Photo: 60 Minutes
Michael Lewis recently offered another interesting explanation for a statement made a few months ago, “Goldman Sachs is doomed.”The reason the company is doomed is their status as a public corporation, he told Vanity Fair, because it allows them to justify barely legal activity that stops at nothing to profit.
A few months ago, the author said Goldman Sachs was doomed because it would never recover from its PR disaster-causing SEC case. Its customers would never be able to trust them if they had a problem with honesty. No customers, no business, went his argument.
Now Lewis has changed his tune. Goldman’s problem is that it does too much for its clients, he says, some of its clients anyway.
“The minute it becomes a public corporation there is this moral justification for bad behaviour.”
That was the “beginning of the end,” he says. When Goldman went public is when Goldman traded a “long-term greedy” attitude for a “short-term greedy” one.
The beginning of the end of the Goldman Sachs I admired was when it ceased to be a partnership.
As soon as that happened, he says, employees at Goldman Sachs had to do right by their shareholders. The easiest way to do that is by ripping off anyone who isn’t a shareholder. But Lewis doesn’t go so far as to say that, he just calls what the company is doing to “people,” “shitty.”
By saying, “We are doing it for our shareholders,” you have an excuse to do shitty things to people and do things that are bad for the world.
Your job then requires you to generate profits by doing anything short of breaking the law so that you can maximise returns to your shareholders.
Apparently not much about their recently announcing spinning off a prop-trading unit, for one, because theoretically, getting rid of prop trading should soothe anxiety about Goldman’s trading against clients.