The further to the left or the right you move, the more your lens on life distorts.

Monday, October 06, 2008

Gordon Gekko

As I have noted in earlier posts, there are no good guys in the current credit debacle that is rapidly turning into a global psychodrama. Borrowers, lenders, politicians, and Wall Street hot shots (the real life progeny of the fictional Gordon Gekko) have given new meaning to the word: irresponsibility. Over the next months and into the term of the new President, there will be massive recriminations with each irresponsible segment pointing fingers at the other. A pox on all their houses!

As the dust begins to settle (and that won’t be anytime soon), we need an overriding philosophy for moving forward. The Australian's Kevin Rudd enunciates such a philosophy better than any American commentator I have read:
There is an alternative political and policy narrative to the one that has tended to prevail in recent times. A narrative that recognises the importance of markets, but one that also recognises the limitations of markets and recognises also where markets fail.

It recognises the role of public goods and that one of those public goods is market regulation. It values transparency, competition and innovation but does not encourage speculation or reward for merely short-term success. It is a political and corporate culture that values profitability and productivity achieved through hard work, but one that does not endorse the Gordon Gekko ethic of the quick buck, based on little more than a single financial transaction.

We believe that market participants need strong incentives and rewards for success. But we believe their success should be measured over a sustainable horizon. We believe in strong incentives for individuals, but we also believe that trust and traditional ethical standards are essential elements of the financial system. We believe strongly in the profit motive but we also believe in responsibility to the community where those profits are made, a belief increasingly evident in Australian corporate philanthropic behaviour.

When we are through this crisis, it will be time to take stock. Because across the length and breadth of the nation, the cry of the people is clear, and that is for a long-term, sustainable vision for the nation's future. It is a vision that goes beyond the electoral cycle, that goes beyond a quarterly corporate reporting cycle and that certainly goes beyond the 24-hour news cycle.

Those of us who pay for 70 percent of government don’t ask for much, but we’d love to see the new president stress and/or force responsible actions for all of the bad guys in this drama—less debt at an individual level; ethical behavior among lenders; reform among politicians who worry more about their reelection than their country, and regulation of Wall Street’s children of Gordon Gekko whose extreme hubris and greed led us all into this mess.