Feeling Good About Greed?
March 1988By John C. Cort
A few years ago a most successful American was invited to speak to a group of business school students. Among other things, he said, Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself. The students applauded. Apparently it was exactly what they wanted to hear. At the time the speaker was indeed feeling good about himself, and about greed. In a period of 10 years he had made a fortune of $200 million. In one year alone, 1984, he had made $115 million on two takeovers, the buyout of Getty Oil by Texaco and that of Gulf by Chevron. The amount of work involved was minimal, but dont think it cost him nothing. He had expenses. He had to pay bribes to another successful financier, who was feeding him inside information.
The man had chutzpah. He wrote a book, Merger Mania, in which he assured us that, There are no easy ways to make money in the security market . There are no esoteric tricks that enable arbitragers to outwit the system.
Eventually the law caught up to him and he was deprived of $50 million in illegal profits plus a fine of another $50 million. Assuming this money all came out of the $200 million, which is a doubtful assumption, he was still ahead by $100 million at a minimum, and probably a lot more than that. Unfortunately, he was also compelled to plead guilty to a criminal charge of illegal inside trading, but, wheeling and dealing to the end, he persuaded the government to allow him to pick the judge who would sentence him. This lily-white-collar crime calls for a maximum sentence of five years. On December 18, 1987, Judge Morris Lasker sentenced him to three years in the slammer. Maybe hes not feeling so good about himself these days, but look at the bright side. Hell have all that time to anticipate the fun he can have with the $100 million-plus he has left over.
The man is, of course, Ivan Boesky. And why have I raked over these depressing ashes? Several reasons: one, you thought that Wall Street crashed on October 19, 1987. I suggest the crash really started with the revelation of the Boesky story back in November 1986, a story that involved four other high rollers in major roles (the successful Yuppies Dennis Levine, Ira Sololow, Robert Wilkis, and David Brown) and led to the Securities and Exchange Commission investigations that incriminated and/or besmirched other prominent financiers such as Thomas Reed, Paul Thayer, and Foster Winans, as well as prestigious banking firms like First Boston.
One Wall Street insider, Meredith Brown, predicted: Everyone will be amazed at the extent of human greed. He was right.
That was when investor confidence began to crumble, began to unravel, an unraveling that climaxed on October 19. And that unraveling, which still continues and is bound to affect consumer confidence significantly, if it has not already done so, will most probably mean a painful recession and, possibly, an even more painful depression.
The root cause was greed. Note well.
Second reason: Boesky is a magnificently classic example of the species homo Americanus avarus, not simply because of the heroic dimensions of his thievery, but because of that chutzpah and hubris that led him to extol the virtues of greed before the business school students and then boast in his book that he had earned all that money by dint of good honest toil.
When the closing bell rang on October 19, at the end of the worst day in the history of the New York Stock Exchange, a characteristically American era came to an end. Thus spake The New York Times on December 13. I dont believe it for a second. More wrists may be slapped, more meager terms in the slammer meted out, maybe even some tightening of regulations that will moderate the freedom of corporate highwaymen to fleece each other. I quote from that same Times story:
Corporate raiders backed by high-risk, high-yield junk bonds put the managers of blue-chip companies on the defensive. Company hunters like T. Boone Pickens, Carl C. Icahn and Irwin L. Jacobs walked away, as often as not, without their targets but richer by tens of millions of dollars . In a two-month period [in 1985] Mr. Icahn and Mr. Pickens separately went after Phillips Petroleum. Phillips remained independent, but Mr. Pickens made $90 million and Mr. Icahn at least $50 million.
None of these things means that this characteristic American era has come to an end. The bitch goddess Success still reigns in the heavens over this fair land. The old American dream, or nightmare, that we can all strike it rich if we just play our cards right, or wrong if we can get away with it, that dream still haunts our days and nights.
Arthur M. Schlesinger Jr., a perceptive historian, was quoted by the Times as making this more defensible comment: In a symbolic sense [the collapse] crystallized peoples discomfort with the unbridled pursuit of self-interest. The Times continued, As they did in the Jazz Age, Mr. Schlesinger said, Americans in the Eighties tipped the balance they are always adjusting between altruism and selfishness. In the Eighties selfishness won. Schlesinger is perceptive, but not perceptive enough. An even more crucial balance than that between altruism and selfishness is that between justice and injustice.
Because the NORs deadline is so early, I am writing this a few days before Christmas, the season of the gentle Jesus meek and mild, the little baby in the crib who wouldnt hurt a soul, couldnt hurt a soul. At this time of year, if we hear of another kind of Jesus, another kind of God, it may only be at a concert of Handels Messiah and at a certain bass aria, followed by a certain magnificent chorus:
But who may abide the day of his coming, and who shall stand when he appear-eth? For he is like a refiners fire.
And he shall purify the sons of Levi, that they may offer unto the Lord an offering in righteousness.
We are all the sons of Levi, not just Ivan Boesky. The simple, unsophisticated people may still believe in a God of justice as well as mercy, they may still fear him with that salutary fear that is the beginning of wisdom. Unfortunately, the sophisticated people who make the important decisions, the decisions that are making the rich richer and the poor poorer, the decisions that are causing pain, hunger, sickness, suffering, and death here and around the world, these people do not fear him. They do not really believe in him, they do not believe in the Jesus who again and again (40 times by my count) warned us that God will not let go unpunished those who ignore his commandments.
Just contemplate the wonderful title Martin E. Marty put on a lecture he gave a few years back at Harvard Divinity School: Hell Disappeared and Nobody Noticed: an American Cultural Phenomenon.
It comes down to this: can Wall Street, can Washington, can the White House, can Congress, can Big Business, can Big Labor, can any of us, big or small, be just for any extended period of time without that salutary fear of God? I dont think so. Time was when that fear was overdone. Perfect love casteth out fear. Love is stronger than death. The greatest of these is love. On and on. Granted, no argument. But where there is no love? Where there is not even a thought for the poor and the powerless? What then?
Then it may be that the only thing that will save us from disaster is the still small voice within some God-fearing man or woman who is in a position to turn the tide, to adjust the balance, not simply from selfishness to altruism, but from injustice to justice.
DOSSIER: Economics and Catholic Social Teaching
DOSSIER: Christ and Neighbor