It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.The culture at Goldman Sachs, he tells us, is thoroughly callous and venal, and he blames the leadership. There used to be some degree of integrity, he says (we’ll just have to take his word), but today, “if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.”
It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are. These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.I would argue that the atmosphere permeates all aspects of American life. It’s a natural consequence of adopting Ayn Rand’s “greed is good philosophy” and letting it ride without any parental supervision for thirty years. It has placed our elites on the same ethical plain as dope dealers and used car salesmen, and it has turned the rest of us into mere objects to be ripped-off and exploited, mere suckers and chumps who, to add insult to injury, are brainwashed into feeling ashamed of ourselves if we don’t get rich in this environment.
We may give Ayn Rand credit for at least one thing: She always argued that ideas matter in the real world, they have concrete, practical results. They are not the irrelevant playthings of scholars and intellectuals. We’re seeing the truth of that observation as her own philosophy, which in all of its essentials has dominated our country for over a generation, is reaching its ugly climax all around us, like the final stages of leprosy or full blown cirrhosis.