greed is good

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pages: 430 words: 109,064

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak

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Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bernie Madoff, Bonfire of the Vanities, bonus culture, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Gordon Gekko, greed is good, Home mortgage interest deduction, Hyman Minsky, income per capita, interest rate derivative, interest rate swap, Kenneth Rogoff, laissez-faire capitalism, late fees, Long Term Capital Management, market bubble, market fundamentalism, Martin Wolf, moral hazard, mortgage tax deduction, Ponzi scheme, price stability, profit maximization, race to the bottom, regulatory arbitrage, rent-seeking, Robert Shiller, Robert Shiller, Ronald Reagan, Saturday Night Live, sovereign wealth fund, The Myth of the Rational Market, too big to fail, transaction costs, value at risk, yield curve

HG2491.J646 2010 332.10973—dc22 2010000168 eISBN: 978-0-307-37922-1 Author photographs © Anthony Armand Placet (Johnson) and courtesy of the author (Kwak) Cover photograph © Alex Ely/Getty Images www.vintagebooks.com v3.1 TO OUR FAMILIES They were careless people, Tom and Daisy—they smashed up things and creatures and then retreated back into their money or their vast carelessness, or whatever it was that kept them together, and let other people clean up the mess they had made. —F. Scott Fitzgerald, The Great Gatsby1 Contents Cover About the Author Other Books by This Author Title Page Copyright Dedication Introduction: 13 Bankers 1 Thomas Jefferson and the Financial Aristocracy 2 Other People’s Oligarchs 3 Wall Street Rising: 1980– 4 “Greed Is Good”: The Takeover 5 The Best Deal Ever 6 Too Big to Fail 7 The American Oligarchy: Six Banks Epilogue Notes Further Reading Acknowledgments INTRODUCTION 13 Bankers My administration is the only thing between you and the pitchforks. —Barack Obama, March 27, 20091 Friday, March 27, 2009, was a lovely day in Washington, D.C.—but not for the global economy. The U.S. stock market had fallen 40 percent in just seven months, while the U.S. economy had lost 4.1 million jobs.2 Total world output was shrinking for the first time since World War II.3 Despite three government bailouts, Citigroup stock was trading below $3 per share, about 95 percent down from its peak; stock in Bank of America, which had received two bailouts, had lost 85 percent of its value.

As Bianco put it, “What sets Salomon apart is the sheer scale on which it oper-ates in the markets, reflecting an appetite for risk unrivaled among financial middlemen.” Four years later, Liar’s Poker, Michael Lewis’s memoir of his years at Salomon, would cement its status as the paradigmatic bank of the 1980s, the same decade that produced the original Oliver Stone Wall Street movie, with Gordon Gekko’s famous “Greed is good” speech. Looking back, however, Salomon seems so … small. When the Business Week story was written, it had $68 billion in assets and $2.8 billion in shareholders’ equity. It expected to earn $1.1 billion in operating profits for all of 1985. The next year, Gutfreund earned $3.2 million.3 At the time, those numbers seemed extravagant. Today? Not so much. If the financial crisis of 2007–2009 produced a king of Wall Street, it would most likely be Jamie Dimon, CEO of JPMorgan Chase and the “Last Man Standing,” according to the title of a recent book.4 (Lloyd Blankfein of Goldman Sachs would be the other contender.)

Depending on the nature of their business, different parties prefer one type of risk or the other. * In the interest rate swap example above, the face value, or notional value, is $100 million. However, the amount of money that changes hands is much smaller; if, at the end of a given year, the floating rate is 7.25 percent, then the dealer only pays the company 0.25 percent (the difference between the floating and fixed rates), or $250,000. 4 “GREED IS GOOD” The Takeover Derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so.… The vast increase in the size of the over-the-counter derivatives markets is the result of the market finding them a very useful vehicle. —Alan Greenspan, chair of the Federal Reserve, July 16, 20031 The 1980s came to a close with the peak of the savings and loan crisis.


pages: 274 words: 93,758

Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof, Robert J. Shiller, Stanley B Resor Professor Of Economics Robert J Shiller

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Andrei Shleifer, asset-backed security, Bernie Madoff, Capital in the Twenty-First Century by Thomas Piketty, collapse of Lehman Brothers, Credit Default Swap, Daniel Kahneman / Amos Tversky, dark matter, David Brooks, en.wikipedia.org, endowment effect, equity premium, financial intermediation, full employment, George Akerlof, greed is good, income per capita, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, late fees, loss aversion, Menlo Park, mental accounting, Milgram experiment, moral hazard, new economy, payday loans, Ponzi scheme, profit motive, Ralph Nader, randomized controlled trial, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Reagan, Silicon Valley, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, theory of mind, Thorstein Veblen, too big to fail, transaction costs, Unsafe at Any Speed, Upton Sinclair, Vanguard fund, wage slave

“The 15 Ronald Reagan Quotes Every Business Leader Must Know.” Accessed January 16, 2015. http://www.entrepreneur.com/ article/234547. 190 Akerlof.indb 190 BIB LIOGR APHY 6/19/15 10:24 AM Hickman, W. Braddock. Corporate Bond Quality and Investor Experience. Princeton: National Bureau of Economic Research and Princeton University Press, 1958. Hindo, Brian, and Moira Herbst. “Personal Best Timeline, 1986: ‘Greed Is Good.’ ” BusinessWeek. http://www.bloomberg.com/ss/06/08/personalbest _timeline/source/7.htm. Hirschman, Elizabeth C. “Differences in Consumer Purchase Behavior by Credit Card Payment System.” Journal of Consumer Research 6, no. 1 (June 1979): 58–66. “History in Review: What Really Happened to the Shah of Iran.” Accessed December 1, 2014. http://www.iransara.info/Iran%20what%20happened %20to%20Shah.htm.

Jensen, “Takeovers: Their Causes and Consequences,” Journal of Economic Perspectives 2, no. 1 (Winter 1988): 21–48. 29. This opposite side of the coin has been argued in Andrei Shleifer and Lawrence H. Summers, “Breach of Trust in Hostile Takeovers,” in Corporate Takeovers: Causes and Consequences, ed. Alan J. Auerbach (Chicago: University of Chicago Press, 1988), pp. 33–68. 30. Brian Hindo and Moira Herbst, “Personal Best Timeline, 1986: ‘Greed Is Good,’ ” BusinessWeek, http://www.bloomberg.com/ss/06/08/personalbest _timeline/source/7.htm. 31. Bruck, The Predators’ Ball, p. 320. 32. Bruck, The Predators’ Ball. 33. FDIC v. Milken, pp. 70–71. 34. Alison Leigh Cowan, “F.D.I.C. Backs Deal by Milken,” New York Times, March 10, 1992. 35. See Thomas Piketty, Capital in the Twenty-First Century (Cambridge, MA: Harvard University Press, 2014), p. 291, fig. 8.5, and p. 292, fig. 8.6. 36.

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America by Matt Taibbi

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affirmative action, Affordable Care Act / Obamacare, Bernie Sanders, Bretton Woods, carried interest, clean water, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, desegregation, diversification, diversified portfolio, Donald Trump, financial innovation, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, illegal immigration, interest rate swap, laissez-faire capitalism, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, medical malpractice, moral hazard, mortgage debt, obamacare, passive investing, Ponzi scheme, prediction markets, quantitative easing, reserve currency, Ronald Reagan, Sergey Aleynikov, short selling, sovereign wealth fund, too big to fail, trickle-down economics, Y2K, Yom Kippur War

One is that voters on both sides of the aisle are gradually weaned off that habit of having real expectations for their politicians, consuming the voting process entirely as culture-war entertainment. The other is that millions of tenuously middle-class voters are conned into pushing Wall Street’s own twisted greed ethos as though it were their own. The Tea Party, with its weirdly binary view of society as being split up cleanly into competing groups of producers and parasites—that’s just a cultural echo of the insane greed-is-good belief system on Wall Street that’s provided the foundation/excuse for a generation of brilliantly complex thievery. Those beliefs have trickled down to the ex-middle-class suckers struggling to stay on top of their mortgages and their credit card bills, and the real joke is that these voters listen to CNBC and Fox and they genuinely believe they’re the producers in this binary narrative. They don’t get that somewhere way up above, there’s a group of people who’ve been living the Atlas dream for real—and building a self-dealing financial bureaucracy in their own insane image. 2 The Biggest Asshole in the Universe BAD POLITICAL SYSTEMS on their own don’t always make societies fail.

A being who does not hold his own life as the motive and goal of his actions, is acting on the motive and standard of death. Such a being is a metaphysical monstrosity, struggling to oppose, negate and contradict the fact of his own existence, running blindly amuck on a trail of destruction, capable of nothing but pain. This is pure social Darwinism: self-interest is moral, interference (particularly governmental interference) with self-interest is evil, a fancy version of the Gordon Gekko pabulum that “greed is good.” When you dig deeper into Rand’s philosophy, you keep coming up with more of the same. Rand’s belief system is typically broken down into four parts: metaphysics (objective reality), epistemology (reason), ethics (self-interest), and politics (capitalism). The first two parts are basically pure bullshit and fluff. According to objectivists, the belief in “objective reality” means that “facts are facts” and “wishing” won’t make facts change.


pages: 374 words: 114,600

The Quants by Scott Patterson

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Albert Einstein, asset allocation, automated trading system, Benoit Mandelbrot, Bernie Madoff, Bernie Sanders, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, buttonwood tree, buy low sell high, capital asset pricing model, centralized clearinghouse, Claude Shannon: information theory, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, Donald Trump, Doomsday Clock, Emanuel Derman, Eugene Fama: efficient market hypothesis, fixed income, Gordon Gekko, greed is good, Haight Ashbury, index fund, invention of the telegraph, invisible hand, Isaac Newton, job automation, John Nash: game theory, law of one price, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, margin call, merger arbitrage, NetJets, new economy, offshore financial centre, Paul Lévy, Ponzi scheme, quantitative hedge fund, quantitative trading / quantitative finance, race to the bottom, random walk, Renaissance Technologies, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Sergey Aleynikov, short selling, South Sea Bubble, speech recognition, statistical arbitrage, The Chicago School, The Great Moderation, The Predators' Ball, too big to fail, transaction costs, value at risk, volatility smile, yield curve, éminence grise

The mood around the country turned decidedly anti–Wall Street as the junk bond scandals hit the front pages of newspapers. An October 1987 Newsweek cover queried, “Is the Party Over? A Jolt for Wall Street’s Whiz Kids.” In December 1987, audiences in movie theaters listened to Gordon Gekko, the slimy takeover artist played by Michael Douglas, proclaim the mantra for the decade in Oliver Stone’s Wall Street: “Greed is good.” A series of popular books reflecting the anti–Wall Street sentiment hit the presses: Bonfire of the Vanities by Tom Wolfe, Barbarians at the Gate by Wall Street Journal reporters Bryan Burrough and John Helyar, The Predators’ Ball by Connie Bruck, Liar’s Poker by Michael Lewis. The quants were licking their wounds. Their wondrous invention, portfolio insurance, was roundly blamed for the meltdown.

