Michael Lewis knows a little something about writing Wall Street memoirs — he wrote the most respected one in history, Liar’s Poker, about the time he spent at Solomon Brothers in London.
So it shouldn’t surprise anyone that he has something to say about Greg Smith’s tell-all, ‘Why I Left Goldman Sachs’, and he says it all for The New Republic.
All in all Lewis’ rundown of the book shreds Smith, Goldman and Wall Street in general. Smith’s account is sanctimonious and self-centered, doing little to answer the most important questions justifiably sceptical readers have about his motives for writing the book and why Goldman became corrupt during his time there.
Sure, Smith gets to the fact that bonus incentives changed in 2005 — Goldmanites started getting paid based on how much they were bringing into the firm, not on a general pay scale based on their position — but it’s something that’s mentioned “almost in passing” (according to Lewis) near the end of the book.
In the end, the reader puts down Why I Left Goldman Sachs a little mystified. Why exactly did Greg Smith leave Goldman Sachs? What did he hope to achieve? If it’s change he is after, his particular story comes too late. If, say, back in 2004, someone such as Greg Smith had stepped forward and explained to the world what was going on inside Goldman, he might have spared us all a lot of pain and trouble. But today’s insider confessions feel like vain and useless acts. And what would he have us do, four years after the Great Collapse, to fix the system, or to change in any way his former employer’s behaviour? The dystopia often imagined in the world of artificial intelligence—in which computers somehow take on a life of their own and come to rule mankind—has actually happened in the world of finance. The giant Wall Street firms have taken on lives of their own, beyond human control. The people flow into and out of them but have only incidental effect on their direction and behaviour. The firms may not be intent on evil; they aren’t intent on anything except short-term profits: they’re insensible. If anyone attempted to seize control of one of these strange machines and impose upon them a clear moral direction, the machine would hit its own button and he would be ejected.
And that’s what happened to Smith, Lewis argues. He was ejected. He was ripe for ejection anyway. Goldman might as well have said ‘good riddance’. One disgruntled employee won’t change Goldman, Goldman has to be changed from the outside.
The market could do it, he continues, but the government is standing in the way.
…the financial sector is already so gummed up by government subsidies that market forces no longer operate within it. Could Goldman Sachs fail, even if it tried? If someone invented a cheaper way to finance productive enterprise, would they stand a chance against the big guys?
Along with the other too-big-to-fail firms, Goldman needs to be busted up into smaller pieces. The ultimate goal should be to create institutions so dull and easy to understand that, when a young man who works for one of them walks into a publisher’s office and offers to write up his experiences, the publisher looks at him blankly and asks, “Why would anyone want to read that?”