Naked Greed Can’t Be Bottom Line : Without a Sense of Responsibility, Business Will Be in Trouble
The spectacle of major Wall Street figures being led away in handcuffs, together with widespread evidence of questionable behavior elsewhere in business, is remindful of the quote often attributed to baseball great Yogi Berra: “It’s deja vu all over again.”
The most spectacular revelations have involved insider trading--the illegal use of insider information by corporate executives or employees of securities firms for their own enrichment. In m1869837344merger fever and the big temptations faced by specialists in unfriendly takeover strategies and counterstrategies; they had access to information not available to other investors in the stock market.
Several Wall Street lawyers and investment bankers already have received jail sentences. Others have been charged and are awaiting trial. U.S. Atty. Rudolph W. Giuliani indicates that there are more arrests and prosecutions to come.
By and large, the alleged culprits are not fast-buck artists operating on the fringes of the financial community. Four men implicated in the latest roundup were highly placed officials or employees of two of the most prestigious firms on Wall Street: Goldman, Sachs and Kidder, Peabody. (The firms themselves have not been accused of wrongdoing.)
The scandal is being called, appropriately, Wall Street’s Watergate.
The financial community objects that there are only a small number of bad apples, that the vast majority of Wall Streeters are conscientious, law-abiding citizens. And they could be right.
As Business Week observes in the current issue, however, the securities industry can no longer “explain away the scandal as an outcropping of yuppie amorality or naivete . . . . Investment banking, the glamor business of the 1980s, apparently contains a corrupt element that includes some of the Street’s best and brightest.”
Questionable business mores are not, unfortunately, limited to the financial community.
The whole takeover craze reflects the reality that in present-day America you can make a mountain of money a lot faster by financial manipulation, even legal financial manipulation, than by helping a company make and market a good product. As the insider-trading bombshells make plain, you can make still more if you have a flexible sense of right and wrong.
Morality is even more at issue than legality. Whatever the law says, there is something corrupt about brainy young business people, who themselves earn hundreds of thousands of dollars a year, scheming for their companies to dip into pension funds on which rank-and-file employees are depending for their retirement.
According to many knowledgeable people both inside and outside business, morality does not rank very high on the value system of a growing number of executives.
Making a profit has always been the bottom-line goal of any business--necessarily so. Traditionally, however, the pursuit of profit has occurred within a framework of enlightened self-interest and some sense of responsibility to the society in which we live. Increasingly, that is no longer the case.
As a lead article in the financial pages of the New York Times observed recently, “The new order eschews loyalty to workers, products . . . communities, even the nation. All such allegiances are viewed as expendable under the new rules.”
The new-style manager feels no particular obligation to keep manufacturing at home, or to consider the long-term effects on America’s industrial base of moving production abroad. And as Frederick W. Smith, the chairman of Federal Express, critically observed, most U.S. managers no longer feel that “one of their goals or missions is to create jobs.”
The excuse offered is the holy name of international competition, that U.S. industry must cut away the accumulated fat if it is to outdo the industrious Japanese.
That is not persuasive.
The Japanese business ethic, which has prevailed as they took away both domestic and foreign markets from U.S. producers, is 180 degrees removed from the so-called pragmatism of the present-day American manager.
Industrialists in Japan recognize an obligation to their work force, including the provision of parachutes for workers who are displaced by new technology. No Japanese executive would dream of defining his company’s interest in a way that would be bad for the people of Japan.
The go-go operators in this country seem to be well-educated young fellows. But they clearly didn’t major in U.S. history--or in the evolution of American capitalism.
The United States has been a basically capitalist country since our forefathers’ days. But, as a democratic society, we haven’t perpetuated capitalism as a favor to the rich and well-born; on the contrary, we have collectively had the wisdom to understand that a free-enterprise system produces a better life for everybody.
When the people on top have failed to understand this simple truth, we have used the power of government to teach them a lesson. The evolution of the antitrust laws almost a century ago, the enactment of laws regulating railroads and public utilities and the creation during Franklin D. Roosevelt’s New Deal of rules governing the stock market all were reactions to excesses by businessmen who failed to understand the need for self-restraint.
Today’s crop of business people has seemingly forgotten the lessons of history. The present Democratic-controlled Congress is already talking about measures to keep American business honest. Business people, with some reason, are saying that government interference will do more harm than good.
Never mind. Unless the movers and shakers of today’s society begin to understand that they have an obligation extending beyond the bottom line, they are in deep trouble.