At the time, the quants were known as rocket scientists, since many came from research hotbeds such as Bell Labs, where cell phones were invented, or Los Alamos National Laboratory, birthplace of the atomic bomb. Wall Street’s gut traders eventually proved to be no match for such explosive brainpower. Michael Lewis’s Wall Street classic, Liar’s Poker, exemplified and exposed the old-school Big Swinging Dick trader of the 1980s, the age of Gordon Gekko’s “greed is good.” Lewis Ranieri, the mortgage-bond trader made famous in the book, made huge bets based on his burger-fueled gut. Michael Milken of Drexel Burhman for a time ruled the Street, financing ballsy leveraged buyouts with billions in junk bonds. Nothing could be more different from the cerebral, computerized universe of the quants. Those two worlds collided when Aaron Brown strode onto Kidder’s trading floor.


pages: 412 words: 113,782

Business Lessons From a Radical Industrialist by Ray C. Anderson

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Albert Einstein, banking crisis, carbon footprint, centralized clearinghouse, clean water, cleantech, corporate social responsibility, Credit Default Swap, dematerialisation, distributed generation, energy security, Exxon Valdez, fear of failure, Gordon Gekko, greed is good, Indoor air pollution, intermodal, invisible hand, late fees, Mahatma Gandhi, market bubble, music of the spheres, Negawatt, new economy, oil shale / tar sands, oil shock, peak oil, renewable energy credits, shareholder value, Silicon Valley, six sigma, supply-chain management, urban renewal, Y2K

I suggest—and I know this is heresy—that Milton Friedman was at the heart, along with a generation of economists and bankers who have blindly followed his mantra: “Business exists to make a profit.” Really? This credo is at the heart of the world view that I’ve already written about—the fundamentally flawed paradigm, the mind-set that underlies the industrial system—and I suggest that that same mind-set also underlies the global financial system. I further suggest that Gordon Gekko’s fictional proclamation in the film Wall Street, “Greed is good,” is as widely accepted as Friedman’s credo, one hand-in-glove with the other, throughout the high-flying financial world. That’s a real double whammy! So, with trillions of dollars seeking instant gratification in short-term profits, with the financial industry coming up with ever-more esoteric and risky ways of satisfying that demand, with a ratings industry turning a blind eye to risk and stamping triple-A on too many pieces of paper (because if one agency didn’t, another would), something had to give, and it did.

See companies Covey, Stephen Craigavon, Northern Ireland, Interface facility creation care credit card debt curbside recycling programs customers attracted by environmental claims listening to cycles, nature’s way dams Dartmouth College debt Deering-Milliken deforestation Déjà vu carpet Dell Dell’Orco, Sergio dematerialization desert brine shrimp Diamond, Jared, Collapse dikes, failure of Dillon-Ridgley, Dianne dioxins Disney Corporation Diversity Connect Dodd, Bobby doing well by doing good dominion over the earth (biblical) Dow Chemicals Drake, Edwin Duke Energy DuPont Earth (planet) as Biblical garden danger faced by Eco Dream Team ecology Ecometrics economic logic economics, courses in Ecosense efficiency and fairness, linked and loss of resilience efficiency measures, useful, but limiting effluent pipes cutting emissions from inventory of inventory of emissions from Ehrlich, Paul and Anne, environmental impact equation of Einstein, Albert Eisenhower, Dwight electric transmission system electric utility industry embodied energy emissions, cutting Emory University end-of-pipe solutions Enel Latin America Energia Global energy clean (including solar) cutting back on use of government subsidies to price of renewable world demands engineering schools, sustainability courses in Enron entrepreneurship go/no-go decision point of training for Entropy carpet line entropy law environment, stewardship of environmental education environmental injustice zones environmentalism false claims suspicion of environmental laws and regulations Environmental Protection Agency environmental responsibility, and profit Epson Portland erosion, and floods ethanol fuels ethical sustainability ethics Evangelical Climate Initiative Evergreen Service Agreement evidence, waiting for last scrap of, before taking precautions externalities extracted minerals, must not increase in nature Exxon Valdez oil spill factories called “plants” (strangely) close to markets fairness, economic and efficiency, are linked Fairworks program faith farmers subsidies to Fastforward to 2020 program Fetz, Charles Fiji Water filtration financial industry, innovative instruments for energy saving financial meltdown of 2008 fish, polluted fishing industry Fitzgerald, Patrick Five P’s floods Fonterra food chain, concentration of contaminants in Ford, Henry forests, value of forever wild Forster, Piers fossil fuels counted as waste in Interface’s metrics dependence on end of age of energy from, not sustainable history of use of Framework Convention on Climate Change (UN) Friedman, Milton Frito-Lay division Fritts, Charles fuel economy mandates future embrace it (or be left behind) showing in the headlights future generations needs of their view of our present handling of the three crises Gallup Gandhi, Mahatma garden, Earth as (in Bible) Genentech General Electric (GE) Georgia Tech Institute for Sustainable Technology and Development (ISTD) Institute of Sustainable Systems (ISS) Germany GlasBac GlasBac RE global climate change doing nothing about, evil of skepticism about globalization, absurd supply chains in Global ReLeaf program global warming. See global climate change global-warming effect, net zero glue God’s currency Goethe Gonen, Ron Google Gore, Al An Inconvenient Truth Gorman, Mary government failure of, to solve environmental problems mandates from power of, to effect environmental change Grant, Ulysses S. Great Dane Trailers “greed is good” Green, John C. greenhouse gas (GHG) emissions effect on global warming effect on other planets (such as Venus) measuring of reduction of volume of green investors Greenlist green power, generation of, on-site green products, can’t be made from brown companies Greenspan, Alan greenwash Gretzky, Wayne grid, “off the” grid parity Grosclose, Frank gross domestic product, distortions of Gustashaw, Dave habitat Habitat for Humanity Haft, David Hansen, James Hart, Gary Hart, Stuart Hartzfeld, Jim Hawken, Paul Blessed Unrest The Ecology of Commerce Hawken, Paul, Amory Lovins, and L.


pages: 1,205 words: 308,891

Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey

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Admiral Zheng, agricultural Revolution, Albert Einstein, BRICs, British Empire, butterfly effect, Carmen Reinhart, clockwork universe, computer age, Corn Laws, dark matter, David Ricardo: comparative advantage, Donald Trump, Edward Lorenz: Chaos theory, European colonialism, experimental economics, financial innovation, Fractional reserve banking, full employment, George Akerlof, germ theory of disease, Gini coefficient, greed is good, Howard Zinn, income per capita, interchangeable parts, invention of agriculture, invention of air conditioning, invention of writing, invisible hand, Isaac Newton, James Watt: steam engine, John Maynard Keynes: technological unemployment, John Snow's cholera map, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, means of production, Naomi Klein, New Economic Geography, New Urbanism, purchasing power parity, rent-seeking, road to serfdom, Robert Gordon, Ronald Coase, Ronald Reagan, Scientific racism, Scramble for Africa, Shenzhen was a fishing village, Simon Kuznets, Slavoj Žižek, spinning jenny, Steven Pinker, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, tulip mania, union organizing, Upton Sinclair, urban renewal, V2 rocket, very high income, working poor, World Values Survey, Yogi Berra

Western European social democracy is surely democratic, and (recent anti-immigrant movements aside) has obviated the alternative of fascism.62 Yet reverting to full-scale, central-planning socialism of the sort many of the clerisy still pine for on old socialist grounds or on new environmental grounds would be a catastrophe, judging from results of actually existing socialism that prevailed over large swathes of the world during the twentieth century. It would be scientifically strange to ignore the material and spiritual failures of full-blown socialism from 1917 to 1991, or to ignore the present-day examples to the contrary in China and 370 India, or to ignore the beginning of it all in the rhetorical change on the shores of the North Sea around 1700. We need to strengthen the rhetoric of innovation. That does not mean celebrating “greed is good,” which I argued at length in The Bourgeois Virtues is a childish and unethical rhetoric — however popular on Wall Street and in the Department of Economics. Strengthening the rhetoric means celebrating innovation and respecting market deals. We must not worship them. That would be in Abrahamic terms idolatry. But we must not, either, cast them out as Baal or Mammon. Take for example the fraught issue of CEO compensation in the United States.

Dignity and liberty were in turn the result in part of the long perfected property rights of Europe, the inheritance from medieval liberties of the towns, the competition among states smaller than the Asian giants, the decline of serfdom outside of sad Russia, the theory of individual dignity in Protestantism and more anciently in all Abrahamic religions, the partial liberation of women outside the Mediterranean, the mind-freeing shock of the Scientific Revolution to Europe’s relatively primitive science, the uneven fall of religious and secular tyrants just when Asia was abandoning its much older tradition of toleration, the emergence of at least a tiny public sphere, the careers of quite a few open to talents, the improvements in military technology that briefly gave the West (and the Chinese) the weapons to lord it over aristocratic warriors of horse-using Steppe or elephant-using empire, the techniques of printing on paper imitated and improved from China and the Muslim world, making possible a more free periodical press and reasonably uncensored theatres and publishing houses (all imperfectly implemented 1600-1800, but startlingly novel, it seems, on the scale practiced in northwestern Europe, even allowing for recent findings that Orientalist notions of Asian backwardness are false). 372 If the technological change was in part a consequence of a new dignity and liberty then we free humans could be modestly proud of it. If our bourgeois building was not raised on foundations of imperialism or exploitation or unequal trade (excepting the brief reign of gunboats, and that in aid of trivial parts of the bourgeois economy), then we could admire it, though self-critically. If serious innovation were not amoral, then we could practice ethics more grown-up than a right-wing Greed is Good or a left-wing Down With the Bosses. Give a woman some rice, and you save her for a day. That’s the simplest form of what Christians flatter themselves by calling “Christian charity.” Give a man some seed and you save him for a year. That’s the plan of investment in capital, tried for decades in foreign aid without a great deal of success. But give a man and a woman the liberty to innovate, and persuade them to admire enterprise and to cultivate the bourgeois virtues, and you save them both for a long life of wide scope, and for their children’s and their grandchildren’s lives.


pages: 494 words: 132,975

Keynes Hayek: The Clash That Defined Modern Economics by Nicholas Wapshott

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airport security, banking crisis, Bretton Woods, British Empire, collective bargaining, complexity theory, cuban missile crisis, Francis Fukuyama: the end of history, full employment, Gordon Gekko, greed is good, if you build it, they will come, Isaac Newton, Joseph Schumpeter, liquidationism / Banker’s doctrine / the Treasury view, means of production, Mont Pelerin Society, mortgage debt, New Journalism, Northern Rock, price mechanism, pushing on a string, road to serfdom, Ronald Reagan, Simon Kuznets, The Chicago School, The Great Moderation, The Wealth of Nations by Adam Smith, Thomas Malthus, trickle-down economics, War on Poverty, Yom Kippur War

Adjustments were made and priorities altered. The freewheeling Reagan years had altered the mood in America. Private enterprise replaced communal action as the preferred way to change society. The free-loving flower children of the 1960s’ “Love Generation” had given way to the self-centered “Me Generation” of the ’80s and ’90s. Bob Dylan’s call to action “The Times They Are a-Changin’” had been superceded by Gordon Gekko’s mantra “Greed Is Good.”21 The national battle for civil rights for minorities was replaced by a demand for smaller government, states’ rights, and more individual rights. By the early 1990s, Taylor’s rule, showing the trade-off between interest rates and the rate of inflation, named after the Stanford economist John Taylor,22 came to replace the Phillips curve, the trade-off between employment and inflation, as the equation of choice for those running the economy.

Bush’s Council of Economic Advisers (2005–6). 16 Ben Bernanke, remarks at “A Conference to Honor Milton Friedman,” University of Chicago, Chicago, November 8, 2002. 17 Michael Kinsley (1951– ), American political journalist. 18 Michael Kinsley, “Greenspan Shrugged,” The New York Times, October 14, 2007. 19 Greenspan, Age of Turbulence, p. 68. 20 George H. W. Bush (1924– ), ambassador to the UN, director of the CIA, and 41st president of the United States (1989–93). 21 The “Greed Is Good” speech by Gordon Gekko, the hero of Oliver Stone’s 1987 movie Wall Street, was based on a commencement address at the University of California, 1986, by the convicted inside-dealing stock trader Ivan Boesky, who said, “I think greed is healthy. You can be greedy and still feel good about yourself.” 22 John Brian Taylor (1946– ), American economist and Robert Raymond Professor of Economics at Stanford University. 23 George H.

