capitalism must rest upon intelligent, even aggressive, competition. But not greed. In the long run, we might all come out better for it.
NOTES
Note 1. The exact line is “greed, for lack of a better word, is good.”
Note 2. Be assured that there is little need to be concerned for Mr. Boesky. After his release from prison, he lived in Montecito, CA. After his divorce, his ex-wife was ordered to deliver millions of dollars to him together with $180,000 a year for the rest of his life. He eventually moved to, and I believe still lives comfortably in, La Jolla. California.
Note 3. Mr. Milken was released from prison early for delivering testimony against his former colleagues and for good behavior. To his fine credit, he re-dedicated his life to many avenues of philanthropy, and as of 2018 he was listed by Forbes magazine as one of the richest men in America with a net worth of $3.7BB. In February 2020, he was pardoned by former President Trump.
Note 4. There are many closely-associated words and dimensions of “greed” – avarice, covetousness, and rapaciousness – but for purposes of this article, this author will just refer to “greed.”
Note 5. Curiously, neither greed nor the other “deadly sins” (pride, wrath, envy, lust, gluttony, and sloth) are mentioned in the Bible. They are, however, alluded to in the Bible, and the Seven Deadly Sins remain a cornerstone of Christian theology.
Note 6. In addition to Mr. Sorkin, the Netflix series was co-written by Brian Koppelman and David Levien.
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