Download For the Love of Money

New York Times
FOR THE
LOVE OF
MONEY
BY SAM POLK
JANUARY 18, 2014
SUMMARY
“In my last year on Wall Street my bonus was $3.6 million
– and I was angry because it wasn’t big enough.”
Sam Polk the person
•
•
•
•
Columbia University
Athlete
Addictive compulsive behavior
Father (Willy Loman) defined
relationship to money
• $ could solve all problems
• Sought counseling
• Ended alcohol & drug addiction
• but not addictive behavior
WALL STREET
“The satisfaction wasn’t just about the money. It was about the
power. … it was someone else’s job to make me happy”
• Internship Credit Suisse First Boston
• Bonds and credit default swap trade Bank
of America
• Joined Hedge fund on Wall Street
• Offered “$1.75 by 2” by Citibank
• Late twenties
• $6000 a month flat in Manhattan
• Beautiful girlfriend
• Access to any restaurant or event at any
time
• During 2008 crash shorted derivatives of
risky companies
WHY IS DESIRE FOR $1 BILLION BAD?
Utilitarian
• Desire is not behavior. Without behavior there are no consequences. Without
consequences there are no stakeholders
• Hedonism: Pleasure and Pain of being rich
Deontological: WD Ross 7 virtues
1.
2.
3.
4.
5.
6.
7.
fidelity
reparation
gratitude
justice
beneficence
self-improvement
non-injury of others
Virtue-Based
• Does the desire to be rich conflict with the goal to be a “moral actor”
• When does desire become excessive?
ETHICAL STANDARD OF COMMUNITY:
WEALTH ADDICTION
“I don’t have the brain capacity to think about the system as a whole.
All I’m concerned with is how this affects our company.”
- Polk’s boss
Polk recognizes addictive behavior is ethical standard of his industry
•
•
•
•
Trading floor feels like neighborhood in “The Wire”
Traders despise anything or anyone that threatens bonuses.
Lobby for tax loop holes.
Terrified of forgoing future bonuses
How doesn’t the drug addict analogy hold up?
• When Polk spends his money it isn’t to support an industry
that perpetuates addiction, violence and lawlessness.
How does the drug addict analogy hold up?
• Fellow trader tells of feeling of being trapped
Taking Action
Stakeholders
Harm
Benefit
Not Taking Action
Harm
Benefit
Professional Stakeholders
Financial institutions:
Pension funds, 401K investors,
Commercial banks, Investment
banks
Desire to make $ may lead to
unethical behavior and/or
assumption of risks that
damages value of investments.
Greater assumption of risks
pays off and increases wealth of
pension fund.
Lack of incentive to perform
may damage returns.
Avoidance of job burn out,
resulting in greater career
longevity and experience which
benefits the fund mgmt and
performance.
Can raise more money faster by
appealing to small group. More
efficient fund raising activities
provides more time for
governance activities.
Forces politician to raise money
from more donations of smaller
amounts. Less efficient.
Increases political voice of less
wealthy / total available market
and accountability to greater
number of constituents /
customers.
Forces businesses to revise
business model to reach larger
total available market, reducing
market availability.
Stakeholders in beneficiaries of wealth
Politicians
Concentration of wealth
narrows scope of fund raising
efforts. Increasing political
influence of small group of
people only interested in
personal interests.
Providers of luxury goods and
services
High concerntration increases
risk to revenue in volatile
markets
Efficient demand generation
from small high income market.
Business forced to revise
business model to reach new
markets resulting in new,
potentially more efficient,
competitors.
Lose respect for his ethics.
Never see boyfriend because he
works all the time.
Can purchase luxury items on
his gold card.
Its about quality not quantity of
time.
Cannot provide for desired
standard of living.
I had more time to spend with
him, it turned out I didn't like
him anyway.
Respect for boyfriend's ethics
serves as foundation of future
relationship.
Spend more time with him and
it turns out I do really like him
and who he want's to be.
Undue political influence results in
loop holes, capital gains tax rates,
increasing tax burden on middle
class and reduced investment on
education and infrastructure
resulting in degradation of national
competitiveness in global economy.
Modestly higher taxes reciepts
result in investments and
reduce deficit.
Potentially reduces tax receipts
and increasing pressures on
deficits and reducing
investments in edu and
infrastructure.
To maintain tax receipts and
fight deficits, government must
remove corporate loop holes
increasing wealth equity.
Increases risk of investment
strategy and amount of leverage
resulting in financial volatility /
crisis that reduces value of
commercial bank savings either
directly or through monetary
devaluation.
Successful investments support
a healthy debt to equity ratio
protecting depositor
investments and availability of
credit.
Drop in performance may make
bank vulnerable to more
motivated competitors, willing
to assume greater risk.
Less motivation for risk results
in more secure investments,
reliable returns and safer
deposits.
Personal Stakeholders:
Polk's girl friend
Societal Stakeholders
Government tax receipts
Commercial Bank Depositors
IS CONSCIENCE A GOOD MEASURE OF
ETHICAL BEHAVIOR?
YES
NO
Virtuous Life is the
happy fulfilled life.
Conscience is fallible
basis of perception.
If you conscience is
troubling you, it may
indicate a failure of
virtuous behavior.
Individual could be
replacing addiction
to power with
addiction to self
loathing or serving
need for acceptance.
“I DON’T LIKE WHO I’VE BECOME.”
Polk’s conscience: Guilt-city
• No social good from trading
• “Wealth addicts are responsible for the
widening rift that is tearing apart our once
great country.”
• McDonald’s CEO makes $14M and
publishes brochures on how to survive low
wages.
• Polk sees himself as a bad moral actor.
Is being rich inherently unethical?
Is guilt a good measure of ethical behavior?
DOES OUR SOCIETY SUPPORT
WEALTH ADDICTION?
“I'm supposed to feel pleased at the author's epiphany.
But I don't. I feel angry.”
“Another exercise in self-excuse
with a philanthropic coda.”
“This explains our government policy, far
more than any of the twisted reasoning offered in
excuses.”
I think it would be a mistake for people to get the impression that
only the very rich or the Wall Street types are wealth addicts.
These days it
seems almost EVERYONE is
obsessed with money.
“Drugs are not the norm, and wealth
addiction is not the norm either.”
trader
-