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor by John Kay

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Albert Einstein, Asian financial crisis, Barry Marshall: ulcers, Berlin Wall, Big bang: deregulation of the City of London, California gold rush, complexity theory, computer age, constrained optimization, corporate governance, corporate social responsibility, correlation does not imply causation, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, Donald Trump, double entry bookkeeping, double helix, Edward Lloyd's coffeehouse, equity premium, Ernest Rutherford, European colonialism, experimental economics, Exxon Valdez, failed state, financial innovation, Francis Fukuyama: the end of history, George Akerlof, George Gilder, greed is good, haute couture, illegal immigration, income inequality, invention of the telephone, invention of the wheel, invisible hand, John Nash: game theory, John von Neumann, Kevin Kelly, knowledge economy, labour market flexibility, late capitalism, Long Term Capital Management, loss aversion, Mahatma Gandhi, market bubble, market clearing, market fundamentalism, means of production, Menlo Park, Mikhail Gorbachev, money: store of value / unit of account / medium of exchange, moral hazard, Naomi Klein, Nash equilibrium, new economy, oil shale / tar sands, oil shock, pets.com, popular electronics, price discrimination, price mechanism, prisoner's dilemma, profit maximization, purchasing power parity, QWERTY keyboard, Ralph Nader, RAND corporation, random walk, rent-seeking, risk tolerance, road to serfdom, Ronald Coase, Ronald Reagan, second-price auction, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, Steve Jobs, telemarketer, The Chicago School, The Death and Life of Great American Cities, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, total factor productivity, transaction costs, tulip mania, urban decay, Washington Consensus, women in the workforce, yield curve, yield management

John Gutfreund, chairman of Salomon Brothers, one of the most aggressive investment banks of the 1980s, said successful traders must wake up each morning "ready to bite the ass off a bear." 8 Lester Thurow, economist and former dean of MIT's Sloan School of Management, offers intellectual support for this materialist perspective "Wealth has always been important in the personal pecking order, but it has become, increasingly, the only dimension by which personal worth is measured. It is the only game to play if you want to prove your mettle. It is the big leagues. If you do not play there, by definition you are second rate." 9 In the most extreme versions of the American business model, it is a mistake to deplore materialism and regard selfishness as a vice. Greed is good: nice guys finish last. The rambling but strident philosophy of Ayn Rand, Alan Greenspan's former mentor, proclaims the virtues of selfishness under the title objectivism. 10 The logical conclusion of extreme individualism is that concern for others is an emotion that can properly be called on only to the extent that we feel it spontaneously. Private charity is the only proper mechanism of redistribution, and any further claim by the community would infringe on our autonomy.

But it is also adaptive for us to follow the rules of dysfunctional cultures whose outcomes do not benefit us or the organizations themselves. Adaptive behavior is determined by social and business values we impose on each other-the phenomenon of contagious reputation (chapter 19) is a good example-and the prevailing values of a market economy are key to its success. This is an important part of the explanation of why Norway and Switzerland are rich states and Kenya and Indonesia are not. The maxim that greed is good has set back the cause of economic development in the East, undermined the legitimacy and performance of the market economies of the West. There is no substantive difference between the pyramid schemes that crippled the Albanian economy in the mid-1990s and the stock market bubble of 1999-2000. We shall only gradually learn how much the competitive advantages of businesses in rich states have been eroded in the pursuit of unsustainable reported growth in earnings: banks that have lost the loyalty of their employees; pharmaceutical companies whose pipelines are increasingly empty; media companies that have alienated their creative talent; insurance companies that no longer have the confidence of their customers.


pages: 237 words: 50,758

Obliquity: Why Our Goals Are Best Achieved Indirectly by John Kay

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Andrew Wiles, Asian financial crisis, Berlin Wall, bonus culture, British Empire, business process, Cass Sunstein, computer age, credit crunch, Daniel Kahneman / Amos Tversky, discounted cash flows, discovery of penicillin, diversification, Donald Trump, Fall of the Berlin Wall, financial innovation, Gordon Gekko, greed is good, invention of the telephone, invisible hand, Jane Jacobs, Long Term Capital Management, Louis Pasteur, market fundamentalism, Nash equilibrium, pattern recognition, purchasing power parity, RAND corporation, regulatory arbitrage, shareholder value, Simon Singh, Steve Jobs, The Death and Life of Great American Cities, The Predators' Ball, The Wealth of Nations by Adam Smith, ultimatum game, urban planning, value at risk

In the end he was forced out of his post at Sunbeam, the appliance manufacturer, amid allegations of accounting abuse and profit manipulation. The corporation went bankrupt. Dunlap was spared possible civil and criminal suits only after he agreed to pay penalties and restitution of fifteen million dollars.10 The history of the last two decades is littered with fallen idols who, like Dunlap, stridently asserted the primacy of wealth. Gordon Gekko, the antihero of Oliver Stone’s 1987 film Wall Street, famously proclaimed: “Greed is good.” Gekko was partly based on Ivan Boesky, a notorious corporate raider of the 1980s, who was reported as telling a class at Columbia: “I want you to know that I think greed is healthy. You can be greedy and still feel good about yourself.”11 Soon after, Boesky went to prison, convicted of insider trading. The businesses that epitomized the explosion of greed on Wall Street in the 1980s were Salomon Brothers (the firm mercilessly caricatured in Michael Lewis’s Liar’s Poker)12 and Drexel Burnham Lambert (more gently pilloried in Connie Bruck’s The Predators’ Ball).13 Salomon turned bond trading from a backwater into the activity of choice for the financially ambitious, while Drexel Burnham Lambert pioneered the issue of junk bonds.


pages: 209 words: 63,649

The Purpose Economy: How Your Desire for Impact, Personal Growth and Community Is Changing the World by Aaron Hurst

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3D printing, Airbnb, Atul Gawande, barriers to entry, big-box store, business process, call centre, carbon footprint, citizen journalism, corporate social responsibility, crowdsourcing, disintermediation, Elon Musk, Firefox, glass ceiling, greed is good, housing crisis, informal economy, Jane Jacobs, jimmy wales, Khan Academy, Kickstarter, Lean Startup, means of production, new economy, pattern recognition, Peter Singer: altruism, Peter Thiel, Ray Oldenburg, remote working, Richard Feynman, Ronald Reagan, sharing economy, Silicon Valley, Silicon Valley startup, Steve Jobs, TaskRabbit, Tony Hsieh, too big to fail, underbanked, women in the workforce, young professional, Zipcar

As they came of age, the environmental movement was going mainstream; pioneering social entrepreneurs were popularizing the idea of “doing well by doing good,” with forerunners like Paul Hawken of Smith & Hawken, Ben & Jerry’s, and Anita Roddick of the Body Shop popularizing a new ethic of corporate social responsibility. Meanwhile, celebrities like Matt Damon, Angelina Jolie, and George Clooney were popularizing a new ethic of individual engagement, making it cool to be socially engaged. The excesses of Wall Street, the dot-com boom and bust, and the mentality that “greed is good” began to change the scope of the American Dream for many Millennials coming of age. Even as they saw their parents working harder and spending less time at home in order to afford the big house, three cars, and all the accoutrements of success, they were mostly turned off by these status symbols and began to challenge existing paradigms of success. According to a 2013 study by Deloitte, corporate employees (not just Millennials) now believe that the top responsibility of a company is to provide goods and services that positively impact society.

Working the Street: What You Need to Know About Life on Wall Street by Erik Banks

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accounting loophole / creative accounting, borderless world, corporate governance, estate planning, greed is good, risk/return, rolodex, telemarketer

If it involves a lot of money, it has to be complicated, right? Have you ever watched the evening business news and seen all of those people in yellow jackets, packed shoulder-to-shoulder on the floor of some exchange, screaming and waving at each other, faces red and purple—looking either absolutely elated or wildly panicked? Do you remember the movie Wall Street—all the money changing hands, the “greed is good” speech, the little companies buying the big ones, the 4 | W o rk i n g t h e S t re e t “inside information” circulating between good guys and bad guys, the eight-panel cutaway shot of the trading floors with high-powered executives earning and losing millions? For many of you, these TV and movie scenes represent Wall Street—and they make it seem so complicated and unintelligible. In reality, Wall Street isn’t very complicated at all.


pages: 298 words: 81,200

Where Good Ideas Come from: The Natural History of Innovation by Steven Johnson

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Ada Lovelace, Albert Einstein, Alfred Russel Wallace, carbon-based life, Cass Sunstein, cleantech, complexity theory, conceptual framework, cosmic microwave background, crowdsourcing, data acquisition, digital Maoism, discovery of DNA, Dmitri Mendeleev, double entry bookkeeping, double helix, Douglas Engelbart, Drosophila, Edmond Halley, Edward Lloyd's coffeehouse, Ernest Rutherford, Geoffrey West, Santa Fe Institute, greed is good, Hans Lippershey, Henri Poincaré, hive mind, Howard Rheingold, hypertext link, invention of air conditioning, invention of movable type, invention of the printing press, invention of the telephone, Isaac Newton, Islamic Golden Age, Jacquard loom, James Hargreaves, James Watt: steam engine, Jane Jacobs, Jaron Lanier, John Snow's cholera map, Joseph Schumpeter, Joseph-Marie Jacquard, Kevin Kelly, lone genius, Louis Daguerre, Louis Pasteur, Mason jar, Mercator projection, On the Revolutions of the Heavenly Spheres, online collectivism, packet switching, PageRank, patent troll, pattern recognition, price mechanism, profit motive, Ray Oldenburg, Richard Florida, Richard Thaler, Ronald Reagan, side project, Silicon Valley, silicon-based life, six sigma, Solar eclipse in 1919, spinning jenny, Steve Jobs, Steve Wozniak, Stewart Brand, The Death and Life of Great American Cities, The Great Good Place, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, transaction costs, urban planning

We do not have a ready-made political vocabulary for the fourth quadrant, particularly the noninstitutional forms of collaboration that have developed around the open-source community. Because these open systems operate outside the conventional incentives of capitalism and resist the usual strictures of intellectual property, the mind reflexively wants to put them on the side of socialism. And yet they are as far from the state-centralized economies that Marx and Engels helped invent as they are from greed-is-good capitalism. They themselves are not the product of market incentives, but they often create environments where private firms thrive, a phenomenon Lawrence Lessig alludes to in his concept of the “hybrid economy,” which blends elements from the open networks of the intellectual commons with the more proprietary walls and tariffs of the private sphere. None of this is meant to imply that the marketplace is the enemy of innovation, or that competition between rival firms doesn’t often lead to useful new products.


pages: 306 words: 78,893

After the New Economy: The Binge . . . And the Hangover That Won't Go Away by Doug Henwood

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accounting loophole / creative accounting, affirmative action, Asian financial crisis, barriers to entry, borderless world, Branko Milanovic, Bretton Woods, capital controls, corporate governance, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, ending welfare as we know it, feminist movement, full employment, gender pay gap, George Gilder, glass ceiling, Gordon Gekko, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, liquidationism / Banker’s doctrine / the Treasury view, manufacturing employment, means of production, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, pets.com, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, structural adjustment programs, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, women in the workforce, working poor, Y2K

Underperforming companies—those generating insufficient profits to satisfy shareholders—^were taken over, either by allegedly more competent rivals or by corporate raiders (or, as Alan Greenspan dubbed them at the time, "unaffiliated corporate restructurers"), or they were taken private by a management team in partnership with outside investors using lots of borrowed money. Regardless of the financial maneuver, the operational strategy was similar: shut or sell weak divisions, lay off workers, cut wages, break unions (where they existed), speed up the Hne, get the profit rate up. The moral philosophy of this period was nicely summed up by Oliver Stone's Gordon Gekko, channeUng the most famous inside trader of all time, Ivan Boesky: "Greed is good." Unfortunately, these maneuvers usually involved lots of debt, and the debt load proved crippHng by decade's end. So there was a shift of strategy toward shareholder activism. Led by large pension funds, particularly the CaHfornia PubHc Employees Retirement System (Calpers), institutional investors drew up hit lists of saggy companies, and pressed management to shape up or ship out. At the same time, managers' pay was shifted from straight salaries to stock options—the idea was to make managers think not hke pampered employees, but like stockholders, whose income was directly tied to the stock price.The operational strategy was similar to that of the 1980s, however—downsizing, outsourcing, and speedup—whatever was necessary to get profits, and with them, stock prices, up.


