Wall Street WARZONE

Oliver Stone: “Greed is Great” for Wall Street Fat-Cat CEOs. But Why Did Greed Also Become the New “American Dream” for 95 Million Main Street Investors?

by Paul B Farrell, JD, PhD
| | 4/12/2010

Two decades ago Oliver Stone’s classic movie “Wall Street” focused a spotlight on New York’s investment banking world. Hedge funds and private equity firms were in their infancy. Mutual funds and 401(k) plans were still a smaller part of the retirement planning world, with employer-sponsored retirement plans dominant. Exchange-Traded Funds and 529 college savings plans didn’t exist. And Corporate America’s CEO were still making reasonable compensation compare to workers.

In the past twenty years the belief that “greed is good” has not only spread rapidly across the top-layers of America’s business and financial world, it has filtered down through the ranks and out to the Main Street America. Greed is the driving force in the new American Dream, reflected everywhere in our culture, not just in the increasing gap between the wealthy at the top and the average worker. We see it in huge lottery payoffs, game shows like “Who Wants to Be a Million” and a Chase bankcard commercial echoing the band Queen’s hit melody: “I want it all, I want it all, I want it all, and I want it now!’

If a picture is worth a thousand words, an editorial page cartoon is worth a million. They capture more than an entire paper about contemporary America. Yet, as with the old court jesters poking fun at a king faults, after a nervous laugh, the message is ignored … until historians write of the empire’s demise. Here’s the scene: Board members sitting around a big table. CEO asks: “Raise your hands those in favor of saving their soul, rather than the company.” That “Salt and Pepper” cartoon on The Journal’s editorial page says volumes about today’s “American Soul.”

In recent years that scenario repeated many times in boardrooms across Corporate America and Wall Street. They “sold our soul to the company store” to paraphrase a line from Tennessee Ernie Ford’s 1950’s song about the coal mines: “You load sixteen tons, and what do you get? Another day older and deeper in debt. Saint Peter, don’t you call me, ‘cause I can’t go, I owe my soul to the company store.”

Top to bottom, greed is the new “American Dream”

Imagine the scene in boardrooms like Merrill Lynch, Citigroup, BearSterns, Countrywide, Moody’s, even in the Fed and Treasury. Imagine their bosses asking: “Raise your hand. Do you want to save your soul? Or will you bend the rules to save the market and economy, your job and your bonus?” Well today, the metastasizing credit meltdown makes clear their compromises: For them morals are negotiable, “greed is good, in fact, greed is always good.”

The sad truth is: We’re all selling our souls to “the company store.” Not just the boardroom “suits” (the greedy CEOs getting hundred million dollar severance packages, and all the greedy directors now selling equity to foreign nations to cover up their gross negligence). No, today everybody is selling their soul, seems everybody secretly wants to become a millionaire and retire rich. And the media panders to this darker side, because it sells “news.”

In Supercapitalism Robert Reich reminds us: “America is assumed to best exemplify the idea that capitalism and democracy go hand in hand.” But in the past three decades America’s “free-market capitalism has triumphed. Yet democracy has weakened.” Main Street has become super-materialistic robots controlled by Supercapitalism’s nerve centers, an eerie parallel with “Big Brother” in George Orwell’s 1984.

Main Street Americans rapidly losing power

“In this transformation, we in our capacities as consumers and investors have done significantly better. In our capacities as citizens seeking the common good, however, we have lost ground,” says Reich. Power has shifted “away from us in our capacities as citizens and toward us as consumers and investors.” Yet even as investors we’re no match against a $12 trillion fund industry. And as consumers and employees, we’ve given away our power to mega-retailers bargaining with suppliers.

Yes, says Reich, we do have “more choice than ever before, and can switch to better deals. Yet as supercapitalism has triumphed, its negative social consequences have also loomed larger … widening inequality as most of the gains go to the very top, reduced job security, instability of or loss of community, environmental degradation, violation of human rights abroad, a plethora of products and services pandering to our basest desires.”

Supercapitalism rules America through new “superpolitics”

Supercapitalism is killing American democracy. Today we substitute MySpace, Facebook, iPods, videogames, game shows and insignificant ego-centric communities for our rights as American citizens, while still working in the “coalmines.” Worse yet (political rhetoric aside), we really don’t expect “change.” Why? Because “the same competition that has fueled supercapitalism has spilled over into the political process.”

Wall Street, Blue-chips and the Forbes-400 “have hired platoons of lobbyists, lawyers, experts, and public relations specialists, and devoted more and more money to electoral campaigns,” says Reich. Lobbyists outnumber elected officials over 20:1. “The result has been to drown out the voices and values of citizens.” Special interests are so powerful the top-25 hedge fund managers average $560 million yet pay taxes below the rate of America’s working poor. Buffett even admitted his tax rate is lower than his secretary’s.

