July 14, 2002
The Hypocrisy of Wall Street Culture
n "The Devil's Dictionary," Ambrose Bierce famously defined a corporation as "an ingenious device for obtaining individual profit without individual responsibility." Bierce and his wicked definition came to mind when President Bush called for a "new ethic of personal responsibility in the business community" during his Wall Street speech. Bierce would've been delighted at the coincidence.
To many of us, the president's rhetoric on Tuesday was all gaping gum, no teeth. If by chance, though, he was being sincere, Mr. Bush was knocking himself out for nothing because, as Bierce's definition implies, the structure of American corporations is inimical to the "new" ethic he was espousing. Despite the efforts of many fine people, American corporations are notorious for daddy-knows-best, brook-no-dissent cultures where personal responsibility more often dies than flourishes. They are also secretive, self-referential environments where transparency, Mr. Bush's other hobbyhorse, is unlikely to be embraced in any form, accounting or otherwise, except as window-dressing.
I make these observations as someone who worked for much of the 1990's as a speechwriter at two major Wall Street financial services corporations. Until then, I'd had no experience of closed societies and rigid hierarchies; perforce, to survive, I had to turn myself into something of an anthropologist.
One paradox was hard to miss: When I crossed the thresholds of those downtown skyscrapers, I went from a one-person, one-vote democracy -- messy, noisy, infuriating, but democratic -- to a netherworld where fear was the primary management tool and dossiers, censorship, misinformation and various forms of surveillance were standard practice. To me, corporations seemed not merely autocratic but totalitarian; the engines of America's fabled democratic society are anything but.
To heap paradox on paradox, because I worked with investment bankers I was surrounded by free-market fundamentalists who roamed the globe preaching a triumphant gospel of deregulation from which all freedoms would flow, yet returned to a bureaucratic roost perfectly Soviet in its rigidity.
The fall of the Berlin Wall, followed by the tech boom, had "turbo-charged" -- to use a favorite piece of business jargon -- their sense of superiority and rightness in all things, not just economic. Of course, free markets were allowed to be free only when it suited bankers; when Long-Term Capital Management faced collapse, instead of allowing it to fail, as the market was clearly dictating, they bailed it out to save themselves. In fact, derivatives-related debacles were piling up faster than car wrecks on a foggy highway. Cost of doing business, said the bankers. Harbingers of much worse to come, said prescient students of financial scandals.
One can argue that corporations, like the armed forces, have to be autocratic. But delivering goods and services in an efficient, competitive manner doesn't require the same unquestioning loyalty as fighting wars. Disciplined teamwork, yes, but not blind obedience. From my experience, corporate employees, while understanding the need for unity, are hungry for real debate, not scripted events. Without it, they know, there is no intellectual growth -- just executive mind-sets growing thick and wrinkly as elephant hide.
Every now and again, employees revolt against being treated as children. I remember a meeting where someone got the bright -- and career-undermining -- idea of polling the assembled managing directors on whether they thought the firm's strategy, as just outlined by the chief executive, would succeed; they were to punch in their responses on handheld devices, to be instantly flashed up on a screen in a way that would be hard to ignore.
Against all rules of corporate decorum, a majority voted no, the firm's strategy wouldn't succeed. Loud gasp. As stunning as this moment was, it was just as stunningly passed over; the meeting continued as if the vote had never happened. In any sane, responsive world, the C.E.O. would've stopped the proceedings and started a debate as to why the managing directors felt that way. The frustration in the hall was palpable.
Yet such high-handedness is accepted. Executives not only routinely ignore their employees, they appease the market whenever necessary by firing large quantities of them -- all done with impunity. It was not until the events of the last months, however, that many shareholders became aware of the extent to which they, too, are but pawns in management's game. They didn't have to lose their portfolios and pensions to learn this, because there has long been one dead giveaway of corporate disdain for shareholders: All over the United States, when the season arrives for annual shareholder meetings, corporations convene them in out-of-the-way places to dissuade shareholders from attending and asking pesky questions.
To return to Ambrose Bierce. Under the entry for "riches" in "The Devil's Dictionary," instead of a definition, you will find three quotes:
On which Bierce -- prince of curmudgeons, king of cynics, long may he be read and emulated -- wisely refused to expand.
Kate Jennings is the author of "Moral Hazard," a novel.