pages: 300 words: 78,475

Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream by Arianna Huffington

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American Society of Civil Engineers: Report Card, Bernie Madoff, Bernie Sanders, call centre, carried interest, citizen journalism, clean water, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, extreme commuting, Exxon Valdez, full employment, greed is good, housing crisis, immigration reform, invisible hand, knowledge economy, laissez-faire capitalism, late fees, market bubble, market fundamentalism, Martin Wolf, medical bankruptcy, microcredit, new economy, New Journalism, offshore financial centre, Ponzi scheme, Report Card for America’s Infrastructure, Richard Florida, Ronald Reagan, Rosa Parks, single-payer health, smart grid, The Wealth of Nations by Adam Smith, too big to fail, transcontinental railway, trickle-down economics, winner-take-all economy, working poor, Works Progress Administration

Think Bigger, Way Bigger,” 13 May 2010, www.huffingtonpost.com. 54 The names of the Wall Streeters: Matthew Vadum, “Goldman Sachs Government,” 16 Oct. 2008, www.spectator.org. 55 The finance industry has 70 former members of Congress: Public Citizen, “Stop Congress’ Revolving Door of Corruption,” www.citizen.org. 56 This includes 33 chiefs of staff, 54 staffers of the House: Arthur Delaney, “Big Bank Takeover: Report Blames Revolving Door for ‘Too Big to Fail,’ ” 11 May 2010, www.huffingtonpost.com. 57 Five of Senate Banking Committee chair Chris Dodd’s: Kevin Connor, “Big Bank Takeover: How Too-Big-to-Fail’s Army of Lobbyists Has Captured Washington,” Institute for America’s Future, 11 May 2010, www.ourfuture.org. 58 Of course, the revolving door spins both ways: Arthur Delaney, “Big Bank Takeover: Report Blames Revolving Door for ‘Too Big to Fail,’ ” 11 May 2010, www.huffingtonpost.com. 59 On the mining front, former Massey chief operating officer: Brad Johnson, “Don Blankenship’s Record of Profits Over Safety: ‘Coal Pays the Bills,’ ” 8 Apr. 2010, www.thinkprogress.org. 60 At the time of the Upper Big Branch accident he was: Ibid. 61 And President Bush named Massey executive Richard Stickler: Ibid. 62 Stickler had such a lousy safety record: Ibid. 63 That’s what happened when Bush put Edwin Foulke: Stephen Labaton, “OSHA Leaves Worker Safety in Hands of Industry,” 25 Apr. 2007, www.nytimes.com. 64 Earlier in his career, while serving as chairman: Ibid. 65 Then there was Bush’s choice of Mary Sheila Gall: “Mary Sheila Gall Named to Chair CPSC,” 20 Apr. 2001, www.consumeraffairs.com. 66 In her ten years on the commission: Lizette Alvarez, “Consumer Product Safety Chief Sets Deadline to Resign,” 9 Aug. 2001, www.nytimes.com. 67 She even adopted a “Let them eat marbles” stance: Hearing on the nomination of Mary Sheila Gall to chair the Consumer Product Safety Commission before the Committee on Commerce, Science, and Transportation, U.S. Senate, 25 Jul. 2001, www.gpo.gov. 68 And while I’m all for slapping warnings: Matthew Robinson and Daniel Murphy, Greed Is Good: Maximization and Elite Deviance in America (Lanham, MD: Rowman & Littlefield, 2009), 94–95. 69 Thankfully, the Senate refused to confirm Gall: Caroline E. Mayer, “Senate Panel Rejects Bush’s Choice for Consumer Job,” 3 Aug. 2001, www.sfgate.com. 70 Undeterred, Bush filled the slot with Harold Stratton: Daphne Eviatar, “Toy Story,” 3 Jan. 2008, www.thenation.com. 71 Following the money once again: Center for Responsive Politics, “Pharmaceuticals/ Health Products: Long-Term Contribution Trends,” 1990–2010, www.opensecrets.org. 72 In return, the Bush administration served up: Marc Kaufman, “Former FDA Chief Illegally Held Stocks,” 17 Oct. 2006, www.washingtonpost.com. 73 And, if you want to see “overly cozy” run amok: Charlie Savage, “Sex, Drug Use and Graft Cited in Interior Department,” 10 Sep. 2008, www.nytimes.com. 74 We saw how all those former Senate and House staffers: Brian Beutler, “Do Baucus’ Ties to Health Care Industry Compromise His Reform Efforts?”


pages: 322 words: 77,341

I.O.U.: Why Everyone Owes Everyone and No One Can Pay by John Lanchester

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asset-backed security, bank run, banking crisis, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black-Scholes formula, Celtic Tiger, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, George Akerlof, greed is good, hindsight bias, housing crisis, Hyman Minsky, interest rate swap, invisible hand, Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, laissez-faire capitalism, liquidity trap, Long Term Capital Management, loss aversion, Martin Wolf, mortgage debt, mortgage tax deduction, mutually assured destruction, new economy, Nick Leeson, Northern Rock, Own Your Own Home, Ponzi scheme, quantitative easing, reserve currency, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Reagan, shareholder value, South Sea Bubble, statistical model, The Great Moderation, the payments system, too big to fail, tulip mania, value at risk

In fields such as education, equality of opportunity, health care, employees’ rights, the social contract, and culture, the first conversation to happen should be about values and principles; then you have the conversation about costs and what you as a society can afford. In Britain in the last twenty to thirty years that has all been the wrong way round. There was a kind of reverse takeover, in which City values came to dominate the whole of British life. There needs to be a general acceptance that the model has failed: the brakes-off, deregulate or die, privatize or stagnate, lunch is for wimps, greed is good, what’s good for the financial sector is good for the economy model; the “sack the bottom 10 percent,” bonusdriven, “if you can’t measure it, it isn’t real” model; the model which spread from the City to government and from there through the whole culture, in which the idea of value has gradually faded to be replaced by the idea of price. When the credit crunch first began—after the initial waves of panic and the moment when “this sucker could go down”—I thought that there might be a general reevaluation of where we all were.


pages: 235 words: 65,885

Peak Everything: Waking Up to the Century of Declines by Richard Heinberg, James Howard (frw) Kunstler

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anti-communist, back-to-the-land, clean water, Community Supported Agriculture, deindustrialization, delayed gratification, demographic transition, ending welfare as we know it, energy transition, Fractional reserve banking, greed is good, Haber-Bosch Process, happiness index / gross national happiness, income inequality, land reform, means of production, oil shale / tar sands, peak oil, Plutocrats, plutocrats, post-oil, reserve currency, ride hailing / ride sharing, Ronald Reagan, the built environment, the scientific method, Thomas Malthus, too big to fail, urban planning

So what did the Boomers do after 1980? Having already taken a detour into the bleary world of recreational drugs, many of the more spirited Boomers now turned to gurus, meditation, and cults: politics was a bummer; if we really wanted to change the world we should change our heads first. Other Boomers steered toward the stock market and scrambled up the corporate ladder. They got jobs, made money, and discovered that “greed is good.” By the end of the decade it was apparent that the Boomers were divided, with some upholding the Earth Day vision, others honing their skills as right-wing radio talk show hosts, and the rest just trying to get by. Another Fork in the Road Bill Clinton, the first Boomer president (born in 1946), elicited high hopes among his generational peers feeling battered by a dozen years of Reagan/Bush.


pages: 295 words: 66,824

A Mathematician Plays the Stock Market by John Allen Paulos

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Benoit Mandelbrot, Black-Scholes formula, Brownian motion, business climate, butterfly effect, capital asset pricing model, correlation coefficient, correlation does not imply causation, Daniel Kahneman / Amos Tversky, diversified portfolio, Donald Trump, double entry bookkeeping, Elliott wave, endowment effect, Erdős number, Eugene Fama: efficient market hypothesis, four colour theorem, George Gilder, global village, greed is good, index fund, invisible hand, Isaac Newton, John Nash: game theory, Long Term Capital Management, loss aversion, Louis Bachelier, mandelbrot fractal, margin call, mental accounting, Nash equilibrium, Network effects, passive investing, Paul Erdős, Ponzi scheme, price anchoring, Ralph Nelson Elliott, random walk, Richard Thaler, Robert Shiller, Robert Shiller, short selling, six sigma, Stephen Hawking, transaction costs, ultimatum game, Vanguard fund, Yogi Berra

If we (or, more likely, our computer) pick these numbers until their sum exceeds 1, the average number of picks we’d need would be e, about 2.718. The ubiquitous e also happens to equal 1 + 1/1! + 1/2! + 1/3! + 1/4! + . . . , the same expression my professor was writing on the board many years ago. (Inspired by a remark by stock speculator Ivan Boesky, Gordon Gecko in the 1987 movie Wall Street stated, “Greed is good.” He misspoke. He intended to say, “e is good.”) Many of the formulas useful in finance are consequences of these two formulas: A = P(1 + r)t for annual compounding and, for continuous compounding, A = Pert. To illustrate how they’re used, note that if you deposit $5,000 and it’s compounded annually for 12 years at 8 percent, it will be worth $5,000(1.08)12 or $12,590.85. If this same $5,000 is compounded continuously, it will be worth $5,000e(.08 × 12) or $13,058.48.


pages: 275 words: 77,017

The End of Money: Counterfeiters, Preachers, Techies, Dreamers--And the Coming Cashless Society by David Wolman

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Bay Area Rapid Transit, Berlin Wall, Bernie Madoff, bitcoin, Bretton Woods, carbon footprint, cashless society, central bank independence, collateralized debt obligation, corporate social responsibility, credit crunch, cross-subsidies, Diane Coyle, fiat currency, financial innovation, floating exchange rates, German hyperinflation, greed is good, Isaac Newton, M-Pesa, Mahatma Gandhi, mental accounting, mobile money, money: store of value / unit of account / medium of exchange, offshore financial centre, Peter Thiel, place-making, placebo effect, Ponzi scheme, Ronald Reagan, seigniorage, Silicon Valley, special drawing rights, Steven Levy, the payments system, transaction costs

When the doors open onto the top floor, I walk into an empty gray-carpeted suite with windows looking down on the mini city and across the water to bluffs in the distance. In front of one window, four metal chairs are aligned side by side facing out to the Reykjavik harbor. Visiting a place like Iceland and thinking about money is different than doing so in a megalopolis like New York or London. There, everything is money. Not necessarily in the “greed is good” sense, but in the way that a cityscape is entirely manmade. Virtually every square inch of it involves economic activity, and in each office, apartment, restaurant, gallery, and bar, commerce is king. In a place like Reykjavik, though, you can look right past the city onto inhospitable wilderness. Gazing out at the stark volcanic landscapes, the social forces that give money its value come into focus.


pages: 272 words: 64,626

Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs by Andy Kessler

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23andMe, Andy Kessler, bank run, barriers to entry, Berlin Wall, British Empire, business process, California gold rush, carbon footprint, Cass Sunstein, cloud computing, collateralized debt obligation, collective bargaining, computer age, disintermediation, Eugene Fama: efficient market hypothesis, fiat currency, Firefox, Fractional reserve banking, George Gilder, Gordon Gekko, greed is good, income inequality, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, Joseph Schumpeter, knowledge economy, knowledge worker, libertarian paternalism, low skilled workers, Mark Zuckerberg, McMansion, Netflix Prize, packet switching, personalized medicine, pets.com, prediction markets, pre–internet, profit motive, race to the bottom, Richard Thaler, risk tolerance, risk-adjusted returns, Silicon Valley, six sigma, Skype, social graph, Steve Jobs, The Wealth of Nations by Adam Smith, transcontinental railway, transfer pricing, Yogi Berra