Faustian bargain—Americans are selling their souls

In this culture of greed, all of us – from CEOs on top, to the middle class and struggling “mineworkers” – all of us are selling our souls to the “company” store. Or more accurately today, to a new “country” that Robert Frank calls Richistan. Oh, stop denying it! The glue binding all Americans, rich or poor, is self-interested greed, pure Adam Smith economics. We all want “more.” We have no faith in the future. And we want it now. And “more is never enough:” A new Chase credit card commercial captured today’s America: Wife says to husband, ‘We need new TV.’ He brightens up. They shop. The background music is a pounding chorus for the band Queen’s big 80s hit song: ‘I want it all, I want it all, I want it all, and I want it now!’ The commercial says ‘text chase’ to get your balance and ends with the tag line: ‘Chase what matters.’

Yes, Corporate America and Wall Street indeed know how to control your mind, it’s so easy. Neuroeconomics is so subtle you don’t even know it’s happening—in fact, you even want it to happen! Hidden just below the surface of the new supercapitalism is a dark Faustian bargain: We’re all trapped by our addiction to “more,” as investors and consumers we’ve bargained away our soul: Richistanis now owns us! Richistan offers a hard-edged snapshot of America’s historic shift from democracy to a plutocracy of elite rich. Kevin Philips, former Nixon strategist and author of The Politics of the Rich & the Poor, says that in a plutocracy, power is centralized in the rich. They control government from the shadows, quietly leveraging their wealth through lobbyists. We let them.

Wealth gap: “Richistanis” control more than 90% of Americans

A few years ago Frank noticed America was still “minting millionaires after the tech bust, recession and terrorist attack of 2001.” Actually that trend began a few decades ago, paradoxically about the same time the average American’s wages began flat-lining. As America is “becoming a more unequal society,” Richistanis barricade themselves in McMansions and gated communities where “the richest 1% of Americans control more than 33% of the total wealth, and their wealth is now greater than the bottom 90%:”

· Lower Richistan. About 7.5 million households worth between $1 to $10 million. However, “many Richistanis say that Lower Richistanis don’t even belong in their country. They refer to the Lowers as ‘affluent,’ the ultimate Richistani insult.” Today, unless inflation pushed them up a notch, that may even include The Millionaire Next Door who had just $3.7 million over a decade ago.
· Middle Richistan. More than two million Americans have net worths between $10 and $100 million. This may also include many in Thomas Stanley’s The Millionaire Mind published in 2000. Their average net worth was $9.2 million, although inflation may protect them from that snarky “affluent” insult.
· Upper Richistan. Frank says there are “thousands” with $100 million to $1 billion. Sadly, the “Uppers” recently increased with the firings of several greedy, clueless CEOs from Citi, Bear, Merrill and Countrywide.
· Billionaireville. Forbes listed only 13 in 1985. By 2007, more than 400. Since 1995 their wealth has more than doubled to over a trillion. Another source says there are more than 1,000 American billionaires, many under the radar.

Although Richistan’s population is under 10 million today, they control over 90% of America’s wealth… and as a result, they indirectly control the other 290 million Americans. How? Very simple, today top-to-bottom we all have the same mindset when it comes to matters involving greed and the “American Dream,” don’t we! In short, today we are all supercapitalists, all obsessed with maximizing our positions as investors and consumers, even if it means surrendering our rights as citizens and voters to the elite Richistanis secretly running America.

Faustian bargains have due dates, like mortgages

In order to reap the promises of supercapitalism, we all make Faustian bargains. But these agreements have long-term moral consequences as well as an hard economic bottom line. Eventually you must pay the “devil” his due. The first hint came in 2000-2002, with the post-90s recession. Unfortunately we didn’t learn that lesson. The subprime-credit meltdown began metastasizing so we have another chance to “get it right” during the 2007-2010 recession.

But don’t hold your breath. Why? Because the grand drama painted in Supercapitalism and Richistan is not really as new as Reich and Frank want you to believe. It’s timeless. Back in 2000, at the peak of the insane dotcom bubble, gurus told us “this time it’s different.” Fortune published “Investing Wisely in an Era of Greed,” a classic Jack Bogle column: “There is no ‘new paradigm.’ Hope, greed and fear make up the market’s eternal paradigm.” In short: Bogle reminds us, money always rules … individuals and nations, markets and economies

In The Battle for the Soul of Capitalism a few years later, Bogle again captured this age-old conflict in a classic remark by Herbert Hoover, a very conservative Republican president, who said: “The trouble with capitalism is the capitalists, they’re too greedy.” That drew a smile! What a great caption that’s make for a new editorial page cartoon in The Wall Street Journal: “The trouble with supercapitalism is the supercapitalists … we’re all too greedy!”


1 Response to Oliver Stone: “Greed is Great” for Wall Street Fat-Cat CEOs. But Why Did Greed Also Become the New “American Dream” for 95 Million Main Street Investors?
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