Markets value those profits and set the price for the enterprise so they can raise more money to grow. The stock market allocates precious capital to companies it thinks can maximize profits and starves those that can’t. In other words, the stock market is democracy’s half-evil henchman, whose tool is the size of the carrot, not the use of the stick. The tenets of capitalism’s great economists, from Adam Smith’s Invisible Hand to Joseph Schumpeter’s Creative Destruction and Gordon Gekko’s Greed Is Good, are all powerful concepts, but it’s profits and the stock market that carry out the dirty work. No Five-Year Plans. All men are created equal, but a few of you need to be canned and retrained so progress can happen again. New industries get funded and start hiring again. But which ones? The ones with the best prospects for profits. Remember, markets don’t create wealth. They allow for price discovery and for productivity to be priced into the value of companies.


pages: 387 words: 110,820

Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell

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barriers to entry, Berlin Wall, big-box store, cognitive dissonance, computer age, Daniel Kahneman / Amos Tversky, delayed gratification, deskilling, Donald Trump, Edward Glaeser, fear of failure, Ford paid five dollars a day, Frederick Winslow Taylor, George Akerlof, global supply chain, global village, greed is good, Howard Zinn, income inequality, interchangeable parts, inventory management, invisible hand, James Watt: steam engine, Joseph Schumpeter, Just-in-time delivery, knowledge economy, loss aversion, market design, means of production, mental accounting, Ponzi scheme, price anchoring, price discrimination, race to the bottom, Richard Thaler, Ronald Reagan, side project, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, traveling salesman, ultimatum game, Victor Gruen, washing machines reduced drudgery, working poor, yield management

IN 1986 stock speculator Ivan Boesky declared, “I think greed is healthy. You can be greedy and still feel good about yourself,” and his audience at the University of California Berkeley School of Business Administration cheered. Money is what makes the world go around, they say, and at the time the world was spinning wildly. But a year later, when Boesky’s comment was echoed in the infamous “Greed . . . is good” line uttered by Michael Douglas in the movie Wall Street, the audience booed. By then the market had crashed. Boesky was on his way to prison for insider trading. Yes, greed motivates us to push the limits, take risks, and aim high. But greed is also a distraction. In business as in sports, focus is everything. Wegmans succeeds because it remains keenly fixed on its mission—a mission that starts with treating even pimply, gum-snapping sixteen-year-old grocery store clerks as valued colleagues and potential customers.


pages: 349 words: 114,038

Culture & Empire: Digital Revolution by Pieter Hintjens

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4chan, airport security, anti-communist, anti-pattern, barriers to entry, Bill Duvall, bitcoin, blockchain, business climate, business intelligence, business process, Chelsea Manning, clean water, congestion charging, Corn Laws, correlation does not imply causation, cryptocurrency, Debian, Edward Snowden, failed state, financial independence, Firefox, full text search, German hyperinflation, global village, GnuPG, Google Chrome, greed is good, Hernando de Soto, hiring and firing, informal economy, invisible hand, James Watt: steam engine, Jeff Rulifson, Julian Assange, Kickstarter, M-Pesa, mutually assured destruction, Naomi Klein, national security letter, new economy, New Urbanism, Occupy movement, offshore financial centre, packet switching, patent troll, peak oil, pre–internet, private military company, race to the bottom, rent-seeking, reserve currency, RFC: Request For Comment, Richard Feynman, Richard Feynman, Richard Stallman, Satoshi Nakamoto, security theater, Skype, slashdot, software patent, spectrum auction, Steve Crocker, Steve Jobs, Steven Pinker, Stuxnet, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, trade route, transaction costs, union organizing, web application, WikiLeaks, Y2K, zero day, Zipf's Law

If the proof of the pudding is in the eating, the right-wing economists are chewing on something cold and rubbery. The blind worship of strong private property rights has allowed many abuses. Broadly, it is an excuse for the rich and powerful to steal public assets and then claim they are the "wealth creators." It has been the plank for many a coup, invasion, and even genocide on grounds to stop "socialist" regimes and their "mad" policies. It blessed the "greed is good" mantra that eviscerated business ethics in the last decades. It protects the patent system from scrutiny and gives it space to grow. It is the curtain that hides the malevolence of the Para-state. And it is fundamentally and powerfully wrong. Wealth does not come from creating more private property. Wealth comes from other people. It is true that the concept of property can protect, capture, and carry that wealth.

Bedsit Disco Queen: How I Grew Up and Tried to Be a Pop Star by Tracey Thorn

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Berlin Wall, East Village, greed is good, means of production, Mikhail Gorbachev, Ronald Reagan, University of East Anglia, young professional

It’s not possible to say that you watched not a second of the wedding, and that you were dismissive of Live Aid, without sounding like a complete killjoy outsider, but many of us simply lived an entirely different set of experiences, which seem to have gone unrecorded and unwritten about, so that it’s as though they never happened. Scenes which I never witnessed in my life – yuppies chugging champagne in City wine bars, toffs dancing in puffball skirts to Duran Duran – have now become the universal TV shorthand used to locate and define the era. In place of the supposed ambition and Greed is Good ethos, within the world of the alternative band we still adhered somewhat piously to the altruism of the benefit gig. In the mid-1980s we had our own causes, and the benefit gigs were many and various. In 1984 I had sung vocals on a track called ‘Venceremos’ with Simon Booth’s Working Week, in support of Chilean opposition to the Pinochet regime. In January 1985 we appeared at a benefit gig for Nicaragua, and later that same month we played with Orange Juice and Aztec Camera at a benefit for the striking miners.


pages: 339 words: 105,938

The Skeptical Economist: Revealing the Ethics Inside Economics by Jonathan Aldred

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airport security, Berlin Wall, carbon footprint, citizen journalism, clean water, cognitive dissonance, congestion charging, correlation does not imply causation, Diane Coyle, experimental subject, Fall of the Berlin Wall, first-past-the-post, framing effect, greed is good, happiness index / gross national happiness, invisible hand, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, labour market flexibility, laissez-faire capitalism, libertarian paternalism, new economy, pension reform, positional goods, Ralph Waldo Emerson, RAND corporation, risk tolerance, school choice, spectrum auction, trade liberalization, ultimatum game

Survey evidence on charitable giving, and laboratory studies of behaviour in games such as the Ultimatum Game, both show economics students becoming more selfish over the duration of their courses.56 If this kind of intensive exposure to the Homo economicus doctrine increases selfishness, there may well be a similar, albeit milder, effect on people with more limited exposure to the doctrine. Does reading The Economist or Freakonomics make you more selfish? Although exposure to the doctrine from just watching television news is much more limited, the effect may be exaggerated because by that stage the doctrine is caricatured, becoming simply ‘Greed is Good’.57 Unfortunately, in the absence of research studying the impact of the doctrine as presented in the mainstream media, these questions cannot be answered directly. But there is evidence on a related issue. Some constitutional frameworks and legal systems both presume and affirm that citizens can be trusted to act responsibly, cooperate and not always put their narrow self-interest above the common good.


pages: 375 words: 105,067

Pound Foolish: Exposing the Dark Side of the Personal Finance Industry by Helaine Olen

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asset allocation, Bernie Madoff, Cass Sunstein, Credit Default Swap, David Brooks, delayed gratification, diversification, diversified portfolio, Donald Trump, Elliott wave, en.wikipedia.org, estate planning, financial innovation, Flash crash, game design, greed is good, high net worth, impulse control, income inequality, index fund, London Whale, Mark Zuckerberg, mortgage debt, oil shock, payday loans, pension reform, Ponzi scheme, quantitative easing, Ralph Nader, RAND corporation, random walk, Richard Thaler, Ronald Reagan, Saturday Night Live, too big to fail, transaction costs, Unsafe at Any Speed, upwardly mobile, Vanguard fund, wage slave, women in the workforce, working poor, éminence grise

Send it straight to Wall Street so that they can pay their brokers $10 million a year in bonuses? I mean, how stupid does a person have to be?” he said in a recent Time magazine interview. Knowing what we do about the state of the American retirement system, he has a point, if not the solution. Kiyosaki’s not howling at you for being in debt like Suze Orman, Dave Ramsey, and David Bach are. He’s howling at you for being in the wrong sort of debt. Greed is good, he tells us. “The problem I sense today,” he writes in Rich Dad, Poor Dad, “is that there are millions of people who feel guilty about their greed. It’s an old conditioning from their childhood. Their desire to have the finer things that life offers. Most have been conditioned subconsciously to say, ‘You can’t have that,’ or ‘You’ll never afford that.’” In other words, Kiyosaki, along with other wealth gurus like Allen, Eker, and all the rest, doesn’t think you are a spendthrift.


pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters by Diane Coyle

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accounting loophole / creative accounting, affirmative action, bank run, banking crisis, Berlin Wall, bonus culture, Branko Milanovic, BRICs, call centre, Cass Sunstein, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, disintermediation, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, Hyman Minsky, If something cannot go on forever, it will stop, illegal immigration, income inequality, income per capita, invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Ronald Reagan, Silicon Valley, South Sea Bubble, Steven Pinker, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, web application, web of trust, winner-take-all economy, World Values Survey

Few people, even among the most ardent fans of market solutions, will disagree with the proposition that the financial markets have, from time to time, brought scandalous demonstrations of greed. While most traders earning multimillion bonuses no doubt think of themselves as upstanding citizens, the rest of us find it hard to find many shining examples of virtuous behavior on Wall Street or in the City of London. In the notorious words of cinema villain Gordon Gekko (Michael Douglas in Wall Street), “Greed is good” is the motto of the markets, but not of Main Street. Likewise, the cartoon “rational economic man” is a selfish being, whereas real people make choices motivated by the moral sentiments of Adam Smith and illuminated by modern evolutionary biology. But does the immorality of the financial markets and the all-out free market ideology they embody in fact corrupt the rest of the economy? Does the efficiency of market outcomes come at a price?


pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

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Affordable Care Act / Obamacare, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land reform, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population, World Values Survey

Financial deregulation in the US at this time laid the foundation for the financial system we have today. The rapid increase in hostile takeovers, in which a company is taken over against the will of the existing management, changed the whole corporate culture in the US. Many of those taking over were ‘corporate raiders’ only interested in asset stripping (namely, the sales of valuable assets, regardless of the impact on the long-term viability of the company), immortalized by Gordon ‘Greed-is-good’ Gekko in the 1987 movie Wall Street. To avoid such a fate, firms had to deliver profits faster than before. Otherwise impatient shareholders would sell up, reducing the share prices and thus exposing the firm to greater danger of hostile takeover. The easiest way for companies to deliver quick profit was through downsizing – reducing the workforce and minimizing investments beyond what is necessary for immediate results, even though these actions diminish the prospect of the company in the longer run.


pages: 311 words: 94,732

The Rapture of the Nerds by Cory Doctorow, Charles Stross

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3D printing, Ayatollah Khomeini, butterfly effect, cognitive dissonance, combinatorial explosion, complexity theory, Credit Default Swap, dematerialisation, Drosophila, epigenetics, Extropian, gravity well, greed is good, haute couture, hive mind, margin call, phenotype, Plutocrats, plutocrats, rent-seeking, Richard Feynman, Richard Feynman, telepresence, Turing machine, Turing test, union organizing

Where a terrestrial establishment would have a central bar area and booths around the periphery, this establishment has a kilometers-wide expanse of glassy floor and a central bar that features such nifty magnification features that stools spring up like self-similar leather mushrooms as you approach any given spot: in the distance, near the walls, gales howl among the hyperspace gates leading to the private areas (which feature planetary themes, so that the subsurface oceanic caverns of Enceladus adjoin the fiery sands of long-dismantled Venus). The dress code is similarly over the top, as Huw realizes when she notices the djinni is wearing an antique Armani suit. She’s no expert on haute couture: she realizes she probably ought to recognize the designer of the cocktail dress the scanner selected for her, but she’s too busy fighting with the insane footwear to care about such minor details. Mid-1980s: Greed is good. It seems a fitting context in which to discuss the identity of a person or persons who might be trying to steal a planet’s worth of computronium. The whole thing is so massively, monstrously over the top—like a nuclear aircraft carrier tricked out as a private yacht—that it takes Huw a moment to realize that she and the djinni are alone. “Where is everyone?” she asks, grabbing his arm for balance.


pages: 355 words: 92,571

Capitalism: Money, Morals and Markets by John Plender

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Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, bonus culture, Bretton Woods, business climate, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, corporate governance, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, Fractional reserve banking, full employment, Gordon Gekko, greed is good, Hyman Minsky, income inequality, inflation targeting, invention of the wheel, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, labour market flexibility, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, means of production, Menlo Park, moral hazard, moveable type in China, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Plutocrats, plutocrats, price stability, principal–agent problem, profit motive, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, We are the 99%, Wolfgang Streeck

It suffered from the flaw that in a society marked by an uneven distribution of income favouring a numerically small elite, the rich had plenty of spending power to satisfy their desires, but not enough buying power to dynamise the economy to its full potential to raise real incomes.8 The German sociologist and economist Werner Sombart nonetheless argued two centuries later that luxury played an important part in the development of capitalism. 9 And Mandeville’s point has trickled down through history. To name just one example, Gordon Gekko’s ‘greed is good’ speech in the film Wall Street clearly descends in a direct line from the author of the fable. The Fable of the Bees was not universally admired by other Enlightenment thinkers. Adam Smith could not bring himself to accept the extremity of Mandeville’s paradox, in which vice was a necessary condition of prosperity. In his justly celebrated redefinition of the boundaries of the argument about business and morality, he emphasised self-interest rather than vice, with his statement in The Wealth of Nations that ‘it is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard for their own interest’. 10 In much the same vein, he added: ‘I have never known much good done by those who affected to trade for the public good.’11 Yet, as the author of The Theory of Moral Sentiments, he also emphasised the need for markets to operate within a moral context and believed that the act of engaging in market exchange entailed a discipline that encouraged good individual behaviour as well as the good of wider society.


pages: 324 words: 92,805

The Impulse Society: America in the Age of Instant Gratification by Paul Roberts

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2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, accounting loophole / creative accounting, Affordable Care Act / Obamacare, American Society of Civil Engineers: Report Card, asset allocation, business process, Cass Sunstein, centre right, choice architecture, collateralized debt obligation, collective bargaining, corporate governance, corporate social responsibility, crony capitalism, David Brooks, delayed gratification, double helix, factory automation, financial deregulation, financial innovation, full employment, game design, greed is good, If something cannot go on forever, it will stop, impulse control, income inequality, inflation targeting, invisible hand, job automation, Joseph Schumpeter, knowledge worker, late fees, Long Term Capital Management, loss aversion, low skilled workers, new economy, Nicholas Carr, obamacare, Occupy movement, oil shale / tar sands, performance metric, postindustrial economy, profit maximization, Report Card for America’s Infrastructure, reshoring, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Rodney Brooks, Ronald Reagan, shareholder value, Silicon Valley, speech recognition, Steve Jobs, technoutopianism, the built environment, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, total factor productivity, Tyler Cowen: Great Stagnation, Walter Mischel, winner-take-all economy

There was Icahn, who, after raiding TWA, directed the struggling airline to borrow half a billion dollars (most of which he paid to himself), then sold off the airline’s most profitable routes (a practice known as asset stripping) to service the debt. There was even a raiders’ gala—a posh annual conference hosted by the deal-making firm Drexel Burnham Lambert for all the big names in restructuring, known as the “Predators’ Ball.” For many critics, and a great many more traumatized former employees, the corporate raider perfectly captured the “greed is good” zeitgeist that overran American corporate culture in the 1980s. But to an emerging school of conservative economists, the raider was nothing less than an economic savior. Raiders had appeared because share prices were falling, and share prices had fallen in part because the companies were being mismanaged. After thirty years of postwar prosperity, many American firms had become complacent and inefficient.


pages: 391 words: 102,301

Zero-Sum Future: American Power in an Age of Anxiety by Gideon Rachman

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Asian financial crisis, bank run, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Bretton Woods, BRICs, capital controls, centre right, clean water, collapse of Lehman Brothers, colonial rule, currency manipulation / currency intervention, deindustrialization, Deng Xiaoping, Doha Development Round, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, global reserve currency, greed is good, Hernando de Soto, illegal immigration, income inequality, invisible hand, Jeff Bezos, laissez-faire capitalism, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, mutually assured destruction, Naomi Klein, offshore financial centre, open borders, open economy, Peace of Westphalia, peak oil, pension reform, Plutocrats, plutocrats, price stability, RAND corporation, reserve currency, rising living standards, road to serfdom, Ronald Reagan, shareholder value, Sinatra Doctrine, sovereign wealth fund, special economic zone, Steve Jobs, Stewart Brand, The Chicago School, The Great Moderation, The Myth of the Rational Market, Thomas Malthus, trickle-down economics, Washington Consensus, Winter of Discontent

As Robert Wade of the London School of Economics points out, in 1980, before Reagan took office, the richest 1 percent of Americans received around 9 percent of the country’s gross domestic product (GDP). By 2006, the richest 1 percent gobbled up 23 percent of national wealth.16 In the United States and the United Kingdom, the success of the free-market reforms of the 1980s was closely associated with a boom in the financial services industry, which was swiftly reflected in house prices and popular culture. In the States, the boom was captured in the film Wall Street, with its catchphrase “greed is good,” and in Tom Wolfe’s novel The Bonfire of the Vanities. The Dow Jones Industrial Average, which stood at 950 on the day Reagan took office, reached a peak of over 2,700 in August 1987—before the stock-market crash of October of that year.17 Some of Reagan’s critics on the left never accepted that his economic policies had succeeded. They saw them as a cruel sleight of hand, fueled by unsustainable tax cuts and deficit spending and hopelessly tilted towards the wealthy.


pages: 452 words: 110,488

The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead by David Callahan

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1960s counterculture, affirmative action, corporate governance, David Brooks, deindustrialization, East Village, forensic accounting, full employment, game design, greed is good, high batting average, housing crisis, illegal immigration, income inequality, job satisfaction, market fundamentalism, McMansion, microcredit, moral hazard, new economy, New Urbanism, offshore financial centre, oil shock, Plutocrats, plutocrats, postindustrial economy, profit maximization, profit motive, RAND corporation, Ray Oldenburg, rolodex, Ronald Reagan, shareholder value, Silicon Valley, Steve Jobs, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, Thorstein Veblen, War on Poverty, winner-take-all economy, World Values Survey, young professional

Why worry about being censured by your state's medical society for taking kickbacks to prescribe certain drugs when those groups are more interested in protecting the interests of doctors than of the general public? Why worry about being thrown out of baseball for using steroids when neither of the major leagues has mandatory drug testing? Growing temptations to cheat have been all the more seductive given the trumpeted morality of the free market. If competition is good—if even greed is good—than maybe questionable cutthroat behavior is also good. In principle, few Americans embrace the idea that "might makes right." In practice, this idea now flourishes across our society, and much of the new cheating is among those with the highest incomes and social status. The Winning Class's clout inevitably has produced hubris and a sense that the rules governing what Leona Helmsley called "the little people" do not apply to them.


pages: 339 words: 99,674

Pay Any Price: Greed, Power, and Endless War by James Risen

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air freight, airport security, banking crisis, clean water, Edward Snowden, greed is good, illegal immigration, income inequality, large denomination, Occupy movement, pattern recognition, pre–internet, RAND corporation, Silicon Valley, Stuxnet, too big to fail, WikiLeaks

He usually came up short but that didn’t stop him from playing blackjack on a nightly basis, racking up unwieldy debts that eventually led to his 2010 arrest for bouncing more than $1 million in bad checks at Caesar’s Palace in Las Vegas. Gambling is how he met his first backer, Warren Trepp. Trepp got rich in the biggest casino of them all, Wall Street. He had been Michael Milken’s right-hand man in the heyday of Milken’s famous Beverly Hills trading desk during the “greed is good” era of insider trading in the 1980s. When a hungry federal prosecutor named Rudolph Giuliani went after Milken for insider trading, he tried to get Trepp to roll over on his boss. Trepp refused, even in the face of a threat that he would be charged himself if he failed to cooperate. Milken went to jail, but Giuliani never could nail Trepp. Instead of facing criminal charges, Trepp became the subject of a marathon investigation by the Securities and Exchange Commission (SEC), which tried to impose civil sanctions for Trepp’s alleged part in Milken’s insider-trading bonanza.


pages: 378 words: 102,966

Affluenza: The All-Consuming Epidemic by John de Graaf, David Wann, Thomas H Naylor, David Horsey

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big-box store, Community Supported Agriculture, Donald Trump, Exxon Valdez, financial independence, Ford paid five dollars a day, full employment, greed is good, income inequality, informal economy, invisible hand, Isaac Newton, McMansion, medical malpractice, new economy, Ralph Nader, Ray Oldenburg, Ronald Reagan, Silicon Valley, Simon Kuznets, single-payer health, The Great Good Place, trade route, upwardly mobile, Yogi Berra, young professional

Those Reagan commercials, small towns and smiling people in golden light, seem quaint now, more like the sunset of an old era than the morning of a new one. For one thing, there are no ads to be seen anywhere in the America pictured in those political commercials, no billboards, no product being sold except Reagan. That’s not America anymore. Reagan’s decade may have been that of supply-side economics, but it was also the decade of demand creation. Yuppies were made, not born. “Greed is good,” chirruped Wall Street’s Ivan Boesky. The message of Reagan’s first inaugural ball and Nancy’s $15,000 dress was clear: It’s cool to consume and flaunt it. The tone of ’80s advertising echoed the sentiment: “Treat Yourself. You Deserve a Break Today. You’re Worth It.” Look out for number one. Since 1980, few industries have grown as fast as advertising. Its importance is underscored by a little-known fact: Madison Avenue real estate is the priciest on the planet.


pages: 383 words: 108,266

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions by Dan Ariely

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air freight, Al Roth, Bernie Madoff, Burning Man, butterfly effect, Cass Sunstein, collateralized debt obligation, computer vision, corporate governance, credit crunch, Daniel Kahneman / Amos Tversky, David Brooks, delayed gratification, endowment effect, financial innovation, fudge factor, Gordon Gekko, greed is good, housing crisis, invisible hand, lake wobegon effect, late fees, loss aversion, market bubble, Murray Gell-Mann, payday loans, placebo effect, price anchoring, Richard Thaler, second-price auction, Silicon Valley, Skype, The Wealth of Nations by Adam Smith, Upton Sinclair

The scary thought is that if we did the experiments with nonmonetary currencies that were not as immediately convertible into money as tokens, or with individuals who cared less about their honesty, or with behavior that was not so publicly observable, we would most likely have found even higher levels of dishonesty. In other words, the level of deception we observed here is probably an underestimation of the level of deception we would find across a variety of circumstances and individuals. Now suppose that you have a company or a division of a company led by a Gordon Gekko character who declares that “greed is good.” And suppose he used nonmonetary means of encouraging dishonesty. Can you see how such a swashbuckler could change the mind-set of people who in principle want to be honest and want to see themselves as honest, but also want to hold on to their jobs and get ahead in the world? It is under just such circumstances that nonmonetary currencies can lead us astray. They let us bypass our conscience and freely explore the benefits of dishonesty.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

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23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, Plutocrats, plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, wage slave, working poor, working-age population, Y2K, Yogi Berra

Mercantilism said that exports made you rich and imports made you poor, a fallacy mocked by Adam Smith when he pointed out that Britain selling durable hardware to France in exchange for perishable wine was a missed opportunity to achieve the ‘incredible aug mentation of the pots and pans of the country’. Marxism said that capitalists got rich because workers got poor, another fallacy. In the film Wall Street, the fictional Gordon Gekko not only says that greed is good; he also adds that it’s a zero-sum game where somebody wins and somebody loses. He is not necessarily wrong about some speculative markets in capital and in assets, but he is about markets in goods and services. The notion of synergy, of both sides benefiting, just does not seem to come naturally to people. If sympathy is instinctive, synergy is not. For most people, therefore, the market does not feel like a virtuous place.


pages: 520 words: 129,887

Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future by Robert Bryce

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Bernie Madoff, carbon footprint, cleantech, collateralized debt obligation, correlation does not imply causation, Credit Default Swap, credit default swaps / collateralized debt obligations, decarbonisation, Deng Xiaoping, en.wikipedia.org, energy security, energy transition, flex fuel, greed is good, Hernando de Soto, hydraulic fracturing, hydrogen economy, Indoor air pollution, Isaac Newton, James Watt: steam engine, Menlo Park, new economy, offshore financial centre, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, purchasing power parity, RAND corporation, Ronald Reagan, Silicon Valley, smart grid, Stewart Brand, Thomas L Friedman, uranium enrichment, Whole Earth Catalog

The oceans of natural gas in the Barnett Shale, the Haynesville Shale, and other formations would likely never have been developed if that gas had been owned by the federal or state government. Individuals and entrepreneurs persist in developing new drilling and completion technologies because it’s in their interest to do so. The more they produce from the properties on which they lease or own the minerals, the more money they make. When it comes to getting oil and gas out of the ground, private ownership of mineral rights provides proof positive that greed is good. Without greed—the greed that springs from individuals owning the minerals beneath their feet—the vast oil and natural-gas fields in Texas, California, Oklahoma, Louisiana, and other states would likely remain underdeveloped. Increased domestic gas production—as well as more domestic oil production—will mean more royalty payments to average Americans. In 2007, the total mineral interest payments to individual Americans totaled about $21.5 billion.


pages: 613 words: 151,140

No Such Thing as Society by Andy McSmith

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anti-communist, Ayatollah Khomeini, Berlin Wall, Big bang: deregulation of the City of London, British Empire, call centre, cuban missile crisis, Etonian, F. W. de Klerk, feminist movement, Francis Fukuyama: the end of history, friendly fire, full employment, glass ceiling, greed is good, illegal immigration, index card, means of production, Mikhail Gorbachev, mortgage debt, mutually assured destruction, North Sea oil, Northern Rock, Ronald Reagan, South Sea Bubble, strikebreaker, The Chicago School, union organizing, upwardly mobile, urban decay, Winter of Discontent, young professional

The pursuit of income equality will turn this country into a totalitarian slum.’13 The audiences for Caryl Churchill’s verse play, Serious Money, which opened at the Royal Court in spring 1987, were notoriously swollen by the City types that the drama satirized, who all loved it. The crooked American financier Ivan Boesky, who told an audience at Berkeley University that ‘greed is healthy’, was seen as the voice of the times in the USA. In 1989, Gordon Brown wrote an assessment of Thatcher’s record, to which he gave the title ‘Where Greed is Good’. Yet, having grown up in reasonable comfort, and having married a rich man when she was young, Mrs Thatcher herself was not greedy; the political historian, Mark Garnett, who is a long way from being a Thatcherite, concluded that ‘a verdict of “greedy” could only be brought in by a jury which was biased against her for other reasons’.14 It would be an exercise in futility to try to measure whether the British were more or less greedy after 1985 than in other periods since the war.


pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

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affirmative action, Albert Einstein, Andrei Shleifer, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, capital controls, Cass Sunstein, central bank independence, clean water, collapse of Lehman Brothers, congestion charging, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, Joseph Schumpeter, Kenneth Rogoff, libertarian paternalism, low skilled workers, lump of labour, Malacca Straits, market bubble, microcredit, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, school vouchers, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional

Assuming a 3 percent commission, your agent can make $8,400 for doing virtually nothing or $9,600 for doing many weeks of work. Which would you choose? On the buy side or the sell side, your agent’s most powerful incentive is to get a deal done, whether it is at a price favorable to you or not. Economics teaches us how to get the incentives right. As Gordon Gekko told us in the movie Wall Street, greed is good, so make sure that you have it working on your side. Yet Mr. Gekko was not entirely correct. Greed can be bad—even for people who are entirely selfish. Indeed, some of the most interesting problems in economics involve situations in which rational individuals acting in their own best interest do things that make themselves worse off. Yet their behavior is entirely logical. The classic example is the prisoner’s dilemma, a somewhat contrived but highly powerful model of human behavior.


pages: 311 words: 130,761

Framing Class: Media Representations of Wealth and Poverty in America by Diana Elizabeth Kendall

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Bernie Madoff, blue-collar work, Bonfire of the Vanities, call centre, David Brooks, declining real wages, Donald Trump, employer provided health coverage, ending welfare as we know it, framing effect, Georg Cantor, Gordon Gekko, greed is good, haute couture, housing crisis, illegal immigration, income inequality, lump of labour, mortgage tax deduction, new economy, payday loans, Ponzi scheme, Ray Oldenburg, Richard Florida, Ronald Reagan, Saturday Night Live, telemarketer, The Great Good Place, Thorstein Veblen, trickle-down economics, union organizing, upwardly mobile, urban planning, working poor

Leach was the master of price-tag framing, showing viewers some of the lavish residences, luxury vehicles, and exotic travel destinations enjoyed by the world’s wealthiest people.93 At the end of each episode, Leach wished his viewers “champagne wishes and caviar dreams.” As that tag line suggests, the lifestyles of the rich and famous shown on Leach’s program were nothing more than “wishes” or “dreams” for the typical viewer. However, the series supported one of the key tenets of the gospel of materialism—namely, “Greed is good,” as stockbroker Gordon Gekko (played by Michael Douglas) declares in the 1980s film Wall Street. During the economic crisis of the 2000s, in Wall Street 2: Money Never Sleeps, Michael Douglas reprises his role as Gordon Gekko, who emerges twenty years later from prison and seeks to rebuild his career and repair his relationship with his daughter. She is engaged to a young, ambitious Wall Street trader with goals much like Gekko himself had when he became involved in chicanery resembling much of what has contributed to many of this country’s financial problems in the twenty-first century.94 Like the original Wall Street and other films such as the 1980s classic Bonfire of the Vanities, Wall Street 2 highlights price-tag framing: everything (and everybody) has a price, and the higher the price, the greater the zeal with which people will pursue wealth and power at any cost. 9781442202238.print.indb 48 2/10/11 10:46 AM Twenty-Four-Karat Gold Frames 49 Not only does price-tag framing tell media audiences how much the rich pay for their possessions, but it also may suggest that ordinary people can live like millionaires, even if on a reduced scale.


pages: 422 words: 131,666

Life Inc.: How the World Became a Corporation and How to Take It Back by Douglas Rushkoff

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affirmative action, Amazon Mechanical Turk, banks create money, big-box store, Bretton Woods, car-free, colonial exploitation, Community Supported Agriculture, complexity theory, computer age, corporate governance, credit crunch, currency manipulation / currency intervention, David Ricardo: comparative advantage, death of newspapers, don't be evil, Donald Trump, double entry bookkeeping, easy for humans, difficult for computers, financial innovation, Firefox, full employment, global village, Google Earth, greed is good, Howard Rheingold, income per capita, invention of the printing press, invisible hand, Jane Jacobs, John Nash: game theory, joint-stock company, Kevin Kelly, laissez-faire capitalism, loss aversion, market bubble, market design, Marshall McLuhan, Milgram experiment, moral hazard, mutually assured destruction, Naomi Klein, new economy, New Urbanism, Norbert Wiener, peak oil, place-making, placebo effect, Ponzi scheme, price mechanism, price stability, principal–agent problem, private military company, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, RFID, road to serfdom, Ronald Reagan, short selling, Silicon Valley, Simon Kuznets, social software, Steve Jobs, Telecommunications Act of 1996, telemarketer, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trade route, trickle-down economics, union organizing, urban decay, urban planning, urban renewal, Vannevar Bush, Victor Gruen, white flight, working poor, Works Progress Administration, Y2K, young professional

CHAPTER FOUR INDIVIDUALLY WRAPPED Public Relations and the Disconnect from One Another The Self Is the Source “We’re trained in our society to give, but to feel uncomfortable taking or receiving. But if you don’t take, you are denying another person from giving.” Three of the women smile and two others half-nod, glazed over. But the younger one in the corner still appears unconvinced by the life coach leading the session. “What’s that really mean, Eileen?” Amy asks. “Greed is good?” “Well, sure,” answers Eileen, a middle-aged and middleweight woman in a chocolate-brown pantsuit. She doesn’t appear to realize that Amy was quoting from the movie Wall Street. “That’s not how they put it, but yes. We have to learn to accept the bounty that life offers. It’s the key to seeing self as source. Remember, you make the world around you with your thoughts. If you aren’t ready to accept, then how can the universe give you anything you want?”


pages: 455 words: 138,716

The Divide: American Injustice in the Age of the Wealth Gap by Matt Taibbi

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banking crisis, Bernie Madoff, butterfly effect, collapse of Lehman Brothers, collateralized debt obligation, Credit Default Swap, credit default swaps / collateralized debt obligations, Edward Snowden, ending welfare as we know it, forensic accounting, Gordon Gekko, greed is good, illegal immigration, information retrieval, London Interbank Offered Rate, London Whale, naked short selling, offshore financial centre, Ponzi scheme, profit motive, regulatory arbitrage, short selling, telemarketer, too big to fail, War on Poverty

Wall Street in 2003 was a very different place from the world Ben Graham had written about in his 1934 Security Analysis. A more definitive portrait of modern finance would probably be the movie Wall Street, which had a profound effect on the city’s business culture, although probably not the effect its heavy-handed lefty director Oliver Stone expected. While the rest of America understood Michael Douglas’s iconic Gordon Gekko character as a villain, and saw his famed “greed is good” speech as incisive satire, many aspiring Wall Street traders sincerely thought—and still think—that Gekko was the movie’s hero. In the early 1990s, Wall Street saw a massive influx of young Gekko wannabes who thought waiting any amount of time to get fabulously wealthy was for losers, or at the very least for people who had never read Sun Tzu. Many of these new world-beaters eschewed the old Wall Street career path of being a broker at a major investment bank and climbing the ladder to a partnership.

Little Failure: A Memoir by Gary Shteyngart

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Albert Einstein, anti-communist, Anton Chekhov, East Village, glass ceiling, Gordon Gekko, greed is good, New Journalism, Ronald Reagan, Yom Kippur War, young professional

I know I cannot be Gary Gnu any longer, but then what will I be? A serious, hardworking Republican boy bound for Harvard, Yale, or, in the worst scenario, Princeton. That’s me. I’ll be funny only when it’s called for. No more clowning around. I’ll keep my mouth shut. I have just seen Oliver Stone’s Wall Street with my family, and the lessons were clear. Don’t trust outsiders. Don’t get caught. Focus only on wealth creation. Greed is good. I also think I have a trump card: the $280,000 colonial my family has just bought in Little Neck. Packed in my school bag, just in case, I carry an engineer’s report testifying to our new house’s value, including a photograph of the house in the morning sun, its southern exposure swaddled by a row of hyacinths. Every step of the process, from picking out the actual house among a casting call of colonial look-alikes to calculating the mortgage payments, was done with my obsessive participation.


pages: 483 words: 134,377

The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor by William Easterly

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air freight, Andrei Shleifer, battle of ideas, Bretton Woods, British Empire, business process, business process outsourcing, Carmen Reinhart, clean water, colonial rule, correlation does not imply causation, Daniel Kahneman / Amos Tversky, Deng Xiaoping, desegregation, discovery of the americas, Edward Glaeser, en.wikipedia.org, European colonialism, Francisco Pizarro, fundamental attribution error, germ theory of disease, greed is good, income per capita, invisible hand, James Watt: steam engine, Jane Jacobs, John Snow's cholera map, Joseph Schumpeter, Kenneth Rogoff, M-Pesa, microcredit, Monroe Doctrine, oil shock, place-making, Ponzi scheme, risk/return, road to serfdom, Silicon Valley, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, Thomas L Friedman, urban planning, urban renewal, Washington Consensus, World Values Survey, young professional

The suppliers who provide any goods that are profitable in the marketplace do so only to get the profit, but they wind up unintentionally meeting many of our most pressing needs. Our demand to get our most urgent needs met is what makes the goods profitable. Smith’s Invisible Hand was one of the first introductions of the revolutionary concept of “spontaneous order,” which we discussed in Chapter Two as today including biological evolution, the Internet, language, and social norms. The misunderstanding is that Smith believed “greed is good,” which triggers revulsion against his Invisible Hand on the left. Some on the right have the misunderstanding that Smith gives a blanket endorsement to all profits by the existing businessmen. Actually, Smith held many negative views about both the rich and businessmen. In his first classic, The Theory of Moral Sentiments, published in 1759, Smith spoke of the rich as a “few lordly masters,” consumed by “vain and insatiable desires,” not to mention their “natural selfishness and rapacity.”9 As for businessmen, Smith in The Wealth of Nations spoke of “the mean rapacity, the monopolizing spirit, of merchants and manufacturers,” which sounds like something he had personally observed in Glasgow.


pages: 515 words: 132,295

Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar

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3D printing, accounting loophole / creative accounting, additive manufacturing, Airbnb, algorithmic trading, Asian financial crisis, asset allocation, bank run, Basel III, bonus culture, Bretton Woods, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, centralized clearinghouse, clean water, collateralized debt obligation, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, crowdsourcing, David Graeber, deskilling, Detroit bankruptcy, diversification, Double Irish / Dutch Sandwich, Emanuel Derman, Eugene Fama: efficient market hypothesis, financial deregulation, financial intermediation, Frederick Winslow Taylor, George Akerlof, gig economy, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, High speed trading, Home mortgage interest deduction, housing crisis, Howard Rheingold, Hyman Minsky, income inequality, index fund, interest rate derivative, interest rate swap, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kenneth Rogoff, knowledge economy, labor-force participation, labour mobility, London Whale, Long Term Capital Management, manufacturing employment, market design, Martin Wolf, moral hazard, mortgage debt, mortgage tax deduction, new economy, non-tariff barriers, offshore financial centre, oil shock, passive investing, pensions crisis, Ponzi scheme, principal–agent problem, quantitative easing, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, Rana Plaza, RAND corporation, random walk, rent control, Robert Shiller, Robert Shiller, Ronald Reagan, Second Machine Age, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, Snapchat, sovereign wealth fund, Steve Jobs, technology bubble, The Chicago School, The Spirit Level, The Wealth of Nations by Adam Smith, Tim Cook: Apple, Tobin tax, too big to fail, trickle-down economics, Tyler Cowen: Great Stagnation, Vanguard fund

One Aspen Institute survey that followed a group of MBA students throughout their schooling found that their values changed, and not for the better, during the course of their time on campus.45 The students began their studies in what the survey called “customer mode,” believing that corporations should be run for the benefit of a large group of stakeholders, from workers to customers to society as a whole. By the end of their second semester, however, students shifted to “business manager mode,” placing more emphasis than before on maximizing shareholder returns and less on producing high-quality goods and services—a change that, the survey said, reflected “the powerful place shareholders occupy in the first-year curriculum.” Business schools teach, quite literally, that greed is good, and that rational self-interest is economically and socially beneficial. But if there is anything that the last few years of economic crisis, recession, and slow painful rebound have taught us, it’s that the conventional economic wisdom doesn’t always work. THE MORALITY OF BUSINESS EDUCATION An increasing number of business educators at top schools are concerned not only that MBA programs are churning out number crunchers without consciences, but that the programs themselves no longer uphold the mission of America’s top universities, which has always been to preserve, create, and transmit knowledge to advance the public good.


pages: 741 words: 179,454

Extreme Money: Masters of the Universe and the Cult of Risk by Satyajit Das

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affirmative action, Albert Einstein, algorithmic trading, Andy Kessler, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Basel III, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, capital asset pricing model, Carmen Reinhart, carried interest, Celtic Tiger, clean water, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, debt deflation, Deng Xiaoping, deskilling, discrete time, diversification, diversified portfolio, Doomsday Clock, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, financial independence, financial innovation, fixed income, full employment, global reserve currency, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, happiness index / gross national happiness, haute cuisine, high net worth, Hyman Minsky, index fund, interest rate swap, invention of the wheel, invisible hand, Isaac Newton, job automation, Johann Wolfgang von Goethe, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kevin Kelly, labour market flexibility, laissez-faire capitalism, load shedding, locking in a profit, Long Term Capital Management, Louis Bachelier, margin call, market bubble, market fundamentalism, Marshall McLuhan, Martin Wolf, merger arbitrage, Mikhail Gorbachev, Milgram experiment, Mont Pelerin Society, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Naomi Klein, Network effects, new economy, Nick Leeson, Nixon shock, Northern Rock, nuclear winter, oil shock, Own Your Own Home, pets.com, Plutocrats, plutocrats, Ponzi scheme, price anchoring, price stability, profit maximization, quantitative easing, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Ray Kurzweil, regulatory arbitrage, rent control, rent-seeking, reserve currency, Richard Feynman, Richard Feynman, Richard Thaler, risk-adjusted returns, risk/return, road to serfdom, Robert Shiller, Robert Shiller, Rod Stewart played at Stephen Schwarzman birthday party, rolodex, Ronald Reagan, Ronald Reagan: Tear down this wall, savings glut, shareholder value, Sharpe ratio, short selling, Silicon Valley, six sigma, Slavoj Žižek, South Sea Bubble, special economic zone, statistical model, Stephen Hawking, Steve Jobs, The Chicago School, The Great Moderation, the market place, the medium is the message, The Myth of the Rational Market, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trickle-down economics, Turing test, Upton Sinclair, value at risk, Yogi Berra, zero-coupon bond

The New York Times dubbed Rand the “novelist Laureate” of the Reagan administration, citing her influence on Greenspan.13 Paul Samuelson, the economist, recalled that: The trouble is that [Greenspan] had been an Ayn Rander. You can take the boy out of the cult but you can’t take the cult out of the boy. He actually had instructions, probably pinned on the wall: “Nothing from this office should go forth which discredits the capitalist system. Greed is good.”14 Like his mentor, Greenspan was his own splendid creation. Celebrity Central Banking Greenspan reveled in the age of celebrity central bankers: “The only central bankers ever to achieve...rock star status.... No one has yet credited Alan Greenspan with the fall of the Soviet Union or the rise of the Boston Red Sox, although both may come in time as the legend grows.”15 In 2000, U.S.


pages: 686 words: 201,972

Drink: A Cultural History of Alcohol by Iain Gately

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barriers to entry, British Empire, California gold rush, delayed gratification, Deng Xiaoping, Edward Lloyd's coffeehouse, Fellow of the Royal Society, Gordon Gekko, greed is good, Haight Ashbury, Hernando de Soto, imperial preference, invisible hand, joint-stock company, Louis Pasteur, megacity, music of the spheres, Peace of Westphalia, refrigerator car, Ronald Reagan, South Sea Bubble, spice trade, strikebreaker, the scientific method, Tim Cook: Apple, trade route, traveling salesman, Upton Sinclair, V2 rocket, working poor

“Lunch is for wimps,” he declares at their first encounter, and Bud pointedly calls for Evian when he meets Gekko in a restaurant at night. The old order is represented by Bud’s father, a union leader at Bluestar Airlines, who does his business with the men he represents over a few beers in the local bar. Gekko aims to take over Bluestar in order to break it into pieces and rob its pension fund, and Bud is forced to choose between old-fashioned beer-drinking, metal-bashing America and the greed-is-good philosophy of Gordon Gekko. After a bottle of whiskey he decides to do the right thing—intoxication leads to an epiphany that restores his moral perspective. There were genuine monetary benefits to be gained from alcohol-free workplaces. Companies that introduced such policies found their workers had fewer accidents, thus reducing insurance premiums and compensation payments, and that they had to sack fewer workers for drunkenness, enabling savings in termination costs and the expenses of recruiting replacements.


pages: 756 words: 228,797

Ayn Rand and the World She Made by Anne C. Heller

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affirmative action, Albert Einstein, anti-communist, Bolshevik threat, conceptual framework, greed is good, laissez-faire capitalism, Milgram experiment, Mont Pelerin Society, New Journalism, open borders, price stability, profit motive, rent control, rolodex, Ronald Reagan, Silicon Valley, the scientific method, theory of mind, Thorstein Veblen, transcontinental railway, upwardly mobile, wage slave, War on Poverty, Works Progress Administration, young professional

Kennedy inaugurated an era of unparalleled American prosperity, new cultural freedoms, increased spending on social programs, and the beginnings of a distant, controversial war, Nathaniel and, to a lesser degree, Barbara established a smaller, safer sphere for their benefactor to inhabit. The proud sufferer asked her two friends not to discuss her depression with the others, so most of her followers knew little or nothing about the extremity of her moods. But they understood that she, and they, were almost universally derided as hate-mongering greed-is-good neo-Fascists and social Darwinists, when they knew themselves to be visionaries of freedom and progress. Some lost friends. Some, like Leonard Peikoff, experienced their parents’ disapproval or estrangement. “How is it possible that we can be accused of advocating, politically, the exact opposite of what we stand for?” they said among themselves after lectures and on Saturday nights. They concluded that, like Roark, they were being punished for their virtues and that the outside world hated and feared them for trumpeting the moral good.


pages: 898 words: 266,274

The Irrational Bundle by Dan Ariely

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accounting loophole / creative accounting, air freight, Albert Einstein, banking crisis, Bernie Madoff, Black Swan, Broken windows theory, Burning Man, business process, cashless society, Cass Sunstein, clean water, cognitive dissonance, computer vision, corporate governance, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, delayed gratification, Donald Trump, endowment effect, Exxon Valdez, first-price auction, Frederick Winslow Taylor, fudge factor, George Akerlof, Gordon Gekko, greed is good, happiness index / gross national happiness, Jean Tirole, job satisfaction, knowledge economy, knowledge worker, lake wobegon effect, late fees, loss aversion, Murray Gell-Mann, new economy, Peter Singer: altruism, placebo effect, price anchoring, Richard Feynman, Richard Feynman, Richard Thaler, Saturday Night Live, Schrödinger's Cat, second-price auction, shareholder value, Silicon Valley, Skype, software as a service, Steve Jobs, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, ultimatum game, Upton Sinclair, Walter Mischel, young professional

The scary thought is that if we did the experiments with nonmonetary currencies that were not as immediately convertible into money as tokens, or with individuals who cared less about their honesty, or with behavior that was not so publicly observable, we would most likely have found even higher levels of dishonesty. In other words, the level of deception we observed here is probably an underestimation of the level of deception we would find across a variety of circumstances and individuals. Now suppose that you have a company or a division of a company led by a Gordon Gekko character who declares that “greed is good.” And suppose he used nonmonetary means of encouraging dishonesty. Can you see how such a swashbuckler could change the mind-set of people who in principle want to be honest and want to see themselves as honest, but also want to hold on to their jobs and get ahead in the world? It is under just such circumstances that nonmonetary currencies can lead us astray. They let us bypass our conscience and freely explore the benefits of dishonesty.